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February 5, 1999

CLA-2-65:RR:NC:3:353 D87305

CATEGORY: CLASSIFICATION

TARIFF NO.: 6505.90.2060

Ms. Dalia Molina
Gonzalo Carrasco Customs Broker
1221 S. Hwy 336 (10th)
Hidalgo, TX 78557

RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of cotton caps from Mexico; Article 509

Dear Ms. Molina:

In your letter dated January 21, 1999, on behalf of Adams Upscale Fashion Headwear, you requested a ruling on the status of cotton caps from Mexico under the NAFTA.

The submitted samples are Styles LP101 Optimum Dusk and LP102 Optimum Khaki/Aqua baseball style caps. They are made of woven 100% cotton fabric. Six triangular pieces, each with a metal grommet, are sewn together to form the crown, which has a fabric covered plastic button on top. Attached to the crown is a fabric covered plastic visor. There is an adjustable leather strap with a metal buckle at the back of the crown. The caps have an inner headband and are lined with 1/2 inch wide fabric that reinforce the crown seams.

All the materials to make the caps are sourced in China including the cotton fabric, leather strap, metal buckle, grommets and plastic visor. In Mexico, cutting of the fabric and assembly of the caps is performed.

The applicable tariff provision for the Styles LP101 Optimum Dusk and LP102 Optimum Khaki/Aqua baseball style caps will be 6505.90.2060, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for “Hats and other headgear, knitted or crocheted, or made up from lace, felt or other textile fabric, in the piece (but not in strips), whether or not lined or trimmed; hair?nets of any material, whether or not lined or trimmed: Other: Of cotton, flax or both: Not knitted: Certified hand?loomed and folklore products; and head?wear of cotton... Other.” The general rate of duty will be 7.8% ad valorem.

Regarding the North American Free Trade Agreement (NAFTA), General Note (GN)12(a)(ii) states:

(a) Goods originating in the territory of a party to the North American Free Trade Agreement (NAFTA) are subject to duty as provided herein. For the purposes of this note??

(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 set forth in regulations issued by the Secretary of the Treasury (whether or not the goods are marked), when such goods are imported into the customs territory of the United States 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, in accordance with section 201 of the North American Free Trade Agreement Implementation Act.

GN12(b)(ii)(A) states in part:
b) 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??
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...

The cotton baseball caps must undergo a change in tariff classification described in GN12(t)/65 which requires:

Chapter 65.

1. A change to headings 6501 through 6502 from any other chapter.

2. A change to headings 6503 through 6507 from any heading outside that group.

Each of the non-originating materials used to make the cotton caps has satisfied the change in tariff classification required under HTSUSA General Note 12(t)/65, except the plastic visor, which is classifiable under heading 6507, and does not change from a heading outside the group of 6503 through 6507. However, GN12(f)(i) regarding de minimis states in part:

(f) De minimis.

(i) Except as provided in subdivisions (f)(iii) through (vi), inclusive, a good shall be considered to be an originating good if the value of all non?originating materials used in the production of the good that do not undergo an applicable change in tariff classification set out in subdivision (t) of this note is not more than 7 percent of the transaction value of the good, adjusted to a F.O.B. basis...

Cost figures supplied to this office show that the plastic visor is 4.5% of the value of the cap. Therefore, GN12(f) applies and the items are considered originating goods.

GN12(a)(ii) requires that the goods also qualify to be marked as goods of Mexico.

On December 8, 1994, the President signed into law the Uruguay Round Agreements Act. Section 334 of that Act (codified at 19 U.S.C. 3592) 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 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 of the foreign materials 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:"

Paragraph (e) in pertinent part 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:"

HTSUS Tariff shift and/or other requirements

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.

As the caps are wholly assembled in a single country, that is, Mexico, as per the terms of the tariff shift requirement, country of origin is conferred in Mexico.

The LP101 Optimum Dusk and LP102 Optimum Khaki/Aqua baseball style caps will be entitled to a Free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.

This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 C.F.R. 181).

This ruling letter is binding only as to the party to whom it is issued and may be relied on only by that party.

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 Kenneth Reidlinger at 212-637-7084.

Sincerely,

Robert B. Swierupski
Director,

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