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HQ 958538




MARCH 12, 1996

CLA-2: RR:TC:TE 958538 PR

CATEGORY: CLASSIFICATION

TARIFF NO.: 6203.43.4010; 6203.43.4020

Michael Pipitone
John F. Kilroy Co., Inc.
John F. Kennedy International Airport
Building 80, Suite 227
Jamaica, N.Y. 11430-1718

RE: Country of Origin of Men's and Boys' Trousers for NAFTA, Marking, Duty, and Quota Purposes; Article 509

Dear Mr. Pipitone:

This is in reply to your letter of August 1, 1995, on behalf of Fiotex, in which you requested a ruling on the country of origin, tariff classification, and duty rate applicable to men's and boys' trousers. Our ruling on the matter follows.

FACTS:

The submitted sample is a man's woven polyester trousers. The trousers have a waistband with belt loops, a fly front with a zipper closure, two side seam pockets, and two rear pockets. It is stated that piece goods made in Taiwan are shipped to Mexico and there cut and sewn into 100 percent polyester finished trousers. The linings, buttons, zippers, and other accessories are produced in Mexico.

ISSUE:

The following issues have been presented and will be addressed.

(1) Under which tariff classification do the imported goods belong?

(2) What is the proper country of origin of the imported goods?
(3) Are the imported goods entitled to any preferential tariff treatment under the North American Free Trade Agreement (NAFTA)?
LAW AND ANALYSIS:

(1) Imported goods are classifiable according to the General Rules of Interpretation (GRI's) of the Harmonized Tariff Schedule of the United States (HTSUSA). GRI 1 provides that for legal purposes, classification shall be determined according to the terms of the headings in the tariff and according to any pertinent section or chapter notes. It appears that GRI 1 governs the classification of the subject merchandise.

Woven 100 percent polyester trousers which are not water resistant are classifiable under the provision for men's or boys' trousers, of synthetic fibers, in either subheading 6203.43.4010, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), if for men, or in subheading 6203.43.4020, if for boys.

(2) Section 12.130, Customs Regulations (19 CFR ? 12.130), sets out the criteria for determining the country of origin of products for textile restraint purposes. It states that where a good has been processed in more than one country, a textile or textile article shall be the product of the country where it last underwent a substantial transformation by means of substantial processing. Applying this rule to the fact situation presented, it is clear that Mexico is the country of origin for textile restraint (quota) purposes.

The principles of Section 12.130 are applicable when determining the country of origin of goods for most tariff purposes (but not NAFTA). Following those principles, absent an overriding statute such as NAFTA, Mexico is the country of origin for duty purposes

In order to be considered a product of a NAFTA party (an originating good) eligible for preferential duty treatment, a good must meet the requirements of General Note 12, HTSUSA. General Note 12(t)/62.16, requires that for polyester men's or boys' trousers to be a NAFTA originating good, all processing from the weaving of the fabric forward until the good becomes classifiable in subheading 6203.43, must be done in a NAFTA party. Under the given fact situation, the processing done in Mexico does not qualify the trousers as NAFTA originating goods. Section 102.20, Customs Regulations (19 CFR ? 102.20), contains the tariff shift rules used to determine whether a good should be marked as a product of a NAFTA country. The rule applicable to trousers classifiable under subheading 6203.43 is that they are the products of the country in which materials classifiable outside chapter 62, HTSUSA, are processed into goods classifiable under subheading 6203.43. In the instant fact situation, Mexico is the country of origin for marking purposes.

(3) Annex 300-B to the NAFTA deals with textile and apparel goods. Appendix 6.B.1(a) to Annex 300-B of the NAFTA provides for a preferential tariff treatment for nonoriginating goods of another Party (commonly called TPLs):

Each Party shall apply the rate of duty applicable to originating goods set out in its Schedule to Annex 302.2, and in accordance with Appendix 2.1, up to the annual quantities specified in Schedule 6.B.1, in SME, to apparel goods provided for in Chapters 61 and 62 that are both cut (or knit to shape) and sewn or otherwise assembled in the territory of a Party from fabric or yarn produced or obtained outside the free trade area and that meet other applicable conditions for preferred tariff treatment under this Agreement.

Accordingly, pursuant to Appendix 6.B.1(a) to Annex 300-B, it appears that under the given facts, the trousers are entitled to preferential rates of duty when imported into the United States, provided they do not exceed the annual quantity of such goods allowed under Schedule 6.B.1. Appendix 6 to Annex 300-B

HOLDING:

The trousers are classifiable under the provision for men's or boys' trousers, of synthetic fibers, in either subheading 6203.43.4010, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), if for men, or in subheading 6203.43.4020, if for boys. They are considered to be products of Mexico for duty, marking, and quota purposes. While not originating goods under the NAFTA, they are elible for duty-free entry into the United States under the NAFTA preferential rates of duty in accordance with the provisions of Appendix 6.B.1(a) to Annex 300-B if, when imported into the United States, they do not exceed the annual quantity of such goods allowed under Schedule 6.B.1. If not eligible for the preferential rate of duty, the goods would be dutiable at the rate of 29.3 percent ad valorem.

On December 8, 1994, the President signed into law the Uruguay Round Agreements Act. Section 334 of that Act provides new rules of origin for textiles and apparel entered, or withdrawn from warehouse, for consumption, on and after

July 1, 1996. On September 5, 1995, Customs published Section 102.21, Customs Regulations, in the Federal Register, implementing ? 334 (60 F.R. 46188). Section 334 generally provides, with certain exceptions, that the origin of textile goods will be the country in which they are assembled. Accordingly, based on the facts stated above, effective July 1, 1996, the country of origin of the shirts will be Mexico.

This ruling is issued pursuant to the provisions of Part 177 Customs Regulations (19 CFR Part 177) and sections 181.91 through 181.102, Customs Regulations (19 CFR 181.91 through 181.102). If the specific factual situation is not as described above, this ruling may not be valid. In such an event, it is recommended that a new ruling request be submitted.

Sincerely,

John Durant, Director

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