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NY F86333




July 13, 2000

CLA2-61:RR:NC:TA:356 F86333

CATEGORY: CLASSIFICATION

Mr. Michael T. Shor
Arnold & Porter
555 Twelfth Street, N.W.
Washington, D.C. 20004-1202

RE: Classification and country of origin determination for men’s and boys’ knit 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. Shor:

This is in reply to your letter dated April 26, 2000, submitted on behalf of your client, TAC International, Hacienda Heights and Commerce, California and TAC International, Taipei, Taiwan, concerning the classification and country of origin determination for five styles of men’s and boys’ knit garments which will be imported into the United States. You have provided a sample of the finished garments and samples of the garment parts prior to assembly. As requested, your samples will be returned.

FACTS:

The first garment is polo shirt constructed from either 100% cotton or 65% polyester, 35% cotton, finely knit fabric that measures 14 stitches per linear centimeter counted in the horizontal direction and 15 stitches per linear centimeter counted in the vertical direction. The garment has a rib knit spread collar; a partial front opening with three button closures; short sleeves with rib knit cuffs; and a hemmed bottom.

The second garment is a T-shirt constructed from either 100% cotton or 65% polyester, 35% cotton, finely knit, light weight jersey fabric. The garment has a rib knit crew neckline; short, hemmed sleeves, and a hemmed bottom.

The third garment is a pullover garment constructed from either 100% cotton or 80% cotton, 20% polyester, finely knit fabric that measures 30 stitches per 2 centimeters counted in the horizontal direction. The garment has a rib knit crew neckline; long sleeves with rib knit cuffs, and a rib knit bottom.

The fourth garment is a sleeveless pullover garment constructed from either 100% cotton or 65% polyester, 35% cotton, finely knit fabric that measures 30 stitches per 2 centimeters counted in the horizontal direction. The garment has oversized armholes; a rib knit crew neckline; and a hemmed bottom.

The fifth garment is sweatshirt constructed from either100% cotton or 80% cotton, 20% polyester, finely knit fabric that is napped on the inside surface. The garment has a self-fabric hood with a drawstring; long sleeves with rib knit cuffs; a pouch pocket on the lower front panel; and a rib knit bottom.

The manufacturing operations for the garments will be as follows:

CHINA OR ANOTHER THIRD COUNTRY:

Yarn is knit into rolls of fabric and exported to Israel

ISRAEL:

The component parts for each style are cut to shape, sorted and bundled by pattern and color, and exported to China or another third country

CHINA OR ANOTHER THIRD COUNTRY:

The cut parts are assembled into completed garments. You state that the assembly process consists of simple sewing operations which do not require highly skilled workers or a substantial amount of time. After the assembly process, the garments will be trimmed, pressed and packed for export to the United States.

ISSUE:

What are the classification and country of origin of the shirts?

CLASSIFICATION:

The applicable subheading for the men’s polo shirt in 100% cotton will be 6105.10.0010, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for men’s or boys’ shirts, knitted or crocheted: of cotton: men’s. The rate of duty will be 20.2 % ad valorem.

The applicable subheading for the boys’ polo shirt in 100% cotton will be 6105.10.0030, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for men’s or boys’ shirts, knitted or crocheted: of cotton: boys’. The rate of duty will be 20.2 % ad valorem.

The applicable subheading for the men’s polo shirt in 65% polyester, 35% cotton will be 6105.20.2010, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for men’s or boys’ shirts, knitted or crocheted: of man-made fibers: men’s. The rate of duty will be 33% ad valorem.

The applicable subheading for the boys’ polo shirt in 65% polyester, 35% cotton will be 6105.20.2030, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for men’s or boys’ shirts, knitted or crocheted: of man-made fibers: boys’. The rate of duty will be 33% ad valorem.

The applicable subheading for the men’s colored T-shirt in 100% cotton will be 6109.10.0012, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for men’s or boys’ T-shirts, knitted or crocheted: of cotton: other T-shirts: men’s. The rate of duty will be 18.3 % ad valorem.

The applicable subheading for the boys’ colored T-shirt in 100% cotton will be 6109.10.0014, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for men’s or boys’ T-shirts, knitted or crocheted: of cotton: other T-shirts: boys’. The rate of duty will be 18.3 % ad valorem.

The applicable subheading for the men’s colored T-shirt in 65% polyester, 35% cotton will be 6109.90.1007, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for men’s or boys’ T-shirts, knitted or crocheted: of man-made fibers: men’s or boys’: T-shirts: men’s. The rate of duty will be 32.8 % ad valorem.

The applicable subheading for the boys’ colored T-shirt in 65% polyester, 35% cotton will be 6109.90.1009, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for men’s or boys’ T-shirts, knitted or crocheted: of man-made fibers: men’s or boys’: T-shirts: boys’. The rate of duty will be 32.8 % ad valorem.

The applicable subheading for the men’s and boys’ 100% cotton or 80% cotton, 20% polyester long sleeve crew neck pullover will be 6110.20.2065, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for pullovers : knitted or crocheted: of cotton: other: men’s or boys’. The rate of duty will be 18.2 % ad valorem.

The applicable subheading for the men’s and boys’ 100% cotton sleeveless pullover will be 6110.20.2065, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for pullovers : knitted or crocheted: of cotton: other: men’s or boys’. The rate of duty will be 32.9 % ad valorem.

The applicable subheading for the men’s and boys’ 65% polyester, 35% cotton sleeveless pullover will be 6110.30.3050, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for pullovers : knitted or crocheted: of man-made fibers: other: men’s or boys’. The rate of duty will be 32.9 % ad valorem.

The applicable subheading for the men’s and boys’ 100% cotton or 80% cotton, 20% polyester sweatshirt will be 6110.20.2040, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for sweatshirts and similar articles, knitted or crocheted: of cotton: other: sweatshirts: men’s or boys’. The rate of duty will be 18.2 % ad valorem.

The garments in chief weight of cotton fall within textile category designation 338. The garments in chief weight of man-made fibers fall within textile category designation 638. 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 knit 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 that 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 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 is 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 that 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 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 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 therein.

In this case, since the fabric is cut into component garment parts in Israel, then Israel is the country of origin of the shirts. This is because, in Israel, the knit fabric is substantially transformed into garment parts that 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 sufficient 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 garments which are the subject of this ruling are shipped from Israel to China for final assembly of their component parts into the finished garments and the garments are exported to the United States from China, these styles do not qualify for the "special" duty rate.

HOLDING:

The country of origin for the polo shirt, T-shirt, long sleeve crew neck pullover, sleeveless pullover and sweatshirt is Israel. Based upon international textile trade agreements, products of Israel are not subject to quota or the requirement of a visa. The shirts 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 Mary Ryan at 212-637-7081.

Sincerely,

Robert B. Swierupski
Director,

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