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NY F88346




June 28, 2000

CLA2-RR:NC:3:353 F88346

CATEGORY: CLASSIFICATION

Mr. Walter Moser
Grace International Customs Brokers, Inc. 145-119 Guy R. Brewer Blvd.
Springfield Gardens, NY 11434-5279

RE: Classification and country of origin determination for socks; 19 CFR 102.21(c)(3); 19 CFR 12.130(c)(1)

Dear Mr. Moser:

This is in reply to your letter dated June 1, 2000, on behalf of Top Circle Hosiery Mills Co., Inc., requesting a classification and country of origin determination for repaired socks, which will be imported into the United States. In addition, you ask if a visa will be required and if the freight charges for shipping the socks to China must be added to the entered value.

FACTS:

The submitted samples consist of Styles TC001, TC002 and TC003 Men’s Socks. All the socks are constructed of knit 80% cotton, 20% nylon fabric. Style TC001 is a men’s regular flat knit dress sock; Style TC002 is a men’s dress sock with cushion foot; and Style TC003 is a men’s over-the-calf patterned dress sock.

The socks are knit to shape and finished in the United States. The socks have a small hole in them that has rendered each sock defective. The socks will be exported to China where the small hole will be repaired.

ISSUES:

What are the classification and country of origin of the subject merchandise? Is a visa required upon importation?
Must the freight charges for shipping the socks to China be added to the entered value?

CLASSIFICATION:

The applicable subheading for the Styles TC001, TC002 and TC003 Men’s Socks will be 6115.92.9000, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for “Panty hose, tights, stockings, socks and other hosiery, including stockings for varicose veins, and footwear without applied soles, knitted or crocheted: Other: Of cotton: Other: Other.” The rate of duty will be 13.9 percent ad valorem.

Styles TC001, TC002 and TC003 Men’s Socks fall within textile category designation 332. 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.

LAW AND ANALYSIS:

FREIGHT CHARGES:

Subheading 9802.00.50, HTSUS, provides for a partial duty exemption for articles exported from and returned to the U.S. after having been advanced in value or improved in condition by repairs or alterations, provided the foreign operation does not destroy the identity of the exported articles or create new or different articles. Entitlement to this tariff treatment is also precluded where the exported articles are incomplete for their intended use prior to the foreign processing, or where the foreign operation constitutes an intermediate processing operation, which is performed as a matter of course in the preparation or the manufacture of the finished articles. Repairs are operations aimed at restoring articles to their original condition, but cannot be so extensive as to destroy the identity of the exported article or to create a new or different article.

Based on the information supplied to this office, the repaired socks qualify for partial duty exemption under subheading 9802.00.50, HTSUSA.

Ruling HQ 556452, dated April 4, 1992, stated that “no appraisement of articles entitled to the partial duty exemption under subheading 9802.00.50, HTSUSA, is required. See, U.S. Note 3(b), subchapter II, Chapter 98, HTSUSA.” It further stated that “Articles entitled to this partial duty exemption are dutiable only upon the cost or value of the foreign repairs or alterations, provided the documentary requirements of section 10.8, Customs Regulations (19 CFR 10.8), are satisfied.” Ruling HQ 555816, dated April 17, 1991, stated that “The cost or fair market value, as the case may be, of the processing outside the United Statesshall be limited to the cost or value of the processing actually performed abroadand shall not include any of the expenses incurred in this country, whether by way of engineering costs, preparation of plans or specifications, and the furnishing of tools or equipment for doing the processing abroad, or otherwise.” It went on to further state that regarding components shipped abroad from the U.S., “freight and insurance costs incurred to transport U.S. metal components from the place of shipment in the U.S. are excluded from the cost or value of the processing abroad because these expenses are incurred in the U.S.”

Similarly, if the freight costs for shipping the socks from the United States to China are incurred in the U.S., those costs are excluded from the cost or value of the repair.

COUNTRY OF ORIGIN:

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

6101–6117 (3) If the good is knit to shape, a change to heading 6101 through 6117 from any heading outside that group, provided that the knit-to-shape components are knit in a single country, territory, or insular possession.

Section 102.21(e) states that a change to headings 6101 through 6117 must take place. The socks are classifiable within subheading 6115 when shipped to China. Since the socks remain under the same tariff classification after undergoing the operation in China, the criteria under Section 102.21(c)(2) is not met.

Section 102.21(c)(3) states that, “Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) or (2) of this section:”

(i) If the good was knit to shape, the country of origin of the good is the single country, territory, or insular possession in which the good was knit.”

The subject merchandise was knit to shape in the United States. Therefore, according to this rule, the country of origin of the socks is the United States.

However, Section 12.130(c)(1) of the Customs Regulations states that “(c) Articles exported for processing and returned—(1) Applicability to U.S. articles sent abroad. Chapter 98, Subchapter II, Note 2, Harmonized Tariff Schedule of the United States, provides that any product of the U.S. which is returned after having been advanced in value or improved in condition abroad, or assembled abroad, shall be a foreign article for the purposes of the Tariff Act of 1930, as amended. In order to have a single definition of the term ‘product of’ and, therefore, a single country of origin for a textile or textile product, notwithstanding paragraph (b), merchandise which falls within the purview of Chapter 98, Subchapter II, Note 2, Harmonized Tariff Schedule of the United States, may not, upon its return to the U.S., be considered a product of the U.S.”

Therefore, under Section 12.130(c)(1), the country of origin of the subject socks is China, for quota, visa, marking and duty purposes.

HOLDING:

The country of origin of the Styles TC001, TC002 and TC003 Men’s Socks is China. Based upon international textile trade agreements products of China are subject to quota and the requirement of a visa.

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 section 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 Kenneth Reidlinger at 212-637-7084.

Sincerely,

Robert B. Swierupski
Director,

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