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HQ 554980

June 13, 1990

CLA-2 CO:R:C:V 554980 CW

CATEGORY: CLASSIFICATION

TARIFF NO: 9802.00.80

Area Director of Customs
JFK Airport Area
Jamaica, New York 11430

RE: Application for Further Review of Protest No. 1001-86-014513
contesting denial of CBERA treatment for lingerie garments entered under item 807.00, TSUS

Dear Sir:

The above-referenced protest, filed by counsel on behalf of Inner Secrets, Inc., contests the denial by your office of duty- free treatment under the Caribbean Basin Economic Recovery Act (CBERA) for certain lingerie garments entered under item 807.00, Tariff Schedules of the United States (TSUS) (now subheading 9802.00.80, Harmonized Tariff Schedule of the United States

FACTS:

The merchandise under consideration consists of ladies' and girls' underwear and brassieres, in chief value of man-made fibers, which were assembled in Saint Lucia (a CBERA beneficiary country (BC)) in whole or in part of U.S. fabricated components. Upon importation in 1986, the garments were entered under item 807.00, TSUS, and allowances in duty were granted for the cost or value of the U.S. fabricated components incorporated therein. There is no dispute regarding the applicability of item 807.00, TSUS, to the garments in question. The merchandise was classified for duty-rate purposes in items 376 and 378, TSUS.

Protestant maintains that the garments are entitled to duty- free treatment under the CBERA in view of Presidential Proclamation 5365 dated August 30, 1985 (50 Fed. Reg. 36220), which lists item 807.00, TSUS, among the TSUS item numbers which are eligible for CBERA treatment. Your office determined that the garments are ineligible for CBERA treatment based upon section 2703(b)(1) of the CBERA (19 U.S.C. 2703(b)(1)), which states that duty-free treatment under this special tariff treatment program shall not apply to "textiles and apparel articles which are subject to textile agreements." See, also, section 10.191(b)(2)(i), Customs Regulations (19 CFR

ISSUE:

Whether textile products subject to textile agreements are eligible for CBERA treatment if entered under item 807.00, TSUS.

LAW AND ANALYSIS:

Under the CBERA, eligible articles the growth, product or manufacture of designated BC's may receive duty-free treatment if such articles are imported directly from a BC, and if the sum of 1) the cost or value of the materials produced in a BC or BC's, plus 2) the direct cost of processing operations performed in a BC or BC's, is not less than 35% of the appraised value of the article at the time it is entered into the U.S. See 19 U.S.C. 2703(a), and section 10.195(a), Customs Regulations (19 CFR 10.195(a)).

Articles are considered "eligible" if classified in a TSUS provision for which a rate of duty appears in the "Special" column followed by the symbol "E" or, with certain exceptions, "E*". See General Headnote 3(e)(vii)(B), TSUS. Articles provided for in a TSUS provision for which the symbol "E*" appears in the "Special" column are eligible for CBERA treatment, except for those articles specified in General Headnote 3(e)(vii)(D), TSUS, which include apparel articles "in chief value of cotton, wool, man-made fibers, or blends thereof ...." The articles under consideration here are classified for duty-rate purposes in provisions (items 376 and 378, TSUS) for which the symbol "E*" appears in the "Special" column.

In a memorandum dated January 27, 1989 (HQ 554930), copy enclosed, this office held that where an article is properly classified in subheading 9802.00.80, HTSUS (which replaced item 807.00, TSUS), it is that provision, rather than the underlying duty-rate tariff provision, which is controlling in determining whether the article is eligible for one or more of the special tariff treatment programs, such as the CBERA. As counsel for the protestant correctly points out, Presidential Proclamation 5365 dated August 30, 1985, listed item 807.00, TSUS, as one of the TSUS provisions which is eligible for CBERA treatment. However, Presidential Proclamation 5646 dated May 4, 1987 (52 Fed. Reg. 16805), stated, in part, that:

I have determined that the TSUS incorrectly indicates duty-free treatment for articles eligible for entry under certain items in schedule 8 of the TSUS [including item 807.00, TSUS] that are otherwise subject to duty under ... the Caribbean Basin Economic Recovery Act ....

Therefore, I am acting as indicated in Annex III to this Proclamation to delete the ... CBERA duty-free designations in the Rates of Duty Special column corresponding to these items.

Section B of Annex III to the Proclamation deleted the rate of duty "Free" and the symbol "E" from the "Special" column opposite item 807.00, TSUS, "[e]ffective with respect to articles entered, or withdrawn from warehouse for consumption, on or after September 1, 1985."

Therefore, as the merchandise in this case was entered (under item 807.00, TSUS) after September 1, 1985, it is ineligible for duty-free treatment under the CBERA pursuant to Presidential Proclamation 5646.

HOLDING:

For the reasons set forth above, the textile products subject to this protest are ineligible for duty-free treatment under the CBERA. Accordingly, the protest should be denied in full. A copy of this decision should accompany the Form 19, Notice of Action, to be sent to the protestant.

Sincerely,

John Durant, Director

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