NY D87609 - Classification and country of origin determination for knitted wearing apparel; United States - Israel Free Trade Agreement; 19 CFR Section 12.130; 19 C.F.R. Section 102.21; and General Note 8, HTS. - United States International Trade Commision Rulings

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 > 1999 NY Rulings > NY D87596 - NY D87640 > NY D87609

June 18, 1999

CLA?2-61:RR:NC:TA:359 D87609

CATEGORY: CLASSIFICATION

Mr. Arthur W. Bodek
Graham & James, LLP
885 Third Avenue, 24th Floor
New York, NY 10022

RE: Classification and country of origin determination for knitted wearing apparel; United States - Israel Free Trade Agreement; 19 CFR Section 12.130; 19 C.F.R. Section 102.21; and General Note 8, HTS.

Dear Mr. Bodek:

This is in reply to your letter dated February 3, 19999, submitted on behalf of your client, the BCTC Corp., 5901 S. Eastern Avenue, Los Angeles, California 90040, concerning the classification and country of origin determination of four styles of knitwear which will be imported into the United States. The samples are returned as requested. Please note that we received four samples, not five as you stated in your request.

FACTS:

The subject merchandise consists of four samples of womens knitwear. They all have a fiber content of 60% cotton and 40% polyester. The fabric of each garment has more than nine stitches per two centimeters, measured in the direction in which the stitches were formed.

Style No. 990052 is a pullover with a crew neckline and short, hemmed sleeves. The bottom is also hemmed and it has a two-inch slit at each side. The body panel at the front features pieced construction.

Style No. 990053 is a short sleeved pullover with a round, hemmed neckline and a hemmed bottom with two-inch side slits. The neckline is decorated with picot edging.

Style No. 990055 is a pullover with a v-neckline and short, hemmed sleeves. The bottom is hemmed and has two-inch side slits. The body fabric has pieced construction.

Style No. 990056 is a sleeveless pullover blouse with a shirt-type collar, v-neckline and a two-button placket that fastens right over left. The bottom is hemmed and has two-inch side slits. The front panel has a chest pocket on the left side which is decorated with embroidery. The fabric of this blouse has more than ten stitches per linear centimeter in each direction (horizontally and vertically).

The manufacturing process for all the styles consists of the following:

In Taiwan
- the fabric is knitted into rolls
In Israel
- the panels for each garment are cut out of the knitted fabric rolls In China
- the garments are assembled; they are finished and packaged and then they are exported to the United States

ISSUE:

What are the classification and country of origin of the four samples?

CLASSIFICATION:

The applicable subheading for Styles 990052, 990053, 990055 will be 6110.20.2075, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for sweaters, pullovers and similar articles, knitted, of cotton, other, other, other, womens. The rate of duty will be 18.6% ad valorem.

The applicable HTS subheading for Style No. 990056 will be 6106.10.0010, which provides for womens blouses and shirts, knitted or crocheted, of cotton. The duty rate will be 20.4% ad valorem.

All styles fall within textile category designation 339. The designated textile and apparel categories may be subdivided into parts. If so, visa and quota requirements applicable to the subject merchandise may be affected. Part categories are the result of international bilateral agreements which are subject to frequent renegotiations and changes. To obtain the most current information available, we suggest that you check, close to the time of shipment, the Status Report on Current Import Quotas (Restraint Levels), an internal issuance of the U.S. Customs Service, which is available for inspection at your local Customs office.

COUNTRY OF ORIGIN - LAW AND ANALYSIS:

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.

EXCEPTION FOR UNITED STATES-ISRAEL FREE TRADE AGREEMENT:

You have stated that the knitted fabric is cut into garment parts in Israel. Section 334(b)(5) of the Uruguay Round Agreements Act provides that:

This section shall not affect, for purposes of the customs laws and administration of quantitative restrictions, the status of goods that, under rulings and administrative practices in effect immediately before the enactment of this Act, would have originated in, or been the growth, product or manufacture of, a country that is a party to an agreement with the United States establishing a free trade area, which entered into force before January 1, 1987. For such purposes, such rulings and administrative practices that were applied, immediately before the enactment of this Act, to determine the origin of textile and apparel products covered by such agreement shall continue to apply after the enactment of this Act, and on and after the effective date described in subsection(c), unless such rulings and practices are modified by the mutual consent of the parties to the agreement.

Israel is the only country which qualifies under the terms of Section 334(b)(5). As the Section 334 rules of origin for textiles and apparel products do not apply to Israel, we refer to the 19 C.F.R. 12.130 rules of origin, the rules of origin applicable to textiles and textile products before the enactment of Section 334. Section 334(b)(5) makes clear that if country of origin was conferred in Israel under Section 12.130, Israel will now be accorded the same treatment. This interpretation of Section 334(b)(5) was confirmed in a Notice of a general statement of policy, Treasury Decision 96-58, appearing in the Federal Register, Vol. 61, No. 148, dated July 31, 1996.

Accordingly, applying Section 12.130(b), the standard of substantial transformation governs the country of origin determination where textiles and textile products are processed in more than one country. The country of origin of textile products is deemed to be that foreign territory or country where the articles last underwent a substantial transformation. Substantial transformation is said to occur when the article has been transformed into a new and different article of commerce by means of substantial manufacturing or processing.

Section 12.130(d) sets forth criteria for determining whether a substantial transformation of a textile product has taken place. These criteria are not exhaustive; one or any combination of criteria may be determinative, and additional factors may be considered.

Section 12.130(d)(1) states that a new and different article of commerce will usually result from a manufacturing or processing operation if there is a change in:

(i) Commercial designation or identity,
(ii) Fundamental character, or
(iii) Commercial use.

Section 12.130(d)(2) states that for determining whether the merchandise has been subjected to substantial manufacturing or processing operations, the following will be considered:

(i) The physical change in the material or article; (ii) The time involved in the manufacturing or processing; (iii) The complexity of the manufacturing or processing; (iv) The level or degree of skill and/or technology required in the manufacturing or processing operations; (v) The value added to the article or material.

Section 12.130(e)(1) states, in pertinent part, that an article will usually be a product of a particular country when it has undergone in that country:

(iv) Cutting of the fabric into parts and the assembly of these parts into the completed article; or (v) Substantial assembly by sewing and/or tailoring of all cut pieces of apparel articles which were cut from the fabric in another country into a component garment. (e.g., the complete assembly and tailoring of all cut pieces of a suit-type jacket, suit or a shirt).

It is the consistently held position of Customs that the cutting of fabric into garment parts is a substantial transformation of the fabric and that those garment parts become the product of the country in which they are cut. It is also the consistently held position of Customs that when garment parts are cut in one country but the garment in assembled in another country, unless the assembly operation is a substantial assembly such as that referred to in Section 12.130(e)(1)(v), the country or origin remains the country in which the garment parts are cut. See, for example, HRL 088235 dated March 15, 1991, and the rulings which are cited in that ruling.

Since, in this case fabric is cut into garment parts in Israel, then Israel is the country of origin of all four styles of imported apparel. This is because in Israel the knitted fabric is substantially transformed into garment parts which are designated for particular articles of apparel, thereby creating a new and different article of commerce. The mere assembly of goods on the other hand, is not enough to substantially transform the components of an article into a new and different article of commerce.

"IMPORTED DIRECTLY" FROM ISRAEL:

Under General Note 8, Harmonized Tariff Schedule of the United States (HTS), products of Israel are eligible, when imported into the United States, for the "special" duty rate set forth in the tariff schedule only if each article is imported directly from Israel into the customs territory of the United States (General Note 8(b)(ii)). Since all four styles which are the subject of this ruling are shipped from Israel to China for final assembly of their component parts into the finished garments, these styles do not qualify for the "special" duty rate.

HOLDING:

The country of origin for all four styles is Israel. Based upon international textile trade agreements products of Israel are not subject to quota nor the requirement of a visa. The four styles are not eligible for the special duty rate because they are not imported directly from Israel.

The holding set forth above applies only to the specific factual situation and merchandise identified in the ruling request. This position is clearly set forth in section 19 CFR 177.9(b)(1). This sections states that a ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect.

This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177). Should it be subsequently determined that the information furnished is not complete and does not comply with 19 CFR 177.9(b)(1), the ruling will be subject to modification or revocation. In the event there is a change in the facts previously furnished, this may affect the determination of country of origin. Accordingly, if there is any change in the facts submitted to Customs, it is recommended that a new ruling request be submitted in accordance with 19 CFR 177.2.

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 Mike Crowley at 212-637-7077.

Sincerely,

Robert B. Swierupski
Director,

Previous Ruling Next Ruling

See also: