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HQ 560914





October 22, 1998

CLA-2 RR:CR:SM 560914 KSG

CATEGORY: CLASSIFICATION

Port Director
U.S. Customs Service
San Juan, Puerto Rico
ATTN: CST- 455

RE: Internal Advice 32/97; Sutures; U.S. Note 2(b), subchapter II, Chapter 98;

Dear Port Director:

This is in reference to your Request for Internal Advice (I.A. 32/97) dated March 23, 1998, asking if non-sterile surgical sutures with needles are eligible for a duty preference under U.S. Note 2(b), subchapter II, Chapter 98, of the Harmonized Tariff Schedule of the United States

FACTS:

According to information you have provided, surgical sutures with needles (non-sterile) are being imported into the Port of San Juan by Davis & Gech, Inc. and by U.S. Surgical Corporation. In your fax of October 5, 1998, you indicate that both the silk and man-made yarns from which the sutures are made may be of U.S. or foreign origin. You also state that the needles may be of U.S. or foreign origin. The different type of yarns used include: catgut; man-made absorbable gut; nylon dacron and silk. You state that the yarns are cut to length and dressed in Puerto Rico. You also state that the yarns are sent to the Dominican Republic for assembly with the needles (by threading) and retail packaging. The assembled sutures and needles are returned non-sterilized.

Your office takes the position that the sutures are textile articles and therefore, not eligible for duty-free treatment under U.S. Note 2(b), subchapter II, Chapter 98, HTSUS.
ISSUE:

Whether the assembled sutures and needles are eligible for duty-free treatment under U.S. Note 2(b), subchapter II, Chapter 98, HTSUS.

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 ("U.S. Note 2(b)"), 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 beneficiary country wholly of fabricated components or ingredients (except water) of U.S. origin.

U.S. 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 used in the note, the term "beneficiary country" means a country listed in General Note 7(a), HTSUS. The Dominican Republic is listed in General Note 7(a), HTSUS, as a designated beneficiary country ("B.C.").

You indicate that both the yarn and the needles may be of U.S. or foreign origin. As clearly set forth in the language of U.S. Note 2(b), a good is entitled to duty-free treatment only if all the components or ingredients are of U.S. origin. We note that under the textile rules of origin set forth in section 102.21, Customs Regulations (19 CFR 102.21), if the sutures are produced in the U.S. from foreign -origin yarn sourced from one country, the origin of the sutures would be the country of origin of the yarn. In such circumstances, the sutures would not be of U.S. origin and therefore, would be ineligible for U.S. Note 2(b) treatment.

The issue presented is whether the sutures which are of U.S. origin are considered textiles articles which are expressly precluded from receiving duty-free treatment under U.S. Note 2(b). Customs stated in Treasury Decision ("T.D.") 91-88, dated October 18, 1991, that

It is Customs position that the controlling factor in determining whether articles constitutes "textile" and "apparel" articles for purposes of Note 2(b) is whether such articles (other than footwear and parts of footwear) are subject to textile agreements.

If an article is subject to a textile agreement, it is indicated in the HTSUS by the inclusion of a textile category number in the applicable tariff provision.

The non-sterile sutures made from man-made yarn are classified at subheading 5609.00.30.00, HTSUS, which provides for articles of yarn, strip or the like of heading 5404 or 5405, twine, cordage, rope or cables, not elsewhere specified or included: of man-made fibers. The non-sterile sutures made from silk yarn are classified at subheading 5609.00.40.00, HTSUS, which provides for articles of yarn, strip or the like of heading 5404 or 5405, twine, cordage, rope or cables, not elsewhere specified or included: other. Neither of these tariff provisions includes a textile category number. Therefore, the non-sterile sutures are not subject to textile agreements and are not excluded from duty-free treatment under U.S. Note 2(b) as textile articles.

HOLDING:

The imported sutures with needles are eligible for duty-free treatment under U.S. Note 2(b), subchapter II, Chapter 98, HTSUS, provided all the components and materials thereof are of U.S. origin and the materials were exported directly from the U.S. to the B.C. and the assembled goods were imported directly to the U.S. from the B.C. The documentation requirements set forth in telex 9264071 (copy enclosed) also must be met.

This decision should be mailed by your office to the internal advice requester no later than 60 days from the date of this letter. On that date the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director
Commercial Rulings Division


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