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HQ 962148




October 19, 1998

CLA-2 RR:CR:TE 962148 jb

Category: CLASSIFICATION

John B. Pellegrini, Esq.
Ross & Hardies
Park Avenue Tower
65 East 55th Street
New York, NY 10022-3219

RE: Request for Reconsideration; NY D80276; NAFTA: "otherwise assembled"

Dear Mr. Pellegrini:

This is in response to your letter, dated August 19, 1998, wherein you ask for reconsideration of New York Ruling Letter D80276, dated August 11, 1998, which addressed the tariff classification and status under the North American Free Trade Agreement (NAFTA) for certain string knit gloves imported from Mexico. Additionally, you ask that Customs explain its interpretation of the term "otherwise assembled" as it appears in General Note 12(t)/ 61.39.

FACTS:

The merchandise which is the subject of this request, referenced style 85-628, is a string knit glove with a hemmed ribbed knit cuff. The glove is made of acrylic chenille yarn produced in Taiwan, hemmed with man-made fiber thread of unknown origin and knit to shape in Mexico. You state that although NY D80276 stated that the fingers on the gloves were sewn closed, the gloves are actually knit directly to their final shape. We note however, based on careful examination of the sample forwarded to us by our National Import Specialist, that the fingers were correctly stated to be sewn closed. As you do not dispute the classification determination given for the knit gloves in NY D80276, this letter will address itself only to the issue of NAFTA eligibility for the subject merchandise.

ISSUE:

Do the subject knit gloves qualify for eligibility under the NAFTA?

LAW AND ANALYSIS:

North American Free Trade Agreement Eligibility

The subject merchandise undergoes processing operations in Mexico which is a country provided for under the North American Free Trade Agreement (NAFTA). General Note 12, HTSUSA, incorporates Article 401 of the North American Free Trade Agreement (NAFTA) into the HTSUSA. Note 12(a) provides, in pertinent part:

(ii) Goods that originate in the territory of a NAFTA party under subdivision (b) of this note and that qualify to be marked as goods of Mexico under the terms of the marking rules... and are entered under a subheading for which a rate of duty appears in the "Special" subcolumn followed by the symbol "MX" in parentheses, are eligible for such duty rate... . [Emphasis added]

Accordingly, the merchandise at issue will be eligible for the "Special" "MX" rate of duty provided it is a NAFTA "originating" good under General Note 12(b), Harmonized Tariff Schedule of the United States Annotated (HTSUSA), and it qualifies to be marked as a good of Mexico. Note 12(b) provides, in pertinent part:

For the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as "goods originating in the territory of a NAFTA party" only if--

(i) they are goods wholly obtained or produced entirely in the territory of Canada,
Mexico and/or the United States; or

(ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that--

(A) except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein, or

(B) the goods otherwise satisfy the applicable requirements of subdivisions (r), (s) and (t) where no change in tariff classification is required, and the goods satisfy all other requirements of this note; or

(iii) they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials; or

Accordingly, the subject merchandise qualifies for NAFTA treatment only if the provisions of General Note 12(b)(ii)(A) are met, that is, if the merchandise is transformed in the territory of Mexico so that the non-originating materials undergo a change in tariff classification as described in subdivision (t).

As the knit gloves are classifiable in subheading 6116.93.8800, HTSUSA, subdivision (t), Chapter 61, rule 39, applies. That note states:

A change to headings 6113 through 6117 from any other chapter, except from headings 5106 through 5113, 5204 through 5212, 5307 through 5308 or 5310 through 5311, chapter 54, or heading 5508 through 5516 or 6001 through 6002, provided that the good is both cut (or knit to shape) and sewn or otherwise assembled in the territory of one or more of the NAFTA parties.

The note above is actually comprised of two parts which must be satisfied in order for the merchandise to qualify for NAFTA treatment. First, the merchandise must meet the requisite tariff shift. In this case, the gloves which in essence consist of acrylic chenille yarn classifiable in heading 5606, HTSUS, are not in a heading precluded by the terms of the note and thus satisfy the tariff shift. Secondly however, the note requires that even if the tariff shift is satisfied, the good must also be "cut (or knit to shape) and sewn or otherwise assembled".

You state that the issue is whether the phrase "otherwise assembled" includes knitting gloves directly to their final condition, but for minor hemming. In your opinion the gloves are not cut and sewn but are "otherwise assembled" and that "otherwise assembled" must mean something different than cutting and sewing. In furtherance of this logic, you conclude that as the term "otherwise assembled" is not defined by the 102.21 rules of origin, we should look to the definition of "assembly" as "the joining or coming together of solids" (United States v. Baylis Co., 451 F. 2d 643 (1971) and conclude that the subject gloves are produced by joining two yarns, acrylic and spandex, and are therefore "assembled".

Your argument seems to indicate that the "or" which precedes "otherwise" in the note separates the requirement "both cut (or knit to shape) and sewn" from the phrase "otherwise assembled." We disagree with this interpretation. The phrase reads "...provided that the good is both cut (or knit to shape) and sewn or otherwise assembled..." Customs has interpreted this phrase to require either that the good be cut or that the good be knit to shape, as is the case with the subject merchandise, in addition to a sewing or assembly operation. It is our belief that the word "both" is controlling. To read the note as you have suggested would ignore the presence
and meaning of the word "both". Read in the context of this dual requirement, the first portion of this test concerns the shaping of the fabric or article (by cutting or knitting directly to shape), while the second portion requires an assembly of some type (whether by sewing, gluing, fusing, stapling, or otherwise). If the intention was to separate the requirement, as is your belief, the note simply could have been drafted to read "...provided that the good is cut and sewn or otherwise assembled (i.e., knit to shape)

You make reference to United States v. Baylis Co., wherein the court held that the process of joining pre-cut and pre-stenciled fabric with thread was an assembly process. First, we emphasize the fact that the meaning of "assembled" in Baylis was addressed in terms of its connection with eligibility for special duty treatment under item 807.00 of the Tariff Schedules of the United States, and not for purposes of origin pursuant to section 102.21. Secondly, it is important to note that in determining that the joining of fabric and thread was an assembly process, the court emphasized that the imported merchandise was a new and different article different from its component materials, that is, the stenciled dress front and the thread used in making the gathered stitches on the dress front. The components together became a "smocked dress front". The thread in Baylis was a component which served as a joining agent. The case of the present merchandise is distinguishable. The subject gloves are, in your words, knit directly to shape. As such, the acrylic yarn and spandex do not have the utilitarian purpose of acting as joining agents, as was the case with the thread in Baylis. The combination of the acrylic yarn and spandex results in the creation of the actual fabric, which in essence forms the shape of the gloves. In doing so, although the process of the formation of the glove through the acrylic and spandex yarns is addressed in the first prong of the note (which directs itself to the formation of the fabric or shaping of the article), the additional requirement of that note, that is, an "assembly operation", is still not satisfied.

Accordingly, we confirm the determination in NY D80276; the knit gloves do not qualify for the NAFTA.

Sincerely,

John Durant, Director
Commercial Rulings Division

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