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NY I86156




October 11, 2002

CLA2-RR:NC:61:N3: I86156

CATEGORY: CLASSIFICATION

Mr. Bill Julich
Delmar International. Inc.
147-55 175th Street
Jamaica, New York 11434

RE: Classification and country of origin determination for a woman’s knitted sweater; United States – Israel Free Trade Agreement; 19 CFR, Section 12.130; General Note 8, Harmonized Tariff Schedule of the United States (HTS)

Dear Mr. Julich:

This is in reply to your letter dated September 11, 2002, submitted on behalf of Charter Ventures, LLC, requesting a classification and country of origin determination for a woman’s knitted sweater which will be imported into the United States. Your sample is returned as requested.

FACTS: The subject merchandise consists of a woman’s knitted pullover sweater that is made of 100% cotton fibers. The knitted fabric of the sweater has nine or fewer stitches per two centimeters, measured in the direction in which the stitches were formed The sweater features a crew neckline, long sleeves with rib knit cuffs and a rib knit bottom. The style number of the sweater is 1F02034405.

You also submitted the component panels from which the sweater is made. These consist of the following: Front Panel
-self-start bottom
-self-finished sides
-armholes contoured to shape during the knitting process -neck contoured to shape during the knitting process Back Panel
-same as above
Sleeve Panels
-self-start ends
-self-finished sides
-contoured to shape during the knitting process at the point of joining the shoulders Narrow Knitted Fabric for Neckband.

The manufacturing operations for the sweater are as follows:

In Country A (Israel)
-knit four component panels and knit neckband

In Country B (China)
-link component panels to form sweater
-mend, wash and finish sweater; ship to the US.

For the purpose of determining the country of origin of this sweater, we note that all the component panels of the garment (the “major parts”), that is the front and back panels and the sleeve panels, are considered to be knit-to-shape component panels. Thus, the sweater is considered a knit-to-shape sweater.

ISSUE:

What are the classification and country of origin of the subject merchandise?

CLASSIFICATION:

The applicable subheading for the woman’s knitted sweater, Style 1F02034405, will be 6110.20.2020, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for sweaters, pullovers --- and similar articles, knitted or crocheted: of cotton: other: other: sweaters: women’s. The rate of duty will be 17.3% ad valorem.

The sweater falls within textile category designation 345. The designated textile and apparel categories and their quota and visa status are the result of international agreements that are subject to frequent renegotiations and changes. To obtain the most current information, we suggest that you check, close to the time of shipment, the U.S. Customs Service Textile Status Report, an internal issuance of the U.S. Customs Service, which is available at the Customs Web Site at WWW.CUSTOMS.GOV. In addition, 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 and should also be verified at the time of shipment.

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.

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 that 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. Section 12.130 rules of origin, which are the rules applicable to textiles and apparel 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 Policy, Treasury Decision (T.D.) 96-58, which appeared in the Federal Register, Vol. 61, No. 148, dated July 31, 1996.

Accordingly, applying Section 12.130 (b), we note that the standard which governs the country of origin determination where textile products are processed in more than one country is the standard of substantial transformation. Thus, the country of origin of textile products is the country where the articles last underwent a substantial transformation. Substantial transformation is said to occur when an 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. 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:
the physical change in the material or article, the time involved in its manufacturing or processing, the complexity of the manufacturing or processing, the level or degree of skill and/or technology required, the value added to the article or material.

Section 12.130 (e) (1) states, in pertinent part, that an article will usually be considered to be the product of a particular country when it has undergone in that country: (3) weaving, knitting or otherwise forming fabric. Conversely, according to Section 12.130 (e) (2), an article usually will not be considered a product of a particular country by virtue of merely having undergone any of the following: (3) trimming and/or joining together by sewing, looping, linking or other means of attaching otherwise completed knit-to-shape component parts produced in a single country, even when accompanied by other processes ( e.g. washing, drying mending, etc.) normally incidental to the assembly process.

Since, in this case, the woman’s sweater is knit to shape in Israel, under the provisions of C.R. Section 12.130, the country of origin for the sweater is Israel. This is because, in Israel, a substantial transformation takes place when those component panels are formed which are designated for use in the particular article of apparel, namely, the sweater, and a new and different article of commerce is thereby created. The mere assembly of a good, on the other hand, is not sufficient to substantially transform the components of an article into a new and different article of commerce.

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 out in the tariff schedule only when each article is imported directly from Israel into the customs territory of the United States. See General Note 8 (b) (ii), HTS. Since, under the terms of your production schedule, however, this sweater is shipped to Country B, China, for linking, washing, mending and finishing, and since the sweater is shipped from Country B, China, it does not qualify for the “special” rate of duty.

HOLDING:

The country of origin of the woman’s sweater is Israel. Based upon international textile trade agreements products of Israel are neither subject to quota nor the requirement of a visa. The sweater is not eligible for the “special” duty rate because it is not imported directly from Israel.

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 Mike Crowley at 646-733-3049.

Sincerely,

Robert B. Swierupski
Director,

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