United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 1998 HQ Rulings > HQ 546681 - HQ 560114 > HQ 559869

Previous Ruling Next Ruling
HQ 559869

---

November 18, 1997

CLA-2 RR:C:SM 559869 DEC

CATEGORY: CLASSIFICATION MARKING

TARIFF NO.: 9802.00.90/9802.00.80

Ms. Karen Soukiasian
David Dobbs Enterprises, Incorporated
4600 U.S. 1 North
St. Augustine, Florida 32095

RE: Country of origin; 19 CFR 102.21; HRL 959203; baseball cap; golf cap; tennis visor; marking; 12.130(c); HRL 558708; 19 U.S.C. 1304; HRL 559760; HRL 559627; HRL 959035; 19 CFR 134.35(b)

Dear Ms. Soukiasian:

This is in response to your letter dated March 13, 1996, requesting a ruling with respect to the country of origin and marking requirements of baseball/golf caps and tennis visors. In addition, you have asked for a ruling with respect to the eligibility of the baseball/golf caps and tennis visors for a partial duty exemption under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), or duty free entry pursuant to subheading 9802.00.90, HTSUS. You submitted additional information in letters dated October 2, 1996, and January 28, 1997.

FACTS:

You state that your company is contemplating the manufacture of baseball/golf caps and tennis visors. The production of the baseball/golf caps involves the production of the visor portion of the caps and the crown portion. The tennis visors do not include a crown. Each of the various production scenarios are discussed below. In your submission of January 28, 1997, you provided tables indicating the origin of the materials and the country in which the various operations are to be performed.

Scenario 1: BASEBALL CAPS/GOLF CAPS (5 panel)

Processes to be Performed in the U.S.

Material for the crown and visor in scenario 1 will be U.S. origin and the material will be cut to shape in the U.S. In addition, the crown will be silkscreened or embroidered in the U.S.

Processes to be performed in Mexico

1. Fuse buckram at 350 degrees for 90 seconds 2. Seam backs
3. Tape back
4. Bind back
5. Set panel (fronts, backs, sides sewn together) 6. Tape cover, tape inside crown
7. For golf caps, mesh stays
8. Set visor* to crown
9. Attach snap tab (sew)
10. Attach, braid, buckles, leather strap (golf cap) 11. Punch eyelets (baseball cap)
12. Assemble button
13. Attach button
14. Block (steam)
15. Pack

*processes performed in Mexico to produce the visor:

A. Sew down
B. Stuff visor (put in board)
C. Stitch visor
D. Pink visor

Scenario 2: BASEBALL CAPS/GOLF CAPS (5 panel)

Material for the crown and visor in scenario 2 will be U.S. origin and the material will be cut to shape in the U.S. In addition, the crown will be silkscreened or embroidered in the U.S. Under scenario 2, the production steps 1-15 listed above will be performed in the U.S. The production processes with respect to the visor listed as A-D will be performed in Mexico.

Scenario 3: BASEBALL CAPS/GOLF CAPS (5 panel)

Material for the crown and visor in scenario 3 will be Mexican origin and the material will be cut to shape in Mexico. In addition, the crown will be silkscreened or embroidered in Mexico. Under scenario 3, the production steps 1-15 listed above will be performed in the U.S. The production processes with respect to the visor listed as A-D will be performed in Mexico.

Scenario 4: BASEBALL CAPS/GOLF CAPS (5 panel)

Material for the crown in scenario 4 will be Mexican origin and the material will be cut to shape in Mexico. In addition, the crown will be silkscreened or embroidered in Mexico. Material for the visor portion will be U.S.-origin and the material will be cut to shape in the U.S. Under scenario 4, the production steps 1-15 listed above will be performed in Mexico. The production processes with respect to the visor listed as A-D will be performed in the U.S.

Scenario 1: BASEBALL CAPS/GOLF CAPS (6 panel)

Processes to be Performed in the U.S.

Material for the crown and visor in scenario 1 will be U.S. origin and the material will be cut to shape in the U.S. In addition, the crown will be silkscreened or embroidered in the U.S.

Processes to be performed in Mexico

1. Fuse buckram at 350 degrees for 90 seconds 2. Seam backs
3. Tape back
4. Bind back
5. Seam front
6. Punch 2 eyelets (front)
7. Attach braid, buckle, leather strap (golf cap) 8. Punch eyelets
9. Seam buster
10. Tape front
11. Set panels
12. Tape cover, tape inside crown

13. For golf caps, mesh stays
14. Set visor* to crown
15. Attach snap tab (sew)
16. Assemble button
17. Attach button
18. Block (steam)
19. Pack

*processes performed in Mexico to produce the visor:

A. Sew down
B. Stuff visor (put in board)
C. Stitch visor
D. Pink visor
E. Sew down
F. Stuff visor (put in board)
G. Stitch visor
H. Pink visor

Scenario 2: BASEBALL CAPS/GOLF CAPS (6 panel)

Material for the crown and visor in scenario 2 will be U.S. origin and the material will be cut to shape in the U.S. In addition, the crown will be silkscreened or embroidered in the U.S. Under scenario 2, the production steps 1-19 listed above will be performed in the U.S. The production processes with respect to the visor listed as A-H will be performed in Mexico.

Scenario 3: BASEBALL CAPS/GOLF CAPS (6 panel)

Material for the crown and visor in scenario 3 will be Mexican origin and the material will be cut to shape in Mexico. In addition, the crown will be silkscreened or embroidered in Mexico. Under scenario 3, the production steps 1-19 listed above will be performed in the U.S. The production processes with respect to the visor listed as A-H will be performed in Mexico.

Scenario 4: BASEBALL CAPS/GOLF CAPS (6 panel)

Material for the crown in scenario 4 will be Mexican origin and the material will be cut to shape in Mexico. In addition, the crown will be silkscreened or embroidered in Mexico. Material for the visor portion will be U.S.-origin and the material will be cut to shape in the U.S. Under scenario 4, the
production steps 1-19 listed above will be performed in Mexico. The production processes with respect to the visor listed as A-H will be performed in the U.S.

Scenario 1: TENNIS VISORS

Processes to be Performed in the U.S.

Material for the tennis visor in scenario 1 will be U.S. origin and the material will be cut to shape in the U.S. In addition, the visor will be silkscreened or embroidered in the U.S.

Processes to be performed in Mexico

1. Fuse buckram
2. Sew down
3. Close visor
4. Pink visor
5. Attach visor to twill and terry sweatband 6. Bind tops
7. Insert plastic
8. Bind ends, same as bind tops
9. Bar tack ends
10. Block (steam)
11. Pack

Scenario 2: TENNIS VISORS

Material for the tennis visors in scenario 2 will be U.S. origin and the material will be cut to shape in the U.S. In addition, the tennis visor will be silkscreened or embroidered in the U.S. Under scenario 2, the production steps 1-9 listed above will be performed in Mexico. The completed tennis visors will be returned to the U.S. where they will be block-steamed and packed (step 10-11).

Scenario 3: TENNIS VISORS

Material for the tennis visors in scenario 3 will be Mexican origin and the material will be cut to shape in Mexico. In addition, the tennis visor will be silkscreened or embroidered in Mexico. Under scenario 3, the production steps 1-11 listed above will be performed in the U.S.

You request that we address the origin, country of origin marking, and Chapter 98, HTSUS, issues for each of the four production scenarios for the 5 and 6-panel baseball/golf caps as well as for the three production scenarios for the tennis visors.

ISSUES:

1. What is the country of origin of the baseball/golf caps and tennis visors subjected to the production scenarios described above?

2. What are the country of origin marking requirements applicable to the baseball/golf caps and tennis visors?

3. Does the processing described above with respect to the production of baseball/golf caps and tennis visors qualify these articles for a partial or complete duty exemption pursuant to subheading 9802.00.80 or 9802.00.90, HTSUS?

LAW AND ANALYSIS:

Baseball/Golf Caps - Country of Origin and Marking

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 (codified at 19 CFR 102.21), in the Federal Register, implementing Section 334 (60 FR 46188).

Thus, effective July 1, 1996, the country of origin of a textile or apparel product shall be determined by sequential application of the general rules set forth in paragraphs (c)(1) through (5) of Section 102.21.

Paragraph (c)(1) states that "The country of origin of a textile or apparel product is the single country, territory, or insular possession in which the good was wholly obtained or produced." As the subject merchandise is not wholly obtained or produced in a single country, territory or insular possession, paragraph (c)(1) of Section 102.21 is inapplicable.

Paragraph (c)(2) states that "Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) of this section, the country of origin of the good is the single country, territory, or insular possession in which each foreign material incorporated in that good underwent an applicable change in tariff classification, and/or met any other requirement, specified for the good in paragraph (e) of this section."

While the procedures vary slightly between the production scenarios for the five and six-panel baseball/golf cap designs (see above), they will be discussed together since the different processes will not result in a different origin, marking, or duty conclusion.

For Scenario 1, the crown and visor portion of the baseball caps/golf caps will be cut to shape from U.S. origin material and the crown will be silkscreened or embroidered in the U.S. The assembly operations of the crown and visor as well as the assembly operations of the completed caps are performed in Mexico.

The completed baseball/golf caps are classifiable in subheading 6505.90, HTSUS. As such, section 102.21 is applicable for determining their origin. Paragraph (e) of section 102.21 states that "The following rules shall apply for purposes of determining the country of origin of a textile or apparel product under paragraph (c)(2) of this section":

6505.90 (1) If the good consists of two or more components, a change to subheading 6505.90 from any other heading, provided that the change is the result of the good being wholly assembled in a single country, territory, or insular possession....

The baseball/golf caps described in Scenario 1 are completely assembled in Mexico. Since the fabric for the visor and the embroidered fabric for the crown are not classified under subheading 6505.90 and since the caps are wholly assembled in Mexico, section 102.21(c)(2) is applicable to this scenario and the country of origin is Mexico. See Headquarters Ruling Letter (HRL) 959035, dated April 5, 1996.

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the United States the name of the country of origin of the article. Part 134 of the Customs Regulations implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Since the country of origin has been determined to be Mexico, the baseball/golf caps produced pursuant to scenario 1 must be marked with Mexico as the country of origin.

Under scenario 2, the visor portion of the baseball/golf caps are made from fabric that is U.S. origin and cut to shape in the U.S. The visor portion of the caps is assembled in Mexico and then shipped to the U.S. where it will be assembled to the crown to create the final cap. The visor portion of the caps when imported into the U.S. from Mexico will be classified under heading 6507, HTSUS. Classified as such, the visor portions are not considered to be a textile or apparel product covered by section 102.21. Therefore, pursuant to the North American Free Trade Agreement (NAFTA) Marking Rules (19 CFR part 102), the following tariff shift rule set forth in section 102.20 is applicable to goods classified under heading 6507:

6507 A change to heading 6507 from any other heading.

Since the fabric will be classified under a different heading when imported into Mexico, the origin of the visor portion when it is returned to the U.S. will be Mexico. After the visor portion of the caps are imported into the U.S., they are incorporated into a finished baseball/golf cap. As stated previously, the completed baseball/golf caps are classifiable in subheading 6505.90, HTSUS, and the country of origin determination therefore is governed by section 102.21 as is the country of origin marking for purposes of 19 U.S.C. 1304. See Headquarter Ruling Letter (HRL) 559760, dated July 19, 1996 and HRL 559627, dated June 27, 1996. Paragraph (e) of section 102.21 states that "The following rules shall apply for purposes of determining the country of origin of a textile or apparel product under paragraph (c)(2) of this section":

6505.90 (1) If the good consists of two or more components, a change to subheading 6505.90 from any other heading, provided that the change is the result of the good being wholly assembled in a single country, territory, or insular possession....

Under this scenario, the imported visor portion of the caps fail to meet the second requirement of the tariff shift rule because the finished baseball/golf caps are not wholly assembled in single country. The visors are assembled in Mexico while the crown is assembled in the U.S.

Since the baseball/golf caps described in scenario 2 are not wholly assembled in a single country, territory or insular possession, 19 CFR 102.21(c)(2) is inapplicable to those scenarios.

Paragraph (c)(3) states the following:

Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) or (2) of this section:

(i) If the good was knit to shape, the country of origin of the good is the single country, territory, or insular possession in which the good was knit; or

(ii) Except for goods of heading 5609,
5807, 5811, 6213, 6214, 6301 through 6306, and 6308, and subheadings 6209.20.5040, 6307.10,

6307.90, and 9404.90, if the good was not knit to shape and the good was wholly assembled in a single country, territory, or insular possession, the country of origin of the good is the country, territory, or insular possession in which the good was wholly assembled.

As the subject merchandise in scenario 2 is neither knit to shape nor wholly assembled in one country, paragraph (c)(3) is not applicable. Section 102.21(c)(4) states, "Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1), (2) or (3) of this section, the country of origin of the good is the single country, territory or insular possession in which the most important assembly or manufacturing process occurred."

In the opinion of this office, the most important assembly or manufacturing process is where the crown of the baseball/golf caps will be sewn together. Therefore, the country of origin of the baseball/golf caps in scenario 2 will be the U.S. Since the importer will process the visor portion of the caps in a manner that results in the good becoming a product of the U.S. under section 102.21 and since 102.21 serves the same purposes as the NAFTA Marking Rules (see 19 CFR 102.0), we find that pursuant to 19 CFR 134.35(b), neither the imported visor portion of the caps nor its container must be marked to indicate that the visor is a product of Mexico when imported into the U.S.

If a phrase such as "Made in the U.S.A." is proposed to be marked on the finished articles, we advise you to contact the Federal Trade Commission (FTC), Division of Enforcement, 6th & Pennsylvania Avenue, NW, Washington D.C. 20508, before attempting to mark the finished products in that fashion, since use of the phrase "Made in U.S.A." is under the FTC's jurisdiction. The Customs Service does not have the authority to approve such a marking.

For scenario 3, Mexican-origin material for the crown is cut to shape and embroidered in Mexico. The visor portion of the caps under this scenario is wholly produced in Mexico. Therefore, these articles when imported into the U.S. are of Mexican origin pursuant to section 102.21(c)(1). However, neither these articles nor their containers are required to be marked to indicate that the articles are products of Mexico (see 19 CFR 134.35(b)) since, for the same reasons discussed under scenario 2, both the imported fabric and the visors will be processed by the importer so that they will become articles of the U.S. pursuant to the rules set forth in section 102.21(c)(4).

Under scenario 4, the visor portion of the cap will be wholly assembled in the U.S. and then exported to Mexico where it will be attached to the Mexican-origin crown to create the finished cap. Based on the application of the 19 CFR Part 102.21 rules as discussed previously and pursuant to 19 CFR 102.21(c)(4), the U.S.-made visor will become a product of Mexico when it is incorporated into the finished baseball cap. Upon importation into the U.S., the caps will be required to be marked as a product of Mexico.

Tennis Visors - Country of Origin and Marking

Under production scenarios 1 and 2 for the tennis visors, material of U.S. origin is cut to shape and embroidered in the U.S. prior to being sent to Mexico where the tennis visors will be wholly assembled. In scenario 2, the tennis visors are steamed and packed in the U.S. whereas in scenario 1, these processes, which have no bearing on the origin of the finished tennis visors, are performed in Mexico. The origin of the imported tennis visors, which are also classified under subheading 6505.90, HTSUS, will be determined pursuant to the rules set forth in 19 CFR 102.21(c).

Since the tennis visors are not wholly obtained or produced in a single country, section 102.21(c)(1) is inapplicable. Section 102.21(c)(2) instructs us to apply the applicable tariff shift rule to the production scenarios at issue. As stated previously, the completed tennis visors are classifiable in subheading 6505.90, HTSUS. The applicable tariff shift rule states the following:

6505.90 (1) If the good consists of two or more components, a change to subheading 6505.90 from any other heading, provided that the change is the result of the good being wholly assembled in a single country, territory, or insular possession....

The tennis visors described in scenarios 1 and 2 are wholly assembled in Mexico. Since the embroidered fabric for the tennis visors is not classified under subheading 6505.90, HTSUS, and since the tennis visors are wholly assembled in Mexico, section 102.21(c)(2) is applicable to scenarios 1 and 2 and the country of origin is Mexico. See HRL 959035, dated April 5, 1996. When the tennis visors are imported into the U.S., they are required to be marked as a product of Mexico.

Under production scenario 3 for the tennis visors, material of Mexican origin is cut to shape and embroidered in Mexico prior to being sent to the U.S. for assembly. To determine the country of origin of the finished tennis visors, we must apply the 19 CFR 102.21(c) rules.

The completed tennis visors are classifiable in subheading 6505.90, HTSUS. Since the imported embroidered fabric for the tennis visors is not classified under subheading 6505.90, HTSUS, and since the tennis visors are wholly assembled in the U.S., section 102.21(c)(2) is applicable to this scenario and the country of origin is the U.S. See Headquarters Ruling Letter (HRL) 959035, dated April 5, 1996. Since the country of origin has been determined to be the U.S., the tennis visors produced pursuant to scenario 3 are not subject to the country of origin marking requirements. Pursuant to 19 CFR 134.35(b), neither the imported fabric nor its containers must be marked if the processing of the visors in the U.S. is performed by the importer or on its behalf.

You did not include processing information with respect to a fourth variation of the production of tennis visors.

Subheading 9802.00.80 & 9802.00.90, HTSUS

Annex 300-B of the North American Free Trade Agreement ("NAFTA") is applicable to textile and apparel goods. Appendix 2.4 of Annex 300-B provides that:

[o]n January 1, 1994, the U.S. shall eliminate customs duties on textiles and apparel goods that are assembled in Mexico from fabrics wholly formed and cut in the United
States and exported from and reimported into the United States under:

(a) U.S. tariff item 9802.00.80.10; or

(b) Chapter 61, 62, or 63 if, after such assembly, those goods that would have qualified for treatment under 9802.00.80.10 have been subject to bleaching, garment dyeing, stone-washing, acid-washing or perma-pressing.

Thereafter, the U.S. shall not adopt or maintain any customs duty on textile or apparel goods of Mexico that satisfy the requirements of subparagraph (a) or (b) or the requirements of any successor provision to U.S. tariff item 9802.00.80.10.

Consequently, subheading 9802.00.90, HTSUS, was created to provide for the duty-free entry of:

Textile and apparel goods, assembled in Mexico in which all fabric components were wholly formed and cut in the United States, provided that such fabric components, in whole or in part (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; provided that goods classifiable in chapters 61, 62 or 63 may have been subject to bleaching, garment dyeing, stone-washing, acid-washing or perma- pressing after assembly as provided for herein.

"Textile and apparel goods" eligible for duty-free treatment under subheading 9802.00.90, HTSUS, are listed in Appendix 1.1 of Annex 300-B of the NAFTA.

Since subheading 9802.00.90, HTSUS, was intended as a successor provision to subheading 9802.00.80, HTSUS, with respect to certain textile and apparel goods assembled in Mexico, the regulations under subheading 9802.00.80, HTSUS, may be instructive in determining whether a good is eligible for the beneficial duty treatment accorded by subheading 9802.00.90, HTSUS. As distinguished from subheading 9802.00.80, HTSUS, however, it is noted that the new statute requires only that all fabric components be formed and cut in the U.S., and that only such components, in whole or in part, must satisfy the three conditions set forth in (a) - (c) of the statute. HRL 558708, dated June 14, 1995.

Section 10.16(a), Customs Regulations (19 CFR 10.16(a)), provides that assembly operations for purposes of subheading 9802.00.80 may encompass any method used to join together solid components such as sewing, welding, soldering, riveting, force fitting, gluing, or the use of fasteners and may be accompanied by operations that are incidental to the assembly as provided in section 10.16(b).

In scenario 1 for both the baseball/golf caps as well as for the tennis visors, all of the fabric components are U.S. origin and the components are cut to shape in the U.S. The operations of fusing the buckram and the various sewing operations used to produce the baseball/golf caps and the tennis visors in Mexico as described in scenario 1 are acceptable assembly operations. Accordingly, the baseball/golf caps and the tennis visors that are produced in the manner described in scenario 1 may enter duty-free pursuant to subheading 9802.00.90, HTSUS.

The visor portion of the baseball/golf caps as described in scenario 2 will not qualify for duty-free entry under subheading 9802.00.90, HTSUS, when imported into the U.S. Upon importation into the U.S., the visor portion of the baseball/golf caps will be classified under heading 6507, HTSUS, and therefore will not be considered a "textile and apparel good" eligible for duty-free treatment under subheading 9802.00.90, HTSUS. See Appendix 1.1 of Annex 300-B of the NAFTA. However, since the operations performed in Mexico (sewing, stuffing, and stitching) are assembly operations, the imported visor portion of the baseball/golf caps will be eligible for a duty allowance for the U.S.-origin materials pursuant to subheading 9802.00.80, HTSUS, provided the documentary requirements of section 10.24, Customs Regulations (19 CFR 10.24) are met. Assuming the fabric components are wholly formed and cut in the U.S., the tennis visors under scenario 2, however, will qualify to enter under subheading 9802.00.90, HTSUS, since the imported visors are classified under subheading 6505.90, HTSUS, which is listed as a qualifying "textile and apparel good" pursuant to the NAFTA and the operations to be performed in Mexico are qualifying assembly operations.

With respect to the production of the baseball/golf cap crowns in scenario 3, neither subheading 9802.00.90, HTSUS, nor subheading 9802.00.80, HTSUS, is applicable because no assembly operation of the crown occurs in Mexico. Neither of the Chapter 98 subheadings is available to the visor portion of the baseball/golf caps under scenario 3 because the visor is assembled abroad from Mexican-origin components. Similarly, production scenario 3 of the tennis visors does not invoke the application of either of the Chapter 98 subheadings since Mexican-origin fabric is used and the assembly operations occur after importation into the U.S.

The operations that will be performed as described in scenario 4 with respect to the baseball/golf caps do not invoke subheading 9802.00.90, HTSUS, because the finished baseball/golf caps that will be imported into the U.S. will not be produced from fabric components all of which are wholly formed and cut in the U.S. However, the U.S.-made visor portion that is sent to Mexico will undergo qualifying assembly operations in Mexico. Accordingly, the imported baseball/golf caps will be eligible for a duty allowance pursuant to subheading 9802.00.80, HTSUS, for the U.S.-origin components used to produce the visor portion of the baseball/golf caps upon compliance with the documentary requirements of 19 CFR 10.24.

HOLDING:

The country of origin, the country of origin marking requirements, and the eligibility for a partial duty allowance pursuant to either subheading 9802.00.80, HTSUS, or subheading 9802.00.90, HTSUS, for the four production scenarios of the baseball/golf caps and the three production scenarios for the tennis visors are set forth above.

A copy of this ruling should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.

Sincerely,

John Durant
Director
Commercial Rulings Division

Previous Ruling Next Ruling

See also:

• Tariff No.: 6209.20.50 - Babies' garments & clothing acc. nesoi, of cotton, incl. sunsuits & sim app, sets & parts of sets, & diapers, not knitted or crocheted
• Tariff No.: 9802.00.80 - U.S. articles assembled abroad, which have not lost their physical identity or have not advanced in value or improved in condition abroad
• Tariff No.: 9802.00.90 - Textile and apparel goods, assembled in Mexico in which all fabric components were wholly formed and cut in the United States, etc.