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NY F85539




August 3, 2000

CLA2-61:RR:NC:TA:359 F85539

CATEGORY: CLASSIFICATION

Mr. Robert Hsu
C & H West Merchandising, Inc.
1611 West Rosecrans Boulevard
Gardena, CA 90249

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. Marking, Part 134, Customs Regulations (19 CFR Part 134).

Dear Mr. Hsu:

This is in reply to your letter dated April 10, 2000,concerning the classification and country of origin determination of a style of knitwear which will be imported into the United States. You have submitted one sample of the sweatshirt and eleven fabric panels which consist of all the component panels for the sweatshirt which are cut in Israel. Your samples are retained by this office for instructional purposes.

FACTS:

The subject merchandise consists of one garment. It extends from the wearer’s neck and shoulders to below the waist. The outside surface of the garment is made of a close-knit, unpatterned fabric which has more than nine stitches per two centimeters, measured in the direction in which the stitches were formed.

Style No. 4000/3000 is a 80% cotton and 20% polyester unisex, knitted, pullover sweatshirt that features long sleeves with rib-knit cuffs, a hood with an adjustable drawstring, a front kangaroo pocket in the waist area and a rib-knit bottom. The fabric is napped on the inside.

The manufacturing process for this style consists of the following steps:

The fabric is knitted in China;

B) The rolls of fabric are sent, to Israel where they are cut into the component panels of the sweatshirt;

C) The cut panels are returned to China for assembling, finishing and exporting of the sweatshirt to the United States.

ISSUE:

What is the classification and country of origin of the sample you submitted?

CLASSIFICATION:

The applicable subheading for the sweatshirt will be 6110.20.2045, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for sweaters, pullovers and similar articles, knitted, of cotton, other, other, other, women’s. The rate of duty will be 18.2% ad valorem.

The sweatshirt falls 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; The level or degree of skill and/or technology required in the manufacturing or processing operations; 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 the sweatshirt. 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 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 sweatshirt which is the subject of this ruling is shipped from Israel to a third country for final assembly of their component parts into the finished garments, this style does not qualify for the "special" duty rate.

MARKING:

You also ask how the sweatshirt should be marked with the country of origin.

The marking statute, Section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304) provides that, unless excepted, every article of foreign origin imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. Congressional intent in enacting 19 U.S.C. 1304 was “that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. The evident purpose is to mark the goods, so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will”. United States v. Friedlaender & Co. Inc., 27 CCPA 297, 302, C.A.D. 104 (1940).

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. As provided in section 134.41(b), Customs Regulations (19 CFR 134.41(b), the country of origin marking is considered to be conspicuous if the ultimate purchaser in the U.S. is able to find the marking easily and read it without strain.

Customs ruled in T.D. 54640(6) (July 15, 1958), that shirts, blouses, coats, sweaters and similar wearing apparel must be legibly and conspicuously marked with the name of the country of origin by means of a fabric lapel or label made from natural or synthetic film sewn or otherwise permanently affixed on the inside center of the neck midway between the shoulder seams or in that immediate area or otherwise permanently marked in that area in some other manner.

Since we have found that the country of origin of your sweatshirt is Israel, the imported garments should be marked permanently, conspicuously and legibly “Made in Israel”, in accordance with 19 CFR, Part 134, and T.D. 54640(6), as noted above.

HOLDING:

The country of origin for the pullover sweatshirt, Style #4000/3000 is Israel. Based upon international textile trade agreements products of Israel are neither subject to quota nor the requirement of a visa. The sweatshirt is not eligible for the special duty rate because it is not imported directly from Israel. The sweatshirt must be marked “Made in 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,

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