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NY G83814




November 7, 2000

CLA262:RR:NC:TA:355 G83814

CATEGORY: CLASSIFICATION

Mr. Saul Tawil
Longstreet, Division of Stretch-O-Rama, Inc. 100 West 33rd Street, Suite 1110
New York, NY 10001-2916

RE: Classification and country of origin determination for a pair of boys’ shorts and pants; United StatesIsrael Free Trade Agreement; 19 CFR Section 12.130; 19 C.F.R. Section 102.21; and General Note 8, HTS.

Dear Mr. Tawil:

This is in reply to your letter dated October 12, 2000, concerning the classification and country of origin determination of garments that will be imported into the United States.

FACTS:

Style E74695 is a pair of boys’ pants. Style S76114 is a pair of boys’ shorts. Samples of both were submitted and will be returned. Although you requested rulings of other sizes, slim, husky and half sizes, ladies and men’s styles, you failed to indicate what style numbers corresponded to the types of garments in the additional information which you sent. Consequently, we are limiting our response to those garments for which you sent samples.

Both the pants and shorts are constructed of 60 percent cotton and 40 percent polyester woven fabric. They have a zippered fly front with a left over right button closure; a waistband with six belt loops; two side slash pockets; two rear pockets with button closures, and hemmed leg openings.

You described the manufacturing operations for the garment as follows:

China

The fabric is woven, dyed and finished

Israel

The fabric will be cut into garment components in Israel.

China

Complete assembly of the pants and the shorts, inspection, packing and direct shipment to the United States.

ISSUE:

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

CLASSIFICATION:

The applicable subheading for style E74695 will be 6203.42.4045, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for men’s or boys’ trousers, bib and brace overalls, breeches and shorts, of cotton, other, other, trousers and breeches, boys’ other. The rate of duty will be 17 percent ad valorem. The applicable subheading for style S76114 will be 6203.42.4060, HTSUSA, which provides for men’s or boys’ trousers, bib and brace overalls, breeches and shorts, of cotton, other, other, other, shorts, boys’ other. The rate of duty will be 17 percent ad valorem.

Styles E74695 and S76114 fall within textile category designation 347.

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 STATESISRAEL FREE TRADE AGREEMENT:

You have stated that the shell 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 9658, 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 suittype 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 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 the fabric is cut into garment parts in Israel, Israel is the country of origin of both the shorts and the pants. 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 trimming of the pants and shorts legs and 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 garment in both scenarios 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 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 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 Camille Ferraro at 2126377082.

Sincerely,

Robert B. Swierupski
Director,

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