NY B80323 - The eligibility of certain leather processed in the Dominican Republic for duty-free treatment under U.S Note 2(b), subchapter II, Chapter 98, HTSUS - United States International Trade Commision Rulings

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NY B80323

December 26, 1996

CLA-2-98:RR:NC:WA:353 B80323

CATEGORY: CLASSIFICATION

Mr. Ronald W. Gerdes
Sandler, Travis & Rosenberg, P.A.
1341 G. Street, N.W.
Washington. D.C. 20005-3105

RE: The eligibility of certain leather processed in the Dominican Republic for duty-free treatment under U.S Note 2(b), subchapter II, Chapter 98, HTSUS

Dear Mr. Gerdes:

In your letter dated December 6, 1996, received in our office on December 11, 1996, you requested a tariff classification ruling on behalf of your client B' Leather, Inc.

You state that your client B' Leather intends to ship "wet blue hides" leather of U.S. origin to a tannery located in the a Free Trade Zone in Santiago, Dominican Republic where they will undergo a processing operation known as "retanning". Such processed hides will be used primarily in the manufacture of footwear as well as belts, bags and small leather goods. You describe this retanning process as follows:

-Sorting of hides by weight and quality
-Shaving on the flesh side to level the thickness to specifications -Shaved hides treated in drums with water and tanning agents under time and temperature controls to impart end use properties such as softness, shading, solidity and uniformity -Hides wrung-out on a "setting out" machine which will stretch the hides and smooth the grain while compressing the material and squeezing out excess moisture. -Hides sent to a vacuum drying machine to further reduce moisture content and then hung on an overhead conveyer system for drying. -Hides "finished" for a desired look by operations such as buffing, plating, staining, milling or similar finishing operations -Inspection of finished leathers

Law and Analysis

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) 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 has been designated as a BC for CBERA purposes.

We believe that the processing operations performed in the Dominican Republic are encompassed by the operations specified in Note 2(b).

Holding

Accordingly, the hides processed in the Dominican Republic will be eligible for duty-free treatment under Note 2(b), provided that this merchandise is imported directly into the United States without entering the commerce of any foreign country other than a BC, and the applicable documentation requirements are satisfied.

This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Martin Weiss at 212-466-5881.

Sincerely,

Roger J. Silvestri
Director

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