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HQ 089447


November 18, 1991

CLA-2 CO:R:C:T 089447 CC

CATEGORY: CLASSIFICATION

Ms. Melanie A. Sweeney
Prime Shelter, Inc.
2749 N. Grand Avenue
Nogales, AZ 85621

RE: Baseball-style caps

Dear Ms. Sweeny:

This letter is in response to your inquiry, on behalf of Capfree International, Inc., requesting the quota category number and the country of origin of baseball-style caps. A sample was submitted for examination.

FACTS:

The four back panels of the merchandise at issue are made of nylon mesh, and the front panel is made of 100 percent polyester knit fabric with a padded sponge. The top of the peak is made of a knit polyester fabric, and the underside of the peak is made of woven fabric. The sweat band is made of woven fabric. There is a braid, which measures approximately 9 inches long and 1/8-inch wide, between the peak and crown of the cap. A small button is located at the top of the cap, and a plastic adjustable strap is located at the back of the cap.

According to your submissions, the material for the front and back panels is made and cut to shape in Taiwan. The component materials for the visors are made in China where the visor pieces are also cut and sewn together. The front and back panels along with the crown and visor are sewn together in Mexico.

You have submitted information concerning the processing and assembly of the following parts of the cap: the sweatband, braid, snap, button, label, bias tapping or piping, and the sizeband. Essentially all of the material for these minor parts comes from Taiwan, except for the material of the sweatband, which comes from China. All of the cutting and sewing of these parts is done in Mexico, except for the sewing of the sweatband, which is done in China.

For the direct material and direct labor costs, you have furnished the following information: 43.60 percent is from Taiwan, 17.78 percent is from China, and 38.62 percent is from Mexico.

ISSUE:

What is the classification of the submitted baseball-style cap under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA), and what is the appropriate textile category number?

What is the country of origin of the merchandise at issue?

LAW AND ANALYSIS:

Classification

The quota category for merchandise is determined by the classification of that merchandise under a particular subheading. Classification of merchandise under the HTSUSA is in accordance with the General Rules of Interpretation (GRI's), taken in order. GRI 1 provides that classification shall be determined according to the terms of the headings and any relative section or chapter notes.

In Headquarters Ruling Letter (HRL) 088438, dated January 14, 1991, we ruled that a baseball-style cap with a braid 3/16-inch wide between the peak and the crown of the cap was classifiable under a subheading providing for "wholly or in part of braid" within Heading 6505. This finding was based on the application of the de minimis rule. (See General Note 7(e) to the HTSUSA). We also stated that we had not determined at what width, if any, a braid on a cap would be considered de minimis, making the cap classifiable as "not in part of braid." Because the submitted cap has a braid less than 3/16 of an inch wide, we are unable to make a final determination at this time with regard to the question of whether the cap is considered in part of braid for purposes of classification in Heading 6505.

We also stated in HRL 088438 that we would be soliciting comments from the public on this issue. In 56 Federal Register 46134, dated September 10, 1991, information was provided where comments on the braided cap issue could be sent. The deadline for submitting comments is November 12, 1991.

Country of Origin

For country of origin purposes, Section 12.130 of the Customs Regulations (19 CFR 12.130) is applicable to the merchandise at issue. Section 12.130(b) of the Customs Regulations provides that a textile product that is processed in more than one country or territory shall be a product of that country or territory where it last underwent a substantial transformation. A textile product will be considered to have undergone a substantial transformation if it has been transformed by means of substantial manufacturing or processing operations into a new and different article of commerce.

Section 12.130(d) of the Customs Regulations sets forth criteria in determining whether a substantial transformation of a textile product has taken place. This regulation states that these criteria are not exhaustive; one or any combination of criteria may be determinative, and additional factors may be considered.

Section 12.130(d)(1) states that a new and different article of commerce will usually result from a manufacturing or processing operation if there is a change in:

(i) Commercial designation or identity,
(ii) Fundamental character or
(iii) Commercial use.

Section 12.130(d)(2) of the Customs Regulations states that in determining whether merchandise has been subjected to substantial manufacturing or processing operations, the following will be considered:

(i) The physical change in the material or article as a result of the manufacturing or processing operations in each foreign territory or country, or insular possession of the U.S.

(ii) The time involved in the manufacturing or processing operations in each foreign territory or country, or insular possession of the U.S.

(iii) The complexity of the manufacturing or processing operations in each foreign territory or country, or insular possession of the U.S.

(iv) The level or degree of skill and/or technology required in the manufacturing or processing operations in each foreign territory or country, or insular possession of the U.S.

(v) The value added to the article or material in each foreign territory or country, or insular possession of the U.S., compared to its value when imported into the U.S.

Essentially all of the components for this merchandise are from Taiwan, except for material used to make the visor and sweatband. Furthermore, the cutting of the front and back panels, which forms the crown of the cap, is done in Taiwan. We believe that the material produced in Taiwan, when cut to form the panels of the crown of the cap, identify this merchandise as a cap. In addition, more value is added to this merchandise in Taiwan than in any other single country. Consequently a substantial transformation takes place in Taiwan. Although processing takes place in both China and Mexico, less than a complete assembly occurs in each of these countries. We do not believe that the processing operations in either of these countries constitute substantial manufacturing or processing operations. Therefore the last substantial transformation takes place in Taiwan, and the country of origin for the merchandise at issue is Taiwan.

HOLDING:

Since the issue of what constitutes "wholly or in part of braid" has not been resolved, you will be permitted, until further notice, to enter the sample baseball-style caps under a subheading providing for "wholly or in part of braid." The merchandise at issue may be entered under subheading 6505.90.5090, HTSUSA, which provides for hats and other headgear, knitted or crocheted, or made up from lace, felt or other textile fabric, in the piece (but not in strips), whether or not lined or trimmed, other, of man-made fibers, knitted or crocheted or made up from knitted or crocheted fabric, wholly or in part of braid, other, other. The rate of duty would be 7.2 percent ad valorem, and the textile category would be 659.

The country of origin of the merchandise at issue is Taiwan.

Due to the changeable nature of the statistical annotation (the ninth and tenth digits of the classification) and the restraint (quota/visa) categories applicable to textile merchandise, you should contact your local Customs office prior to importation of this merchandise to determine the current status of any import restraints or requirements.

The designated textile and apparel category may be subdivided into parts. If so, visa and quota requirements applicable to the subject merchandise may be affected. Since part categories are the result of international bilateral agreements which are subject to frequent renegotiations and changes, to obtain the most current information available, we suggest that you check, close to the time of shipment, the Status Report On Current Import Quotas (Restraint Levels), an internal issuance of the U.S. Customs Service, which is available for inspection at your local Customs office.

The holding set forth above applies only to the specific factual situation and merchandise identified in the ruling request. This position is clearly set forth in section 177.9(b)(1), Customs Regulations (19 CFR 177.9(b)(1)). This section states that a ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. Should it subsequently be determined that the information furnished is not complete and does not comply with 19 CFR 177.9(b)(1), the ruling will be subject to modification or revocation. In the event there is a change in the facts previously furnished this may affect the determination of country of origin. Accordingly, it is recommended that a new ruling request be submitted in accordance with section 177.2, Customs Regulations (19 CFR 177.2).

Sincerely,

John Durant, Director

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