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HQ 557726




January 6, 1994

CLA-2 CO:R:C:S 557726 WAS

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80

INDUSTRIAS YIDI LTDA.
Carrera 67B No. 48-07
Apartado Aereo 392
Barranquilla, Colombia

RE: Eligibility of zippers from Colombia for duty-free treatment under the Andean Trade Preference Act; 9802.00.80

Dear Sir:

This is in reference to your letter dated November 3, 1993, addressed to the Area Director of Customs, New York Seaport, concerning the eligibility of zippers from Colombia for duty-free treatment under the Andean Trade Preference Act (ATPA) (19 U.S.C. 3201 and 3203), or the applicability of the partial duty exemption under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to garments into which are incorporated zippers of Colombian origin.

FACTS:

You state that zippers will be produced in Colombia. These zippers will be sold to U.S. companies and used in the assembly abroad of garments. The finished garments will be imported into the U.S. You also state that the value of the zippers represents approximately 0.5% of the total cost of the garment.

ISSUE:

(1) Whether the zippers are entitled to duty-free treatment under the ATPA when imported into the U.S.

(2) Whether the assembled garments are entitled to a partial duty exemption under subheading 9802.00.80, HTSUS, when returned to the U.S. with Colombian zippers incorporated therein.

LAW AND ANALYSIS:

On December 4, 1991, the President of the United States signed into law the ATPA, which provides the basic authority for the President to grant duty-free treatment to imports of eligible articles from countries designated as beneficiaries according to criteria set forth in the Act. The ATPA was implemented by Presidential Proclamations 6455 and 6456, both dated July 2, 1992. In Presidential Proclamation 6455, the President designated Colombia as a beneficiary country for purposes of the ATPA and modified the HTSUS to incorporate the substance of the relevant provisions of the ATPA.

The relevant provisions of the ATPA provide that any article which is the growth, product, or manufacture of a beneficiary country (BC) will receive duty-free treatment provided that (1) the article is imported directly from a BC into the customs territory of the U.S.; and (2) the sum of (i) the cost or value of the materials produced in a BC or two or more BC's under this Act, or a BC under the Caribbean Basin Economic Recovery Act of 1983, as amended (CBERA) (19 U.S.C. 2701 et seq.), or two or more such countries, plus (ii) the direct costs of processing operations performed in a BC or countries (under this Act or the CBERA, as amended) is not less than 35% of the appraised value of such article at the time it is entered. The cost or value of any U.S. materials may be counted toward the 35% value-content requirement in an amount not to exceed 15% of the appraised value of the article at the time it is entered into the U.S. The ATPA is effective with respect to articles entered, or withdrawn from warehouse for consumption, on or after July 22, 1992.

Additionally, articles provided for in a provision for which a rate of duty of "Free" appears in the "Special" subcolumn followed by the symbol "J" or "J*" in parentheses are eligible articles for purposes of the ATPA pursuant to section 204 of that Act. You state that the subject merchandise which consists of zippers will be classified under subheading 9607.11.00 or 9607.19.00, HTSUS. Articles classified under these subheadings are deemed eligible for duty-free treatment under the ATPA, provided that all of the requirements are met. Provided that the zippers are imported separately into the U.S., they would receive duty-free treatment if they are considered to be "products of" Colombia, the 35% value-content requirement is satisfied, and the merchandise is "imported directly" into the customs territory of the U.S. from Colombia. However, if the article being imported into the U.S. is the assembled garment (with the zipper attached thereto), then the garment would have to be considered an eligible article under the ATPA in order for it to be entitled to duty-free treatment under this provision. Pursuant to 19 U.S.C. 3203(3)(b), textile and apparel articles which are subject to textile agreements are precluded from receiving duty-free treatment under the ATPA. Therefore, if the garment is classified under a HTSUS provision which includes a textile category number, it will not be eligible under the ATPA. Without a more complete description of the composition of the merchandise, we cannot make this determination.

Next, you state that you propose to sell these zippers to U.S. firms who will use them in the assembly of garments abroad. Once the garments are assembled, they will be imported into the U.S. and the importer will claim a partial duty exemption under subheading 9802.00.80, HTSUS, for the value of any U.S. components. You have asked us whether the presence of the Colombian-origin zippers in the assembled garments will affect the garments' eligibility for 9802.00.80, HTSUS, treatment.

HTSUS subheading 9802.00.80 provides a partial duty exemption for:

[a]rticles assembled abroad in whole or in part of fabricated components, the product of the United States, which (a) were exported in condition ready for assembly without further fabrication, (b) have not lost their physical identity in such articles by change in form, shape or otherwise, and (c) have not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process such as cleaning, lubrication, and painting . . .

All three requirements of HTSUS subheading 9802.00.80 must be satisfied before a component may receive a duty allowance. An article entered under this tariff provision is subject to duty upon the full value of the imported assembled article, less the cost or value of such U.S. components, upon compliance with the documentary requirements of section 10.24, Customs Regulations (19 CFR 10.24).

In the instant case, the zippers of Colombian-origin will be assembled with other garment components. Pursuant to the regulations, an allowance in duty may be made under subheading 9802.00.80, HTSUS, for fabricated components which are a "product of" the U.S. Since the zippers will be produced in Colombia, no allowance in duty may be made under this tariff provision for the cost or value of the zippers when the garments are returned to the U.S. However, duty allowances may be made for the cost or value of any U.S. fabricated components which meet the requirements of subheading 9802.00.80, HTSUS, assuming compliance with the documentation requirements of 19 CFR 10.24.

HOLDING:

The zippers which are produced in Colombia and imported separately into the U.S. will receive duty-free treatment under the ATPA, provided that they are considered "products of" Colombia, the 35% value-content and "imported directly" requirements are satisfied. With respect to garments assembled abroad with various components, including the Colombian-origin zippers, allowances in duty may be made under subheading 9802.00.80, HTSUS, for the cost of value of any U.S. fabricated components which meet the requirements of the statute, provided the documentation requirements of 19 CFR 10.24 are met. No allowance may be made for the cost or value of the Colombian-origin zipper.

Sincerely,

John Durant, Director

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