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NY E88922





December 27, 1999

CLA-2-62:RR:NC:WA:357 E88922

CATEGORY: CLASSIFICATION

TARIFF NO.: 6202.93.4500; 6202.93.5011; 6211.43.0076

Mr. Arthur W. Bodek
Graham & James LLP
885 Third Avenue
New York, NY 10022-4834

RE: Classification and country of origin determination for two women’s woven garments; 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:

In your letter dated December 6, 1999, on behalf of BCTC Corporation, you requested a ruling on the classification and country of origin of two garments. Samples were submitted and are being returned as you requested.

FACTS:

Style CA611070 is an unlined woven nylon fabric pullover jacket. It has a half-zipper, an integral hood with an elasticized drawstring and cord locks, a kangaroo pocket with VELCRO-type closures in the center below the waist, an elasticized drawcord with cord lock at the bottom hem and zip-off sleeves with fabric flanges covering the zippers.

Style CA611069 is a lined outerwear vest also made from woven nylon fabric. This article has a woven lining, a stand-up, zip-through collar, a full-front zippered opening, slant pockets with VELCRO-type closures at the waist, a vertical zippered pocket in the left chest area, a horizontal zippered pocket in the lower back and an elasticized drawcord with cord lock at the bottom hem. The armholes are trimmed with a knit fabric.

Both garments are stated to have a 600mm polyurethane coating for water resistance. The coating is not visible as that term is defined in the tariff; therefore, HTS heading 6210 does not apply.

You described the manufacturing operations for the garments as follows: In Taiwan or another Asian country the fabric is woven, then shipped to Israel, where it is cut into garment components. The components are then shipped to China for assembly into garments, finishing operations are performed and the garments are exported to the United States.

ISSUE:

What are the classification and country of origin of these two garments?

CLASSIFICATION:

If style CA611070 passes the water resistance test specified in the Harmonized Tariff Schedule of the United States (HTS), Chapter 62, U.S. Note 2, then the applicable HTS subheading for the garment will be 6202.93.4500, which provides for other woman’s anoraks, windbreakers and similar articles of man-made fibers, water resistant. The duty rate will be 7.4 percent ad valorem. The rate for 2000 will be 7.3 percent ad valorem.

If the jacket does not pass the water resistance test, then the applicable HTS subheading for the garment will be 6202.93.5011, which provides for other women’s anoraks, windbreakers and similar articles of man-made fibers. The duty rate will be 28.6 percent ad valorem. The rate for 2000 will be 28.4 percent ad valorem.

The applicable subheading for style CA611069 will be 6211.43.0076, Harmonized Tariff Schedule of the United States (HTS), which provides for other women’s garments of man-made fibers, vests. The duty rate will be 16.5 percent ad valorem. The rate for 2000 will be 16.4 percent ad valorem.

Style CA611070 falls within textile category designation 635; style CA611069 falls within category 659.

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.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.

EXCEPTION FOR UNITED STATES-ISRAEL FREE TRADE AGREEMENT:

You have stated that the woven 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).

Customs has consistently held 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 is 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, Israel is the country of origin of the jacket and vest. This is because in Israel the shell fabric is substantially transformed into garment parts which are designated for a particular article 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 the jacket and vest which are the subject of this ruling are shipped from Israel to China for final assembly of the component parts into the finished garments, then exported to the U.S. directly from China, the jacket and vest do not qualify for the "special" duty rate.

HOLDING:

The country of origin of the jacket and vest is Israel. Based upon international textile trade agreements products of Israel are not subject to quota nor the requirement of a visa. The jacket and vest 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 C.F.R. §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).

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 W. Raftery at 212-637-7076.

Sincerely,

Robert B. Swierupski
Director,

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