HQ 957572 - Request for reconsideration of HRL 956423 of December 20, 1994; NAFTA eligibility; Article 509 - United States International Trade Commision Rulings

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HQ 957572

April 3, 1995

CLA-2 CO:R:C:T 957572 CMR

CATEGORY: CLASSIFICATION

Mr. Mervyn Taub
Advanced Apparel Associates
51 Magazine Street
Bedford, New Hampshire 03110-4810

RE: Request for reconsideration of HRL 956423 of December 20, 1994; NAFTA eligibility; Article 509

Dear Mr. Taub:

This is in response to your request of January 25, 1995 for reconsideration of Headquarters Ruling Letter (HRL) 956423 issued to you on December 20, 1995. The basis for your request is a belief that the de minimis rule set out in General Note 12(f) of the Harmonized Tariff Schedule of the United States (HTSUS) is applicable to the men's jackets at issue in HRL 956423.

FACTS:

HRL 956423 was issued in response to your request for reconsideration of New York Ruling Letter (NYRL) 896271. According to NYRL 896271, the garment at issue is a man's jacket with an outer shell of 100 percent cotton denim fabric. The garment is classifiable in subheading 6201.92, HTSUS. When imported, the garment will consist of 98 percent United States fabric. The remaining two percent is a cotton flannel fabric of Taiwanese origin. Both the U.S. and Taiwanese fabrics will be cut and assembled into the garment in Mexico. The cotton flannel fabric is used as a lining for the yoke.

The garment was denied preferential tariff treatment under the North American Free Trade Agreement because the cotton flannel fabric failed to meet the requisite tariff shift. You believe that the de minimis rule of General Note 12(f) applies in this case and that as the Taiwanese fabric is only 2 percent of the garment, it should be ignored.

ISSUE:

Does the de minimis rule of General Note 12(f), HTSUS, apply to the garment at issue, and if so, was NAFTA preferential tariff treatment properly denied? -2-

LAW AND ANALYSIS:

As stated in HRL 956423:

The request for reconsideration hinges on the applicability of the de minimis rule contained in General Note 12(f), HTSUSA.

As that is the focus of your letter of January 25, 1995, Customs will not repeat our entire analysis from HRL 956423, but will concern ourselves only with the de minimis rule and why it is not applicable to the goods at issue in HRL 956423.

General Note 12(f), HTSUSA, provides, in pertinent part:

(i) Except as provided in subdivision (f)(iii) through (vi) . . .
(vi) A good provided for in chapters 50 through 63, inclusive, of this schedule that does not originate because certain fibers or yarns used in the production of the component of the good that determines the tariff classification of the good do not undergo an applicable change in tariff classification, provided for in subdivisions (r), (s) and (t) of this note, shall nonetheless be considered to originate if the total weight of all such fibers or yarns in that component is not more than 7 percent of the total weight of that component. (underscoring added)

In your letter, you state you agree with the following statements in HRL 956423:

Under the instant factual situation, the goods in question do not qualify for preferential tariff treatment under the NAFTA for two reasons--(1) the cotton fabric from Taiwan does not meet the requisite tariff shift rule contained in General Note 12(t)/62.3(B); and (2) since lining fabrics do not determine the tariff classification of the good, . . . .

You disagree with the remaining portion of the last sentence quoted above. That portion states: "the de minimis rule is not applicable to the subject goods."

You are correct that the de minimis rule does not apply to the lining. It applies to "the component of the good that determines the tariff classification" which in this case is the garment shell consisting of United States fabric.

The Taiwanese cotton flannel fabric must undergo the requisite tariff shift as it is non-originating material. As it -3-
is a lining fabric for a garment classified in heading 6201.92, HTSUS, it is required to meet Chapter rule 1 for Chapter 62, as stated in tariff shift rule General Note 12(t)/62.3(B). It fails to meet this tariff shift requirement.

As you correctly state in your letter, the de minimis rule does not apply to the lining fabric. Thus, the de minimis rule cannot be used to dismiss the tariff shift requirement for the lining fabric. The rule does not apply to the garment as a whole. Therefore even though the lining fabric is only 2 percent of the garment, because it is not the component that determines the classification we cannot apply the de minimis rule and the lining fabric must meet its tariff shift requirement.

HOLDING:

We affirm our decision in HRL 956423 of December 29, 1994 which affirmed Customs decision in NYRL 896271. The garment at issue therein failed to meet the requirements for preferential tariff treatment under the NAFTA.

Sincerely,

John Durant, Director
Commercial Rulings Division

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