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NY E87243




November 22, 1999

CLA2-61:RR:NC:TA:359 E87243

CATEGORY: CLASSIFICATION

Mr. Thomas G. Travis
Sandler, Travis & Rosenberg
The Waterford
5200 Blue Lagoon Drive
Miami, Florida 33126-2022

RE: Classification and country of origin determination for a woman’s knitted pullover; 19 CFR 102.21(c)(2); tariff shift; General Note 3(a) (iv), HTSUS, insular possession

Dear Mr.Travis:

This is in reply to your letter dated, September 17, 1999, which you submitted on behalf of your client, Luen Thai International Group, Inc. Hong Kong and in which you requested a tariff classification and country of origin determination for a woman’s knitted pullover, which will be imported into the United States.

FACTS:

The subject merchandise consists of one sample and its component panels. These are returned as requested. The sample is a woman’s pullover that consists of 100% cotton fibers. It is worn over the skin or underwear and it extends from the neck and shoulders to below the waist. The pullover has short, hemmed sleeves, a hemmed bottom and a large round neckline that is capped. As a special feature there is extensive embroidery and beading on the front panel of the pullover. The fabric of the pullover has more than nine stitches per two centimeters, measured in the direction in which the stitches were formed.

The manufacturing process for the pullover is as follows: A) bolts of fabric on rolls are imported into the Commonwealth of the Northern Mariana Islands (CNMI);
B) in the CNMI the fabric is cut into patterned shapes to form the component panels of the pullover;
C) the front panels are shipped to China where they are embroidered and beaded;
D) the front panels are returned to the CNMI, where they are sewn together with the back panel and the sleeve panels to form the assembled pullover; E) the pullovers are finished in the CNMI, packed and exported to the United States.

ISSUES:

What are the classification and country of origin of the subject merchandise? Is the pullover entitled to duty-free treatment under General Headnote 3(a)(iv), HTSUS, when imported into the United States?

CLASSIFICATION:

The applicable subheading for the pullover will be 6110.20.2075, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for “pullovers and similar articles, knitted or crocheted, of cotton, other, other, other, women’s”. The rate of duty will be 18.6% ad valorem.

The pullover falls within textile category designation 339. The designated textile and apparel categories and their quota and visa status are the result of international agreements that are subject to frequent renegotiations and changes. To obtain the most current information, we suggest that you check, close to the time of shipment, the U.S. Customs Service Textile Status Report, an internal issuance of the U.S. Customs Service, which is available at the Customs Web Site at WWW.CUSTOMS.USTREAS.GOV. In addition, 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 and should also be verified at the time of shipment.

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.

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

6110.20.2075 If the good is not knit to shape and consists of two or more component parts, a change to an assembled good of heading 6101 through 6117 from unassembled components, provided that the change is the result of the good being wholly assembled in a single country, territory or insular possession.

As the pullover is assembled in a single insular possession, that is, in the CNMI, and as the pullover, which is classified in heading 6110 and which is a good made from unassembled components, thereby meets the tariff shift requirements, the country of origin is conferred in the Commonwealth of the Northern Mariana Islands (CNMI).

General Note 3(a), HTSUS, permits products of insular possessions (which includes the CNMI) of the United States to be imported into the United States free of duty if certain requirements are fulfilled. Duty-free entry is permitted to products that do not exceed the specified foreign value limitation, that are shipped directly to the customs territory of the United States from the insular possession, and that are the growth or product of the insular possession.

Treasury Decision (T.D.) 88-17, effective April 13, 1988, determined that the concept of double substantial transformation should be used in deciding whether foreign material that does not originate in the insular possession may nevertheless qualify as part of the value of material produced in the insular possession for purposes of the foreign value limitation. To do this the foreign material must be substantially transformed in the insular possession and then this different product must be transformed yet again into another new and different product which is exported to the United States. In the present case, foreign made rolled fabric in bolts is sent to the CNMI where it is cut into the component panels for the pullover (first substantial transformation). Afterwards, following the further processing of the front panel in China, all of the component panels are assembled together into the pullover in the CNMI (second substantial transformation). In each instance the requirement that a new and different article of commerce be produced is satisfied (that is, the component panel of the first substantial transformation and the finished garment of the second). Therefore, the cost of the foreign material (the fabric) is considered part of the value of materials produced in the insular possession. (HQ 559137, September 7, 1995, is noted).

HOLDING:

The country of origin of the pullover is the Commonwealth of the Northern Mariana Islands (CNMI). Based upon international textile trade agreements products of the CNMI are neither subject to quota nor the requirement of a visa.

Further, the cost of the fabric imported into the CNMI is not considered “foreign material” for purposes of calculating the foreign value limitation under General Note 3(a)(iv), HTSUS. If the pullovers are imported directly from the CNMI to the United States, and if all required documentation needed to substantiate qualification under the foreign value limitation is submitted at the time that entry of the merchandise is made, then the pullover will be entitled to duty-free treatment under General Note 3(a)(iv), HTSUS.

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,

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