HQ 0555814 - Applicability of duty exemption under U.S. Note 2(b), subchapter II, Chapter 98, HTSUSA, to gloves assembled in Guatemala; 555886 - United States International Trade Commision Rulings

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HQ 555814

October 7, 1991
CLA-2 CO:R:C:S 555814 SER

CATEGORY: CLASSIFICATION

Mr. William R. Irmscher
Best Manufacturing Company
Edison Street
Menlo, GA 30731

RE: Applicability of duty exemption under U.S. Note 2(b), subchapter II, Chapter 98, HTSUSA, to gloves assembled in Guatemala; 555886

Dear Mr. Irmscher:

This is in reference to your letter of December 12, 1990, requesting a ruling on the eligibility for duty-free treatment under U.S. Note 2(b), subchapter II, Chapter 98 of the Harmonized Tariff Schedule of the United States Annotated (HTSUSA), of gloves produced in Guatemala. We regret the delay in responding.

FACTS:

Four types of work gloves, all made exclusively of U.S.- origin materials, undergo initial manufacturing operations in the U.S. before being shipped to Guatemala where they undergo final assembly operations to complete the gloves.

The types of work gloves are categorized as follows: woven cotton, knit cotton, coated knit, and coated woven. Each type comes in several different styles. The woven cotton gloves consist of 65% cotton and 35% polyester. The knit cotton gloves are made from napped jersey fabric, while the coated woven gloves are constructed from PVC coated fabric of which the coating comprises more than 50% by weight. The coated knit gloves are constructed either from nitrile rubber coated fabric or PVC coated fabric. The coating operation and the cutting of the fabric to shape are performed in the U.S., and the assembly of the components to create the completed gloves is performed in Guatemala.

ISSUE:

Whether the work gloves 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, HTSUSA, ("Note 2(b)") to provide for the 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 in 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), HTSUS. Guatemala is a designated BC under the General Note.

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 work gloves are included in the "textile and apparel article" 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, 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 treatment 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).

Classification of goods under the HTSUSA is governed by 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. Headings 6116 and 6216, HTSUSA, provide for gloves, mittens and mitts. The woven cotton gloves (styles W70665 and PK1) are properly classified in subheading 6216.00.3910, HTSUSA, with a rate of duty of 25% ad valorem, and are subject to textile category number 331. The knit cotton gloves (styles 9K5 and 6616) are properly classified in subheading 6116.92.6020, HTSUSA, with a rate of duty of 25% ad valorem, and are also subject to textile category number 331. The coated woven gloves (styles 460-09, 60-09 and B60-09) are properly classified in subheading 6216.00.1210, HTSUSA, with a rate of duty of 25% ad valorem. The coated knit gloves (styles 2735-09 and P2735-09, 760-09, 770-09, and P770-09) are properly classified in subheading 6116.10.1810, HTSUSA, with a rate of duty of 25% ad valorem.

Since the woven and knit cotton gloves are classified in tariff provisions which contain textile category numbers they are not eligible for duty-free treatment under Note 2(b). The coated woven and knit gloves are classified in provisions which do not include textile category numbers and, therefore, they are eligible for duty-free treatment under this note, assuming all other conditions are fulfilled.

Though a detailed description of the assembly operations to be performed in Guatemala was not provided, it would appear that the final assembly operations would primarily involve sewing the cut-to-shape fabrics together to form the final article. This type of assembly operation is encompassed by the operations specified in Note 2(b)(i).

Therefore, the coated woven and knit work gloves are entitled to duty-free treatment under Note 2(b), provided they are shipped directly to the U.S. without entering into the commerce of any foreign country other than a BC, and then
applicable documentation requirements are satisfied. We have enclosed a copy of a telex to Customs field offices dated September 28, 1990, which outlines these requirements.

HOLDING:

On the basis of the information submitted, the coated woven and knit work gloves, classified in subheadings 6216.00.1210 and 6116.10.1810, HTSUSA, respectively, which are assembled into final articles in Guatemala wholly from U.S.-origin materials, are entitled to duty-free treatment under Note 2(b), upon compliance with the "direct shipment" and applicable documentation requirements. The woven and knit cotton gloves, classified in subheadings 6216.00.3910 and 6116.92.6020, HTSUSA, respectively, and subject to textile agreements, are ineligible for duty-free treatment under Note 2(b). The rate of duty applicable to the woven and knit cotton work gloves is 25% ad valorem, and these gloves are subject to textile category number 331.

Sincerely,

John Durant, Director
Commercial Rulings Division

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