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NY I82319





June 17, 2002

CLA-2-64:RR:NC:TA:347 I82319

CATEGORY: CLASSIFICATION

Mr. Joshua Levy
Sandler, Travis & Rosenberg, P.A.
5200Blue Lagoon Drive
Miami, FL 33126-2022

RE: Duty-free eligibility for four articles of footwear under the African Growth and Opportunity Act (AGOA)

Dear Mr. Levy:

In your letter dated May 16, 2002 you requested a binding ruling regarding the eligibility of four articles of footwear for duty free treatment under the African Growth and Opportunity Act (AGOA). Your letter sets forth the production processes, which will be employed to produce the subject footwear in an unnamed beneficiary sub-Saharan African country. You have submitted samples of the various component pieces along with the finished product for four different types of women’s shoes.

General Note 16 of the Harmonized Tariff Schedule of the United States (2002) provides that for articles provided for in a provision for which a rate of duty appears in the “Special” sub- column followed by the symbol “D” in chapters 1 through 97 of the tariff schedule, the goods are designated to be eligible articles for duty free treatment from countries designated as beneficiary countries under the African Growth and Opportunity Act (AGOA), if imported directly into the customs territory of the United States and provided that such good:

(i) is the growth, product or manufacture of a designated beneficiary sub-Saharan African country enumerated in subdivision (a) of this note, and

(ii). the sum of--
the cost or value of the materials produced in one or more designated beneficiary Sub-Saharan African countries, plus
the direct costs of processing operations performed in the designated beneficiary sub-Saharan African country or any two or more designated beneficiary sub-Saharan countries that are members of the same association of countries which is treated as one country under section 507(a)2 of the 1974 (Trade) Act,
is not less than 35 percent of the appraised value of such articles at the time it is entered. If the cost or value of the materials produced in the customs territory of the United States is included with respect to an eligible article, an amount not to exceed 15 percent of the appraised value of such article at the time it is entered that is attributed to such United States cost or value may be applied toward determining the percentage referred to in clause (ii)(b) above. No article or material of a designated beneficiary sub-Saharan African country shall be eligible to such duty free treatment by virtue of having merely undergone simple combining or packing operations, or mere dilution with water or mere dilution with another substance that does not materially alter the characteristics of the article.

In your letter you provide the four production processes that outline your proposals to produce four different articles of footwear which you identify as; a women’s pump (white), a women’s pump (black), a women’s sandal, and a women’s sneaker. In each case, you state that you propose to import foreign (non sub-Saharan African) footwear parts into a sub-Saharan African country, where complex operations to produce the finished footwear will take place. Based on previous Customs rulings, it is your belief that during the course of the sub-Saharan African operations, the foreign parts will undergo substantial transformation into footwear, a new and different article of commerce. Accordingly, you believe that the four finished footwear articles meet the “product, growth or manufacture of” requirement for a sub-Saharan African designated country and therefore will qualify for a free duty rate under the African Growth and Opportunity Act (AGOA). In addition, you state in your letter that it should be assumed that the finished footwear will meet the 35% minimum requirement for the cost or value of the materials plus the direct cost of processing operations performed in the designated beneficiary AGOA country. It is also to be assumed that the shoes will be imported directly into the United States from that country.

The production processes you propose are as follows:

Shoe Number 8559 – Women’s Pump (white)

In Country A, a country not eligible under AGOA, the following footwear parts will be made: Outsole
Insole
Upper (Open and Unformed)
Sheet Counter
Outsole Filler
Sock-Lining

The parts listed above will be imported into Country B, a designated, beneficiary sub-Saharan African country, where the following production processes will take place:

Lasting

Staple the insole to the bottom of last.
Cement the lasting edge of both the insole and lasted upper. Dip the chemical sheet counter in solvent to activate it. Insert the counter into the heel of the upper. Run upper and last, with insole attached, through a dryer, to activate the cement. Last the toe area of the upper to the insole. Last the sides of the upper to the insole. Last the heel of the upper to the insole.

Bottoming

Cement the outsole filler onto the bottom of lasted upper. Place the outsole against the bottom of the lasted upper, and draw a line on the upper around the entire circumference of the outsole, for roughing. Rough the entire lasting allowance of the upper with a grinder. Apply cement to the entire lasting allowance of the upper. Apply cement to the lasting margin of the outsole. Run the lasted upper and outsole through a dryer, to activate the cement. Attach the cemented outsole to the cemented lasted upper by hand. Sole press the outsole to the lasted upper. Remove the last from the shoe.
Nail the heel to the insole.

Finishing & Packing

Insert and cement the socklining to the insole. Insert the appropriate stuffing inside the shoe. Apply fungicide to the inside surface of the box lid. Wrap the shoe with tissue paper, and place it in shoebox.

Shoe Number 8531 – A Women’s Pump (black)

In country A, a country not eligible under the AGOA, the following footwear parts will be made:

Outsole w/Heel
Insole
Upper (Opened and Unformed)
Sheet Counter
Sock-lining

The parts listed above will be imported into Country B, a designated, beneficiary sub-Saharan African country, where the following production processes will take place:

Lasting

Apply cement to the edge of the upper.
Staple the insole to the bottom of the last. Dip the chemical sheet counter in a solvent to activate it. Insert the chemical sheet counter into the heel of the upper. Apply cement on the lasting edge of the lining. Apply cement on lasting edge of insole.
Vamp crimping.
Run upper and last, with insole attached, through a dryer, to activate the cement. Last the toe area of the upper to the insole. Last the sides of the upper to the insole. Last the hell of the upper to the insole.

Bottoming

Rough the lasting edge of the upper with a grinder. Cement the lasting edge of both the lasted upper and the outsole. Run the lasted upper and the outsole through a dryer, to activate the cement. Attach the outsole to the lasted upper by hand. Sole press the outsole to the lasted upper. Remove the last from the shoe.
Nail the heel to the insole.

Finishing & Packaging

Insert and cement the sock lining to the insole. Insert cardboard.
Insert stuffing paper and stick.
Clean shoes.
Wrap shoes with tissue paper and place in shoebox.

Shoe Number 10680 – Women’s Sandal

In Country A, a country not eligible under the AGOA, the following footwear parts will be made:

Outsole w/Heel
Insole
Upper (Opened and Unformed)

The parts listed above will be imported into Country B, a designated, beneficiary sub-Saharan African country, where the following production processes will take place:

Lasting & Bottoming

Apply latex to the insole board and lasting allowance edge. Apply glue to the upper lining and insole board. Heat the applied glue until completely dry. Attach the insole board to the bottom of the last. Attach the upper straps to the insole board. Inspect for quality.
Heat to ensure all latex glue is dry (10-12 min.) Prime the upper and outsole.
Heat the outsole and upper until primer is dry. Apply first coat of glue.
Heat until glue dries (3 min.).
Apply second coat of glue.
Apply filler to bottom of the last between upper and outsole. Apply glue to the outsole.
Heat glue until dry (9 min.).
Apply the outsole to the lasted upper.
Place in sole press and press (7 sec.).
Allow product to cool before removing last (1 min., 20 sec.). Remove last from the shoe.
Quality inspection.

Finishing & Packaging

Apply cement to the edges of the insole and sock lining. Heat cement until dry (2 min.).
Insert the sock lining into the shoe.
Apply appropriate price ticket to product. Insert the cardboard form to ensure shoe shape. Clean the upper and the outsole.
Check the shoes to ensure correct sizes are together. Apply labels to the outsole.
Prepare the shoeboxes.
Apply fungicide to product (mold prevention). Pack the shoes in a carton.

Shoe Number 6469 – Women’s Sneaker

In Country A, a country not eligible under the AGOA, the following footwear parts will be made:

Outsole
Insole
Upper (Opened and Unformed)
Foxing Band
Sock-lining

The parts listed above will be imported into Country B, a designated, beneficiary sub-Saharan African country, where the following production processes will take place:

Lasting

Apply cement to the lasting edge of the upper. Attach the insole to the bottom of the last. Apply cement to the cement margin of the insole. Run upper and last, with insole attached, through a dryer, to activate the cement. Last the toe area of the upper to the insole. Last the sides of the upper to the insole. Last the heel of the upper to the insole.

Bottoming

Cut the foxing band to correct length.
Apply cement to area of lasted upper where foxing band will be applied. Apply cement to back edge of foxing band. Apply cement to footside of outsole.
Apply cement to bottom of insole.
Run lasted upper, foxing band, and outsole through a dryer, to activate the cement. Attach the cemented outsole to the cemented insole of the lasted upper. Sole press outsole to lasted upper.
Attach the cemented foxing band to the cemented area of the lasted upper. Remove excess foxing band from the shoe.

Vulcanizing

Hang the lasted shoe on a metal rack.
Insert the rack of lasted shoes into a vulcanizing autoclave, to cure the rubber and strengthen the bond between the lasted upper, foxing band, and outsole. Allow the aluminum lasts to cool down properly, before removal from the shoe. Remove the aluminum last from the shoe.

Finishing & Packing

Insert and cement the sock lining to the insole. Insert laces through the eyelets.
Clean any dirt and fingerprints from the finished shoe. Insert stuffing inside the shoe.
Apply fungicide to the bottom surface of the shoebox lid. Wrap shoe with tissue paper, and insert it into the shoebox.

The four production scenarios that you have provided outline specific lasting and bottoming operations that describe the processes by which four unlasted shoe uppers without bottoms and various other footwear parts are transformed into new and different articles of commerce, finished shoes. You claim that the joining of the unlasted, unformed uppers to insoles and outer soles in a designated beneficiary sub-Saharan African country constitutes a substantial transformation. Previous Customs ruling letters on this issue have held that uppers which were cut and stitched in one country (Country A) and then sent to a second country (Country B) where they were lasted and bottomed into complete footwear, were substantially transformed in the second country (HRL 056512, June 6, 1979). In Headquarters Ruling Letter, HRL 730155 (October 4, 1989), Customs examined whether the uppers were “substantially complete” prior to the attachment of the outsole, or whether the upper had the “very essence” of a completed shoe. In that case, Customs found that an upper that had not been lasted or soled did not have the “very essence” of a shoe and therefore it was substantially transformed when it was subsequently lasted and soled. This was also the basis for finding in HRL 735338, dated January 28, 1994, that an unlasted upper made in one country is “substantially transformed” as a result of the processes performed after importation into a second country that involved lasting and the attachment of the midsole and outsole, because the finished article now had the “very essence” of a completed shoe.

Based on the consensus of agreement found in previous Customs Headquarters decisions, it is also the opinion of this office that, as you believe, the lasting and bottoming of footwear parts substantially transforms footwear parts into finished footwear, a new and different article of commerce. Therefore, since the footwear samples at issue, consisting of various individual footwear component parts, will undergo lasting and bottoming operations in an AGOA beneficiary country, the finished shoes produced will be considered the “product, growth or manufacture of” that AGAO beneficiary country. Furthermore, as you state that for the purposes of this ruling, if we presume that each “product” will meet the 35% minimum value content requirement and that the product (a completed shoe) will be imported directly into the United States from that AGOA beneficiary country, then each of the four completed sample shoes at issue will qualify for duty free treatment under the terms of the African Growth and Opportunity Act (AGOA).

This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).

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 Richard Foley at 646-733-3042.

Sincerely,

Robert B. Swierupski
Director,

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