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HQ 965007




May 29, 2002

CLA-2 RR:CR:TE 965007 SS

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.8044, 9820.11.18

Gail T. Cumins, Esquire
Sharretts, Paley, Carter & Blauvelt, P.C. 75 Broad Street
New York, NY 10004

RE: U.S.-Caribbean Basin Trade Partnership Act; Eligibility of Garments Made From “Sliver Knit” Pile Fabric; Fabric Wholly Formed in the United States from Yarn Wholly Formed in the United States; 9802.00.8044, HTSUSA; 9820.11.18, HTSUSA

Dear Ms. Cumins:

This is in response to your letter dated April 26, 2001, on behalf of your client, Glenoit Corporation (Glenoit), requesting a binding ruling on the eligibility of garments made from “sliver knit” pile fabric under the United States-Caribbean Basin Trade Partnership Act (CBTPA).

FACTS:

The “sliver knit” pile fabric at issue is made in the United States and is trademarked by Glenoit as MicroFabric, the “Fabric Made from Fiber”. The fabric is often used as artificial fur for character costumes. The fabric is a “long-pile” fabric classifiable under subheading 6001.10, of the Harmonized Tariff Schedule of the United States Annotated (HTSUSA). “Long-pile fabrics” are described by Additional U.S. Note 1 to Chapter 60, HTSUSA, as fabrics made by inserting fibers from card sliver into the loops of the ground fabric during knitting.

The Dictionary of Fiber & Textile Technology 143 (1990) defines “sliver” as:

A continuous strand of loosely assembled fibers without twist. Sliver is delivered by the card, the comber or the drawing frame. The production of sliver is the first step in the textile operation that brings staple fibers into a form that can be drawn (or reduced in bulk) and eventually twisted into a spun yarn.

The first step in creating the “sliver knit” pile fabric is the blending of fibers for the sliver in a special chamber. While the majority of the fibers are sourced in the United States, certain fibers are imported from Japan, Germany, Korea and France. The blended fibers are then subjected to a carding process in which the fibers are combed repeatedly to align them parallel to one another. The fibers are then grouped into what you describe as a “sliver yarn” by giving them a slight twist. Thereafter, the “sliver yarn” is fed into the knitting machine.

The knitting process involves the use of polyester or polypropylene yarns formed in the United States and the “sliver yarn”. During the knitting process, the machine picks up fibers from the “sliver yarn” and locks them directly into the knit backing formed by the domestic yarns. The fibers are permanently secured at one end while the remaining lengths stand upright and perpendicular. Next, the fabrics are sheared and then polished or tumbled. Different surface textures and weights are created by different finishing processes. Finally, the backing is coated with an acrylic foam spread that provides stability to the fabric.

Coated pile fabric remains classified in heading 6001, HTSUSA. See Chapter Note 1(c), Chapter 60, HTSUSA.

ISSUE:

Whether garments made from the instant “sliver knit” pile fabric are eligible for preferential tariff 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. “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. Although the specific CBTPA beneficiary countries involved in the manufacture of the instant garments are not identified in your request, for the purposes of this ruling we will assume that they are CBTPA beneficiary countries that have been designated as eligible for textile benefits.

You indicate that garments will be assembled, or cut and assembled, from the instant fabric in one or more CBTPA beneficiary countries. Subheadings 9802.00.8044 and 9820.11.18, HTSUSA, grant preferential treatment under the CBTPA to knit garments made from “fabric wholly formed in the United States from yarns wholly formed in the United States” provided that certain other requirements are met. We note that a third provision, subheading 9820.11.06, HTSUSA, similarly provides for apparel articles cut and sewn in a CBTPA beneficiary country from fabric wholly formed in the United States from yarns wholly formed in the United States. However, subheading 9820.11.18, HTSUSA, specifically provides for knitted or crocheted apparel articles. Thus, knit garments cut and assembled in a CBTPA beneficiary country are more properly classified under subheading 9820.11.18, HTSUSA. The issue in this case is whether the instant fabric qualifies as “fabric wholly formed in the United States from yarns wholly formed in the United States.”

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. The interim regulations define “wholly formed” as follows:

“Wholly formed,” when used with reference to yarns or thread, means that all of the production processes, starting with the extrusion of filament or the spinning of all fibers into yarn or both and ending with a yarn or plied yarn, took place in a single country, and, when used with reference to fabric(s), means that all of the production processes starting with the polymers, fibers, filaments, textile strips, yarns, twine, cordage, rope or strips of fabric and ending with a fabric by a weaving, knitting, needling, tufting, felting, entangling or other process, took place in a single country.

See 19 CFR §10.222.

The regulations clearly allow for the use of foreign fibers. Yarns made from foreign fibers qualify as “wholly formed in the United States” if the foreign fibers are spun into yarns in the United States. The problem in this case is that the foreign fibers are not spun into yarn; the foreign fibers are only transformed into “sliver yarn” by the carding and slight twisting processes.

However, it appears that the instant fabric meets the definition of fabric wholly formed in the United States. All of the production processes, starting with the fibers and yarns end with a fabric by knitting or other processes in the United States.

Customs notes that the CBTPA explicitly provides preferential treatment to apparel articles made from certain fabrics “not formed from yarns.” In other words, apparel made from fabrics that are formed directly from fibers may qualify for preferential treatment. Each of the subheadings at issue state that the provision includes certain non-woven fabrics formed wholly in the United States. Additionally, the definition of “wholly formed fabric” encompasses the formation of fabrics not made from yarns (i.e., non-wovens) which can be formed by needling, felting or entangling fibers. Clearly, the subheadings and regulation allow the use of foreign fibers which are converted directly into fabric without passing through the yarn stage.

Thus, the CBTPA allows foreign fibers in spun yarns and in fabrics not made from yarns. The instant fabric is made from yarns wholly formed in the United States (the polyester or polypropylene yarns) and foreign fibers converted into sliver and then into fabric. Although the foreign fibers are not spun into yarns, the fibers are formed into sliver in the United States and the fibers from the sliver are then converted into fabric. Since the yarns in the fabric are wholly formed in the United States and the CBTPA allows the use of foreign fibers, the fabric qualifies as wholly formed in the United States since the formation of the fabric (knitting of yarns and insertion of foreign fibers) occurs in the United States.

Accordingly, garments assembled, or cut and assembled, in one or more CBTPA beneficiary countries from the instant “sliver knit” pile fabric would qualify for duty free and quota free treatment pursuant to the CBTPA, assuming all other requirements are met.

HOLDING:

Assuming all other requirements of the subheading and U.S. note 7(b) to Subchapter II, Chapter 98, HTSUSA, are satisfied, articles assembled in one or more CBTPA beneficiary countries from the instant “sliver knit” pile fabric are eligible for duty free/quota free treatment under subheading 9802.00.8044, HTSUSA, provided they are imported directly into the customs territory of the U.S. from a CBTPA beneficiary country.

Assuming all other requirements of the subheading are satisfied, apparel articles cut and assembled, with thread formed in the United States, in one or more CBTPA beneficiary countries from the instant “sliver knit” pile fabric are eligible for duty free/quota free treatment under subheading 9820.11.18, HTSUSA, provided they are imported directly into the customs territory of the U.S. from a CBTPA beneficiary country.

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

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