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HQ 557216




August 19, 1993

CLA-2 CO:R:C:S 557216 WAW

CATEGORY: CLASSIFICATION

John S. Rode, Esq.
Rode & Qualey
295 Madison Avenue
New York, N.Y. 10017

RE: Eligibility of neoprene knee brace and neoprene-nylon material for duty-free treatment under U.S. Note 2(b), subchapter II, Chapter 98, HTSUS; "product of"

Dear Mr. Rode:

This is in response to your letter dated March 29, 1993, on behalf of Becton Dickinson and Company, concerning the eligibility of "Ace" Brand neoprene knee brace from the Dominican Republic for duty-free treatment under U.S. Note 2(b), subchapter II, Chapter 98, Harmonized Tariff Schedule of the United States (HTSUS) ("Note 2(b)"). Samples of the merchandise were enclosed for our review.

FACTS:

You state that Becton Dickinson will import sheets manufactured in Taiwan of neoprene-nylon material measuring 4 inches by 8 inches into Puerto Rico. This material is composed of neoprene rubber to which knit nylon fabric is laminated on beth the inner and outer surfaces, through the use of heat sensitive adhesive. In Puerto Rico, the neoprene-nylon material will be cut to the shape and size of the component parts of the knee brace. The completed knee brace will be packaged and shipped to the U.S. for import, distribution, and sale.

ISSUE:

(1) What is the tariff classification of the neoprene-nylon material?

(2) What is the tariff classification of the knee brace manufactured out of the neoprene-nylon material?

(3) Whether the neoprene knee brace will be eligible for duty-free treatment under Note 2(b).

LAW AND ANALYSIS:

I. Classification of the neoprene-nylon material

The classification of goods under the HTSUS 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. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRI's may be applied, taken in order.

The two headings at issue-in the classification of the neoprene-nylon material are: .heading 4008, HTSUS, which provides for "[p]lates, sheets, strip, rods and profile shapes, of vulcanized rubber other than hard rubber" and heading 5906, HTSUS, which provides for "[r]ubberized textile fabrics, other than those of heading 5902."

The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) to Chapter 40, state the following, on page 580, regarding rubber and textile combinations:

The classification of rubber and textile combinations is essentially governed by Note 1 (ij) to Section XI, Note 3 to Chapter 56 and Note 4 to Chapter 59... The following products are covered by this Chapter:

(d) Plates, sheets and strip of cellular rubber, combined with textile fabrics (as defined in Note 1 to Chapter 59), felt or nonwovens, where the textile is present merely for reinforcing purposes.

The ENs to heading 4008 also state that this heading excludes rubberized textile fabrics as defined in Legal Note 4 to Chapter 59 (heading 59.86). According to Legal Note 4 to Chapter 59, HTSUS, for the purposes of heading 5906, HTSUS, the expression "rubberized textile fabric" means:

(d) Plates, sheets or strip, of cellular rubber, combined with textile fabric, where the textile fabric is more than mere reinforcement, other than textile products of heading 5811.

It is our position that the nylon fabric laminated to the neoprene rubber is more than mere reinforcement. The textile fabric provides a protective cover for the neoprene and gives it a different visual appearance and tactile quality. In addition, when the material is made into the knee brace, the nylon fabric helps to wick away perspiration and provides elasticity to the knee brace. Therefore, the neoprene-nylon material is considered a "rubberized textile fabric" and it is classified in heading 5906, HTSUS.

We analyzed a small sample from the submitted disk of material and found that it weighed 917 grams/meter squared. The analyzed sample is more than 70 percent by weight of rubber and is classifiable in subheading 5906.91.20, HTSUS, which provides for "[r]ubberized textile fabrics, other than those of heading 5902: [o]ther: [k]nitted or crocheted: [o]f man-made fibers: [o]ver 70 percent by weight of rubber or plastics."

II. Classification of the neoprene-nylon knee brace

The knee brace is potentially classifiable in three HTSUS headings. The headings at issue are:

Heading 6212, HTSUS Brassieres, girdles, corsets, braces, suspenders, garters and similar articles and parts thereof, whether or not knitted or crocheted.

Heading 6307, HTSUS Other made up articles of textiles, including dress patterns.

Heading 9021, HTSUS Orthopedic appliances, including crutches, surgical belts and trusses; splints and other fracture appliances;. . . and other appliances which are worn or carried, or implanted in the body, to compensate for a defect or disability...

It is your position that the knee brace is classifiable in heading 9021, HTSUS, by virtue of Legal Note l(b) to Chapter 90, HTSUS, which provides the following:

This Chapter does not cover:

(b) Supporting belts or other support articles of textile material, whose intended effect on the organ to be supported or held derives solely from their elasticity ( for example, maternity belts, thoracic support bandages, abdominal support bandages, support for joints or muscles) (Section

You contend that the intended effect of the brace on the knee is derived from the neoprene rubber, which keeps the muscles pliable during activity by retaining body heat. Therefore, the effect on the knee is not related solely to elasticity.

In Headquarters Ruling Letter (HRL) 952568 dated January 28, 1993, we had occasion to classify a neoprene knee brace (style 6906) that was substantially similar to the subject merchandise. In that ruling, we determined that the knee brace was not classifiable in heading 9021, HTSUS, as the neoprene of which the knee brace was constructed provided support to the wearer because of its elasticity and the ENs to heading 9021 specifically stated that textile support articles akin to the knee brace were not provided for in that heading.

Moreover, we also held that the knee brace was not classifiable in heading 6212, HTSUS, based on criteria used to determine what type of support articles are provided for in heading 6212, HTSUS. See HRL 952390 dated December 16, 1992, which discusses the criteria for determining what is classifiable as "belts" in heading 6212, HTSUS.

Finally, we concluded that the neoprene knee brace was classifiable in heading 6307, HTSUS. The ENs to 6307 provide the following:

This heading covers made up articles of any textile material which are not included more specifically in other headings of Section XI or elsewhere in the Nomenclature.

It includes, in particular:

(27) Support articles of the kind referred to in Note l(b) to Chapter 90 for joints (e.g., knees, ankles, elbows or wrists) or muscles (e.g., thigh muscles), other than those falling in other headings of Section XI.

The knee brace was a made up textile article that was not more specifically provided for elsewhere in the HTSUS and the above EN specifically provided for items such as the neoprene knee brace. Therefore, it was classifiable in heading 6307, HTSUS. As the knee brace at issue here is of the same construction as the brace in HRL 952568, we see no reason to deviate from this precedent. Therefore, the subject merchandise is also classifiable under subheading 6307.90.9986, HTSUS.

III. Eligibility of neoprene knee brace for duty-free treatment under Note 2(b)

Section 222 of the Customs and Trade Act of 1990 (Public Law 101-382) amended U.S. Note 2, subchapter II, Chapter 98, HTSUS, to provide for the duty-free treatment of articles (other than textile and apparel articles, and petroleum and petroleum products) which are assembled or processed in a Caribbean Basin Economic Recovery Act (CBERA) 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.

Note 2(b) specifically 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 stated in this paragraph, the term "beneficiary country" means a country listed in General Note 3(c)(v)(A).

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.

Pursuant to General Note 3(c)(v)(A), HTSUS, the Dominican Republic is a designated BC for CBERA purposes. 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 products derived from petroleum. The articles which are the subject of this case are not within any of these categories (see T.D. 91-88 dated October 18, 1991) and, therefore, are eligible for duty-free treatment under this provision provided that all of the other requirements are satisfied.

To qualify for Note 2(b) duty-free treatment, an eligible article must be assembled or processed in a BC entirely of components or ingredients that are a "product of" the U.S. Components or ingredients that are imported into the U.S. may become "products of" the U.S. if they undergo a process of manufacture in the U.S. which results in a substantial transformation. See sections 10.12(e) and 10.14(b), Customs Regulations (19 CFR 10.12(e) and 10.14(b)). General Note 2, HTSUS, states that the term "customs territory of the U.S.", as used in the tariff schedule, includes Puerto Rico. Therefore, consistent with sections 10.12(e) and 10.14(b), described above, components or ingredients that are imported into Puerto Rico may become "products of" the U.S. for purposes of Note 2(b) treatment if they undergo a process of manufacture in Puerto Rico which results in a substantial transformation.

At issue is whether the neoprene-nylon material imported into Puerto Rico becomes a product or manufacture of the U.S. by being substantially transformed there. The courts have held that a "substantial transformation" occurs "when an article emerges from a manufacturing process with a name, character, or use which differs from those of the original material subjected to the process." See The Torrington Co. v. United States, 764 F.2d 1563 (Fed. Cir. 1985).

Because the article in question consists, in large part, of textile material, section 12. 130, Customs Regulations ( 19 CFR 12.130), is applicable. Section 12.130, Customs Regulations (19 CFR 12.130), sets forth criteria for determining whether a textile or textile product has been substantially transformed. Pursuant to the regulations, a textile or 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. See 19 CFR 12.130(b). According to section 12.130(d)(2), the following will be considered in determining whether merchandise has been subjected to substantial manufacturing or processing operations: (1) the physical change in the material or article; (2) the time involved; (3) the complexity of the operations; (4) the level or degree of skill and/or technology required; and (5) the value added to the article in each country or territory. Any one or a combination of these factors may be determinative and other factors may also be considered. 19 CFR 12.130(d).

Examples of processes which generally will result in a substantial transformation and those which usually will not are set forth in 19 CFR 12,130(e). According to 19 CFR 12.130(e)(iv), the cutting of fabric into parts and the assembly of those parts into the completed article in a foreign country or insular possession will usually result in a substantial transformation of the fabric so as to confer country of origin.

We have consistently held that the cutting of fabric into specific or defined shapes suitable for use as components in an assembly operation is sufficient to substantially transform the fabric into a new and different article of commerce. See HRL 067823 dated June 2, 1982; HRL 555189 dated June 12, 1989; and C.S.D. 89-27(4) (HRL 554929 dated November 3, 1988). With regard to the facts in this case, we find that the foreign neoprene-nylon material which is cut in"Puerto Rico into component parts suitable for use in the production of a knee brace, results in a substantial transformation of the foreign material into a new and different article of commerce.

In regard to the operations performed in the Dominican Republic, we believe that sewing the knee brace components together to produce the finished knee brace is encompassed by the operations specified in Note 2(b). Therefore, if in fact, all of the materials, including the thread used to sew the knee brace components together, are of 100 percent U.S.-origin and the merchandise is shipped directly to the U.S. from the Dominican Republic without entering into the commerce of any foreign country other than a BC, and the applicable documentation requirements are satisfied, the neoprene knee brace will be entitled to duty-free treatment under this provision.

HOLDING:

The neoprene-nylon materials are classified in subheading 5906.91.20, HTSUS, which provides for "[r]ubberized textile fabrics, other than those of heading 5902: [o]ther: [k]nitted or crocheted: [o]f man-made fibers: [o]ver 70 percent by weight of rubber or plastics."

The knee brace is classified in subheading 6307.90.9986, HTSUS, which provides for "[o]ther made up articles, including dress patterns: [o]ther: [o]ther: [o]ther: [o]ther: [o]ther: [o]ther." The rate of duty is 7 percent ad valorem.

Due to the changeable nature of the statistical annotation (the ninth and tenth digits of the classification) and the restraint (quota/visa) categories, 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 neoprene knee brace which is made in the Dominican Republic entirely of U.S.-origin materials may enter into the U.S. duty-free pursuant to Note 2(b), provided the documentation requirements set forth in Customs telex #9264071 dated September 28, 1990 (copy enclosed) are satisfied.

Sincerely,

John Durant, Director
Commercial Rulings Division


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