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HQ 561808




June 25, 2002

CLA-2 RR:CR:SM 561808 KSG

CATEGORY: CLASSIFICATION

Leonard L. Rosenberg, Esq.
Sandler, Travis & Rosenberg, P.A.
5200 Blue Lagoon Drive
Miami, Florida 33126-2022

RE: U.S. Caribbean Basin Trade Partnership Act; subheading 9820.11.06; 9802.00.8044

Dear Mr. Rosenberg:

This is in response to your letter dated July 6, 2000, on behalf of Skip's Cutting, requesting a ruling on the eligibility of certain apparel under the Caribbean Basin Trade Partnership Act (CBTPA).

FACTS:

Skip's Cutting has a sewing facility in Honduras, dyeing operation in the United States, and garment finishing operation in Honduras.

Your client proposes to make garments in the following manner: fabric is knit in the U.S. from yarn formed in the U.S.; fabric is bleached in the U.S.; and the fabric may be cut in either the U.S. or Honduras.

The cut components are sewn in Honduras with U.S. cotton thread. The garments are then shipped to the U.S. where they are dyed, after which they are shipped back to Honduras. In Honduras, the garments are screen printed and/or embroidered and/or washed and packed. The garments are then shipped back to the U.S. and re-imported into the U.S.

ISSUE:

Whether the apparel articles produced as described above, would qualify for preferential treatment under the CBTPA.

LAW AND ANALYSIS:

Title II of the Trade and Development Act of 2000, (Pub. L. 106-200, 114 Stat. 251), concerns trade benefits for the Caribbean Basin and is referred to as the United States-Caribbean Basin Trade Partnership Act ("CBTPA"). Section 211 of the CBTPA amended section 213 (b) of the Caribbean Basin Economic Recovery Act (CBERA) (19 U.S.C. 2703(b)) to provide expanded trade benefits during a “transition period” to designated countries in the Caribbean Basin.

Section 211 of the CBTPA eliminates tariffs and quantitative restrictions on specific textile and apparel articles and extends North American Free Trade Agreement duty treatment standards to non-textile articles that previously were ineligible for preferential treatment under the CBERA. “Transition period” is defined in 19 U.S.C. 2703(b)(5)(D) as meaning, with respect to a designated CBTPA country, the period that begins on October 1, 2000, and ends on the earlier of September 30, 2008, or the date on which a free trade agreement enters into force with respect to the U.S. and the CBTPA country.

Presidential Proclamation 7351, dated October 2, 2000, published in the Federal Register on October 4, 2000 (65 Fed. Reg. 59329), implemented the CBTPA by designating the eligible CBTPA countries and amending Chapter 98, HTSUS (including the creation of new subchapter XX) to facilitate the entry of the specific textile and apparel articles eligible for preferential treatment under the CBTPA.

The enhanced trade benefits provided by the CBTPA are available to eligible articles imported directly from a country (1) that is designated as a CBTPA beneficiary country and (2) which the U.S. Trade Representative (“USTR”) has determined has implemented and follows, or is making substantial progress toward implementing and following certain customs procedures that allow U.S. Customs to verify the origin of the articles. Honduras is a designated beneficiary CBTPA country that meets both criteria.

In addition, Interim Customs Regulations to implement the trade benefit provisions of section 211 of the CBTPA were published in the Federal Register as T.D. 00-68 on October 5, 2000 (65 Fed. Reg. 59650). The T.D. invited public comments to be submitted on the Interim Regulations by December 4, 2000. It is noted that the issue raised in this ruling letter is outside the scope of the comments received.

The first question presented is whether the garments that are produced as described above are eligible for preferential treatment under the CBTPA upon their initial importation into the U.S. U.S. Note 7(b)(i), Subchapter II, Chapter 98, HTSUS, provides that:

For purposes of heading 9802.00.80, duty-free treatment shall be accorded to the following articles imported directly from a beneficiary United States-Caribbean Basin Trade Partnership Act (CBTPA) country previously designated by the President in a proclamation issued pursuant to such Act and enumerated in general note 17(a) to the tariff schedule—

(i) apparel articles assembled in one or more such beneficiary countries from fabrics wholly formed and cut in the United States, from yarns wholly formed in the United States (including fabrics not formed from yarns, if such fabrics are classifiable under heading 5602 or 5603 of chapter 56 and are wholly formed and cut in the United States);

Subheading 9820.11.03, HTSUS, provides that articles imported from a designated beneficiary Caribbean Basin Trade Partnership country enumerated in general note 17(a) to the tariff schedule which meet the following description are eligible for CBTPA treatment:

Apparel articles of chapter 61 or 62 assembled in one or more such countries from fabrics wholly formed and cut in the United States, from yarns wholly formed in the United States (including fabrics not formed from yarns, if such fabrics are classifiable in heading 5602 or 5603 and are wholly formed and cut in the United States), the foregoing which (1) are embroidered or were subjected to stone-washing, enzyme-washing, acid washing, permapressing, oven-baking, bleaching, garment-dyeing, screen printing or other similar processes, and (2) but for such embroidery or processing are of a type otherwise described in heading 9802.00.80 of the tariff schedule

Subheading 9820.11.06, HTSUS, provides that articles imported from a designated beneficiary Caribbean Basin Trade Partnership country enumerated in general note 17(a) to the tariff schedule which meet the following description are eligible for CBTPA treatment:

Apparel articles cut in one or more such countries from fabric wholly formed in the United States from yarns wholly formed in the United States (including fabrics not formed from yarns, if such fabrics are classifiable in heading 5602 or 5603 and are wholly formed in the United States), if such articles are assembled in one or more such countries with thread formed in the United States.

Based on the facts presented, the garments that are assembled in Honduras, from fabric that is wholly formed and cut in the U.S. from yarn that is wholly formed in the U.S., would be eligible for preferential treatment under the CBTPA under subheading 9802.00.80.44 pursuant to U.S. Note 7(b)(i), Subchapter II, Chapter 98, HTSUS, upon their first importation into the U.S.

The garments that are cut and assembled in Honduras from fabric wholly formed in the U.S. from yarns wholly formed in the U.S. with thread formed in the U.S. would be eligible under subheading 9820.11.06, HTSUS, for CBTPA treatment upon their first importation into the U.S.

The second issue presented is whether the garments that are imported into the U.S. for dyeing and then are returned to Honduras for screen printing and/or embroidery and/or washing and packing are entitled to CBTPA preferential treatment a second time under subheading 9802.00.8044, 9820.11.03, or 9820.11.06, HTSUS, when re-imported into the U.S. In this regard, we believe U.S. Note 2, Chapter 98, HTSUS, is pertinent. It states that:

In the absence of a specific provision to the contrary, the tariff status of an article is not affected by the fact that it was previously imported into the customs territory of the United States and cleared through customs whether or not duty was paid upon such previous importation.

Thus, an article is not entitled to special tariff treatment under a Chapter 98 provision based solely on the fact that the article qualified for entry under that or another Chapter 98 provision on a previous importation. The conditions and requirements for entry under a Chapter 98 provision must be satisfied on each importation of the article. Therefore, in this case, when the garments are returned to Honduras, the processing performed there must conform to the conditions and requirements set forth in one of the CBTPA HTSUS provisions to be eligible for preferential treatment under one of those provisions when imported into the U.S. a second time. Merely subjecting the garments to screen printing and/or embroidery and/or washing and packing when returned to Honduras will not satisfy the conditions and requirements of any of the CBTPA provisions. Therefore, under the facts presented in this case, the garments would not be eligible for CBTPA treatment upon re-importation into the U.S.

HOLDING:

Based upon the information submitted, the garments that are assembled in Honduras from fabric wholly formed, cut and bleached in the U.S. from yarn wholly formed in the U.S. would be eligible for CBTPA treatment under subheading 9802.00.8044, HTSUS, upon the garments' initial importation into the U.S. for garment dyeing. The garments that are cut and assembled in Honduras from fabric wholly formed and bleached in the U.S. from yarn wholly formed in the U.S. would be eligible for CBTPA treatment under subheading 9820.11.06, HTSUS, upon the garments' initial importation for garment dyeing. The foregoing assumes that the garments are imported directly to the U.S. and satisfy the applicable documentation requirements.

However, the previously-imported garments that are exported to Honduras for screen printing and/or embroidery and/or washing and packing would not be eligible for preferential treatment under the CBTPA upon their re-importation into the U.S.

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.

Sincerely,

John Durant, Director
Commercial Rulings Division

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