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NY G84662





February 9, 2001

CLA2-61:RR:NC:TA:359 G84662

CATEGORY: CLASSIFICATION

Mr. Bill Julich
Delmar International
147-55 175th Street
Jamaica, NY 11434

RE: Classification and country of origin determination for one style of women’s knitwear; status of goods under Israeli – United States Free Trade Agreement and for goods of a Qualifying Industrial Zone; General Note 3(a)(v); 19 CFR 102.21(c)(3) and (c)(4); T.D. 98-62

Dear Mr. Julich:

This ruling is in response to your letter dated November 20, 2000, submitted on behalf of Dransfield Apparel (USA), Inc., New York, NY 10018. Your request concerns the classification, country of origin determination and eligibility for preferential duty treatment for a sample of women’s knitted wearing apparel which will be imported into the United States. The submitted sample is returned as requested.

FACTS:

Style 52966 is a woman’s knitted, sleeveless pullover sweater which consists of 100% cotton fibers. The jersey knit fabric of the sweater is constructed with nine or fewer stitches per two centimeters, measured in the direction in which the stitches were formed. The sweater features a long turtleneck that is made from rib knit fabric, as well as rib knit bands around the armholes. You also submitted the component panels from which the sweater is made. These panels consist of the following:

Front Panel

- self-start bottom self-finished sides armholes contoured to shape during the knitting process clear, but not continuous, line of demarcation at the neckline to indicate where the fabric must be cut

Back Panel
self-start bottom self finished sides armholes contoured to shape during the knitting process

Turtleneck Panel

Strips of Fabric to Finish Armholes

The manufacturing operations for the sweater consist of the following:

Scenario I

In China
- Back panel is knitted and shipped to the Qualifying Industrial Zone (QIZ), Jordan

In the QIZ, Jordan
- Front panel is knitted
- Turtleneck panel and strips of fabric for the armholes are knitted - All component panels are linked

Scenario II

In China or Israel
- Yarn is spun

In Israel
- Front and back panels are knitted
- Turtleneck panel and strips of fabric for the armhole are knitted

In the QIZ, Jordan
- All component panels are linked

Since both of the component panels (the “major parts”) of the sleeveless sweater are knit to shape, the sweater is considered knit to shape for the purpose of determining the country of origin.

In a telephone conversation with the appropriate National Import Specialist for women’s knitwear, you stated that the country of exportation under both manufacturing scenarios is Jordan.

ISSUE:

What are the classification, country of origin and status under the U.S.-Israel Free Trade Agreement of the subject merchandise?

CLASSIFICATION:

The applicable subheading for Style 52966, the sleeveless pullover sweater, is 6110.20.2020, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for sweatersknitted or crocheted: of cotton: other: other: sweaters: women’s. The general rate of duty is 17.8% ad valorem.

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.

The United States Trade Representative (USTR), working with representatives of the governments of Israel and Jordan, have designated various industrial zones in Jordan as Qualifying Industrial Zones (QIZ). Following additional negotiations, the three governments entered into a written agreement dated November 16, 1997, which included the following provision, entitled “Rules of Origin”:

The parties agree that the origin of any textile or apparel product that is processed in the QIZ, regardless of the origin or place of processing of any of itsmaterials prior to entry into, or subsequent withdrawal from, the zone, will be determined solely pursuant to the rules of origin for textiles and apparel products set in Section 304 of the Uruguay Round, 19 U.S. Code 3592.

Treasury Decision 98-62 dated July 13, 1998, determined that pursuant to the agreement between the Governments of Israel and Jordan, and by mutual consent of the U.S. and Israel, Customs will exclusively apply the textile and apparel rules of origin set forth in 19 CFR 102.21 in determining the country of origin of a textile or apparel product processed in a QIZ.

General Note 3(a)(v)(G), HTS, defines a “qualifying industrial zone” as any area that: “(1) encompasses portions of the territory of Israel and Jordan or Israel and Egypt; (2) has been designated by local authorities as an enclave where merchandise may enter without payment of duty or excise taxes; and (3) has been designated by the U.S. Trade representative in a notice published in the Federal Register as a qualifying industrial zone.”

Regarding the manufacturing process for Scenario I:

Paragraph (c)(1) of 19 CFR 102.21 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

If the good is knit to shape, a change to heading 6101 through heading 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 there must be a classification change (the “tariff shift”) from outside the designated grouping (6101-6117 HTS); however, the change in this case occurs inside the grouping -–from parts (the component panels) in heading 6117, to the completed sweater in heading 6110. Accordingly, as the classification change does not meet the tariff shift requirement, Section 102.21(c)(2) is inapplicable.

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.

As the subject merchandise is knit to shape in two separate countries, namely, in China (the back panel) and in the QIZ, Jordan (the front panel), and not in a single country, Section 102.21(c)(3) is inapplicable.

Section 102.21 (c)(4) states, "Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1), (2) or (3) of this section, the country of origin of the good is the single country, territory or insular possession in which the most important assembly or manufacturing process occurred".

In the case of the subject merchandise, the knitting of the front panel and the linking of the component panels, both of which take place, according to Scenario I, in the QIZ, Jordan, constitute the most important assembly or manufacturing processes. Accordingly, the country of origin of the sample, Style 52966, the woman’s knitted, sleeveless pullover sweater, when manufactured according to Scenario I is the QIZ, Jordan.

Regarding the manufacturing process for Scenario II:

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

6110.20.2020 If the good is knit to shape, a change to heading 6101 through heading 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 there must be a classification change (the “tariff shift”) from outside the designated grouping (6101-6117 HTS); however, in this case the change occurs inside the grouping - from parts (the component panels) in heading 6117, to the completed sweater in heading 6110. Accordingly, as the classification change does not meet the tariff shift requirement, Section 102.21(c)(2) is inapplicable.

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.

As the subject merchandise is completely knit to shape in a single country, namely, Israel, for Scenario II, Section 102.21(c)(3) applies. Accordingly , the country of origin of the sample, Style 52966, the woman’s sleeveless pullover sweater, when manufactured according to Scenario II, is Israel.

HOLDING:

The country of origin of Style 52966, the woman’s knitted, sleeveless pullover sweater is the QIZ, Jordan, according to Scenario I, CFR 102.21(c)(4)

The country of origin for Style 52966, the woman’s knitted, sleeveless pullover sweater is Israel, according to Scenario II, CFR 102.21(c)(3).

STATUS UNDER THE UNITED STATES-ISRAEL FREE TRADE AGREEMENT:

Pursuant to the authority conferred by section 9 of the U.S.-Israel Free Trade Area Implementation Act of 1985 (19 U.S.C. §2112 note), the President issued Proclamation No. 6955 dated November 13, 1996 (published in the Federal Register on November 18, 1996 (61 Fed. Reg. 58761)), which modified the Harmonized Tariff Schedule of the United States (HTSUS) (by creating a new General Note 3(a)(v)) to provide duty-free treatment to articles which are the product of the West Bank, Gaza Strip or a qualifying industrial zone, provided certain requirements are met. Such treatment was effective for products of the West Bank, Gaza Strip or a qualifying industrial zone entered or withdrawn from warehouse for consumption on or after November 21, 1996.

Under General Note 3(a)(v), HTSUS, articles the products of the West Bank, Gaza Strip or a qualifying industrial zone which are imported directly to the U.S. from the West Bank, Gaza Strip, a qualifying industrial zone or Israel qualify for duty-free treatment, provided the sum of (1) the cost or value of materials produced in the West Bank, Gaza Strip, a qualifying industrial zone or Israel, plus (2) the direct costs of processing operations performed in the West Bank, Gaza Strip, a qualifying industrial zone or Israel, is not less than 35% of the appraised value of such articles when imported into the U.S. An article is considered to be a product of the West Bank, Gaza Strip or a qualifying industrial zone if it is either wholly the growth, product or manufacture of one of those areas or a new and different article of commerce that has been grown, produced or manufactured in one of those areas. As discussed earlier, under the applicable rules of origin for textiles, style 52966 is considered a product of the QIZ, Jordan, following Scenario I. It is considered a product of Israel, following Scenario II.

With respect to the requirement that the articles be imported directly, we note General Note 3(a)(v)(B)(1), HTSUSA, which states,

Articles are “imported directly” for purposes of this paragraph if--

(1) they are shipped directly from the West Bank, the Gaza Strip, a qualifying industrial zone or Israel into the United States without passing through the territory of any intermediate country;

Based on the statement which you made to the National Import Specialist, the shipment of the sweater under both scenarios satisfies this requirement.

HOLDING:

Based on the information provided, the woman’s sleeveless, pullover sweater is considered a product of the QIZ, Jordan (Scenario I), and a product of Israel (Scenario II). Upon submission of the required documentation at the time of entry, and based on the fulfillment of all statutory and regulatory requirements, the sweater is eligible for preferential duty treatment under General Note 3(a)(v), HTSUS.

The country of origin of Style 52966 is the QIZ, Jordan (Scenario I) and Israel (Scenario II). Based upon international textile trade agreements, neither products of the QIZ, Jordan, nor products of Israel, currently 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 Michael Crowley at 212-637-7077.

Sincerely,

Robert B. Swierupski
Director,

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