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NY G83257




November 1, 2000

CLA-2-62:RR:NC:TA:357 G83257

CATEGORY: CLASSIFICATION

TARIFF NO.: 6202.93.2020; 6202.93.4500; 6202.93.5011

Mr. Arthur W. Bodek
Akin, Gump, Strauss, Hauer & Feld, L.L.P. 590 Madison Avenue
New York, NY 10022

RE: The tariff classification and country of origin of three 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 October 11, 2000, on behalf of Xiamen Associated Garment Manufacturing Co., Ltd., of China, you requested a ruling on the classification and country of origin of three garments. Samples were submitted and are being returned as you requested.

FACTS:

Although you referred to five garments, three samples were submitted and described.

Style H630 is described as a women’s outerwear vest. It has a nylon woven outershell quilted to a 2-oz. polyfil batting and is lined with a polyester knit fleece fabric. The item has a full front opening secured by a zipper that extends to the top of the stand-up collar and zippered pockets at the waist.

Style 2051 is a women’s reversible hip-length jacket. One shell is a woven 100% nylon fabric treated for water resistance. The woven side has slant pockets at the waist and a storm flap over the zipper closure. The other side of the garment is made of a polyester knit fleece fabric and has side-seam pockets at the waist. The garment has elasticized drawstrings at the waist, an integral hood and a zipper with a reversible pull.

Style “A” is a women’s jacket approximately 32-inches in length. The shell is made from a bonded fabric consisting of a polyester woven exterior and a polyester knit interior material. The fabric is treated to be water resistant. The jacket is lined with a woven nylon fabric and features an integral hood with drawstring, hemmed sleeve ends and slant pockets at the waist.

We assume that being “treated for water resistance” for styles 2051 and “A” consists of an application of a rubber or plastics material.

All of the garments will be produced under the identical manufacturing scenario, as follows:

TAIWAN OR ANOTHER ASIAN COUNTRY

Fabric is formed

ISRAEL

All garment components are cut from the fabric

CHINA

Complete assembly of the garments, finishing operations, exportation to the U.S. This may include third-country trim items (e.g., zippers)

ISSUE:

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

CLASSIFICATION:

The applicable subheading for style H630 will be 6202.93.2020, Harmonized Tariff Schedule of the United States (HTS), which provides for other women’s or girls’ padded, sleeveless jackets of man-made fibers. The duty rate will be 15.7 percent ad valorem.

If styles 2051 and “A” pass 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 garments 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 7.3 percent ad valorem.

If the jackets do not pass the water resistance test, then the applicable HTS subheading for the garments 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 28.4 percent ad valorem.

Style H630 falls within textile category designation 659; styles 2051 and “A” fall within category 635.

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 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 garments. This is because in Israel the 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)]. As the garments which are the subject of this ruling are cut into components in Israel, assembled in China, then shipped directly to the United States, they do not qualify for the special duty rate.

HOLDING:

The country of origin of the garments is Israel. Based upon international textile trade agreements products of Israel are neither subject to quota nor 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 C.F.R. §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 C.F.R. §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 C.F.R. §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 W. Raftery at 212-637-7076.

Sincerely,

Robert B. Swierupski
Director,

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