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HQ 555777


September 24, 1991
CLA-2 CO:R:C:S 555777 SER

CATEGORY: CLASSIFICATION

Ralph H. Sheppard, Esq.
Adduci, Mastriani, Meeks & Schill
330 Madison Avenue
New York, NY 10017

RE: Duty-free treatment of camera bags from the Dominican Republic under U.S. Note 2(b), subchapter II, Chapter 98, HTSUSA

Dear Mr. Sheppard:

This is in reference to your letters of November 7, 1990, and April 19, 1991, on behalf of Coast Manufacturing Company (Coast), requesting duty-free treatment under U.S. Note 2(b), subchapter II, Chapter 98, Harmonized Tariff Schedule of the United States (HTSUS), for camera bags produced from various U.S.-origin components and materials in the Dominican Republic.

FACTS:

Coast imports camera bags from the Dominican Republic which are comprised of four types of outer surfaces: vinyl, cotton, man-made fiber and leather. All of the components and materials used in the manufacture of the camera bags in the Dominican Republic are of U.S.-origin. Some of the components are exported in pre-cut sections which are ready for assembly. The remaining U.S.-origin materials are exported to the Dominican Republic in rolls and cut to length prior to the final assembly operations.

The first step of the operation involves sewing the materials to form the major panels of the camera bags. A paperboard reinforcer and a piece of foam are then sewn into the bottom compartment door and top flap. After each of the major panels are formed, parts of the bags, such as plastic snap locks, are attached to the panels where needed. Velcro is then sewn to the inside of the back and front panels to be used in connection with interior dividers. The panels are then sewn together, forming the bag, foam is inserted where needed, and edges or seams are finished with welting or binding. The welting, binding, velcro and webbing are cut to the desired length just prior to assembly. Upon completion, the bags are packaged and exported to the U.S.

ISSUE:

Whether the camera bags at issue are entitled to duty-free treatment under U.S. Note 2(b), subchapter II, Chapter 98, HTSUSA, when imported into the U.S.

LAW AND ANALYSIS:

Section 222 of the Customs and Trade Act of 1990 (P.L. 101- 382) amended U.S. Note 2, subchapter II, Chapter 98, HTSUS, ("Note 2(b)") to provide for duty-free treatment of articles, other than certain specified products, which are assembled or processed in a Caribbean Basin Initiative beneficiary country (BC) wholly of fabricated components or ingredients (except water) of U.S. origin. This amendment was effective with respect to goods entered on or after October 1, 1990.

Specifically Note 2(b) provides as follows:

(b) No article (except a textile article, apparel article, or petroleum, or any product derived from petroleum, provided for in heading 2709 or 2710) may be treated as a foreign article, or as subject to duty, if-

(i) the article is--

(A) assembled or processed in whole of fabricated components that are a product of the United States, or

(B) processed in whole of ingredients (other than water) that are a product of the United
States, in a beneficiary country; and

(ii) neither the fabricated components, materials or ingredients, after exportation from the United States, nor the article itself, before importation into the United States, enters the commerce of any foreign country other than a beneficiary country.

As used in this paragraph, the term "beneficiary country" means a country listed in General Note 3(c)(v)(A), HTSUSA. The Dominican Republic is a designated BC.

As stated above, Note 2(b) specifies four categories of products which are excluded from duty-free treatment under this provision: textile articles; apparel articles; petroleum; and certain petroleum products. The issue presented here concerns whether the camera bags are included in the "textile articles" exclusion for purposes of Note 2(b) and, therefore, precluded from receiving duty-free treatment under this provision. In a
letter dated August 28, 1991 (555886) to the Office of Textiles and Apparel, International Trade Administration, U.S. Department of Commerce (copy enclosed), we stated:

... as a general rule, we believe that those articles (other than footwear and parts of footwear) classified in HTSUS provisions which include a textile category number should be considered "textile and apparel articles" for purposes of U.S. Note 2(b) and, therefore, precluded from receiving duty-free under this provision. Conversely, those articles (except petroleum and certain petroleum products) classified in tariff provisions not containing a textile category number should be entitled to such treatment, assuming compliance with the requirements of U.S. Note 2(b).

Heading 4202, HTSUSA, provides for camera bags. The camera bags with an exterior surface of vinyl are classified in subheading 4202.92.9040, HTSUSA; the camera bags with an outer surface of cotton are classified in subheading 4202.92.6000, HTSUSA; the camera bags of man-made fiber are classified in subheading 4202.92.9020, HTSUSA; and the camera bags made of leather are classified in subheading 4202.91.0090, HTSUSA. Subheadings 4202.92.9020 and 4202.92.6000, HTSUSA, encompassing respectively, camera bags made of man-made fiber and cotton, are tariff provisions which include textile category numbers, and, therefore, these bags are not entitled to duty-free treatment. The camera bags made of vinyl and leather, classified in subheadings 4202.92.9040 and 4202.91.0090, HTSUSA, respectively, are not classified in provisions which include a textile category number. Therefore, these bags are eligible for duty-free treatment under this note, assuming all other conditions are fulfilled.

As stated above, to qualify for duty-free treatment under Note 2(b), an article must be assembled or processed in a BC entirely of components or ingredients that are a "product of" the U.S. An article manufactured within the customs territory of the U.S. is considered a "product of" the U.S. You state in your submission that all of the materials used to produce the bags are products of the U.S.

Note 2(b)(i) specifies that an eligible article will be entitled to duty-free treatment if it is:

(A) assembled or processed in whole of fabricated components that are a product of the U.S., or

(B) processed in whole of ingredients (other than water) that are a product of the U.S., in a BC.

The operations to be performed in the production of the eligible camera bags consist of: cutting to length of various materials in the Dominican Republic; sewing and assembling the components together; and packaging for shipment to the U.S.

Although Note 2(b)(i)(A) and (B) are separated by the word "or", it is our opinion that Congress did not intend to preclude free treatment under this provision to an article which is created in a BC both by assembling and processing U.S. fabricated components and by processing U.S. ingredients.

In regard to the operations performed in the Dominican Republic, we believe that the cutting and assembly of the U.S. materials are encompassed by the operations specified in Note 2(b). See HRL 555742 dated November 5, 1990. Therefore, if all the components are of U.S. origin and the finished articles are shipped directly to the U.S. without entering into the commerce of any foreign country other than a BC, and the applicable documentation requirements are satisfied, the eligible camera bags will be entitled to duty-free treatment under this provision. We have enclosed a copy of Headquarters telex 9264071 to Customs field offices, dated September 28, 1990, which outlines the documentation requirements.

HOLDING:

On the basis of the information submitted, we conclude that the vinyl and leather camera bags, classified in subheadings 4202.92.9040 and 4202.91.0090, HTSUSA, respectively, and made in the Dominican Republic wholly from materials of U.S. origin, are entitled to duty-free treatment under Note 2(b), upon compliance with the documentation requirements set forth in Headquarters telex 9264071 dated September 28, 1990. The camera bags with an outer surface of cotton or man-made fibers, which are classified in HTSUS subheadings containing a textile category number, are ineligible for duty-free treatment under Note 2(b).

Sincerely,

John Durant, Director
Commercial Rulings Division

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