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HQ 562536

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December 23, 2002

MAR-2 RR:CR:SM 562536 KSG

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.8044; 9820.11.18; 9820.11.09

Sandra Tovar
CST, INC.
120 C Commerce Circle
Fayetteville, GA 30214

RE: U.S.-Caribbean Basin Trade Partnership Act; knit-to-shape; subheading 9802.00.8044; Presidential Proclamation 7626

Dear Ms. Tovar:

This is in response to your letter of August 6, 2002, to our New York office on behalf of Sara Lee Hosiery, requesting a binding ruling on the eligibility of three hosiery garments for preferential tariff treatment under the United States-Caribbean Basin Trade Partnership Act (“CBTPA”). You submitted samples for our examination. You also asked if these goods are eligible for a duty exemption provided in subheading 9802.00.80 of the Harmonized Tariff Schedule of the United States ("HTSUS"). Your letter was forwarded to this office for the preparation of a response. We will reply separately on the subheading 9802.00.80 issue.

FACTS:

This case involves three garments that are manufactured by Sara Lee Hosiery. The first garment (Style 0E060) is a women's panty made of fabric that is 69% nylon/31% spandex. The garment features a hemmed waistband, hemmed leg openings and a sewn-in crotch. The panty would be knit-to-shape in tube form in the U.S. or El Salvador on a Santoni knitting machine using U.S. and Israeli yarns. We will assume for the purposes of this ruling that the crotch/gusset component is knit or woven in the U.S. In El Salvador, the garment is then slit about two inches to prepare the garment for crotch placement and the crotch and inseam would be sewn. This garment would be classified in subheading 6108.22.9020, HTSUS.

The second garment (Style 0E058) is a mid-thigh shaper made of 56% nylon and 44% spandex. This garment is a boy-leg panty girdle featuring a hemmed waistband, two-inch wide hemmed leg openings and a diamond shaped sewn-in gusset. You state that the garment is produced in the same manner as panty style 0E060. This garment would be classified in subheading 6212.20.0020, HTSUS.

The third garment (Style 0F039) is a hip slip that extends from the waist to mid thigh. The fiber content is 64% nylon and 34% spandex. The garment features a hemmed waistband and a two-inch wide hemmed bottom. This garment will be knit-to-shape in tube form in El Salvador on a Santoni knitting machine using U.S. and Israeli yarns. We will assume for the purposes of this ruling that this garment is hemmed in El Salvador, the country in which it is knit-to-shape. This garment would be classified in subheading 6108.11.0010, HTSUS. You indicated that the Israeli yarn used in all three garments consists solely of nylon filament yarn.

ISSUE:

Whether the three garments described above 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 3107(a) of the Trade Act of 2002 (Pub. L. 107-210, 116 Stat. 933), signed into law on August 6, 2002, modified the treatment accorded certain textile and apparel articles under section 213(b) of the CBERA.

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 section 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. See also Presidential Proclamation 7626, dated November 13, 2002, published in the Federal Register on November 18, 2002 (67 Fed. Reg. 69459).

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. El Salvador is a CBTPA beneficiary country. See U.S. Note 1, Subchapter XX , Chapter 98, HTSUS.

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).

Section 213(b)(2)(A) of the CBERA, as amended, specifies the textile and apparel articles to which preferential treatment applies under the CBTPA during the transition period. Section 213(b)(2)(A)(i)(I) provides, in pertinent part, that preferential treatment applies to ---

(i) Apparel articles sewn or otherwise assembled in one or more CBTPA beneficiary countries from fabrics wholly formed and cut, or from components knit-to-shape 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 the HTS and are wholly formed and cut in the United States) that are ---

(I) entered under subheading 9802.00.80 of the HTS;

Apparel articles entered on or after September 1, 2002, shall qualify under the preceding sentence only if all dyeing, printing, and finishing of the fabrics from which the articles are assembled, if the fabrics are knit fabrics, is carried out in the United States. Apparel articles entered on or after September 1, 2002, shall qualify under the first sentence of this clause only if all dyeing, printing, and finishing of the fabrics from which the articles are assembled, if the fabrics are woven fabrics, is carried out in the United States.

The portions in bold above were added by section 3107(a) of the Trade Act of 2002.

Subheading 9802.00.8044, HTSUS, provides as follows:

Articlesassembled abroad in whole or in part of fabricated components, the product of the United States, which (a) were exported in condition ready for assembly without further fabrication, (b) have not lost their physical identity in such articles by change inform, shape, or otherwise, and (c) have not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process, such as cleaning, lubricating and painting.

U.S. Note 7(b)(i), Subchapter II, Chapter 98, HTSUS, as recently amended by Presidential Proclamation 7626, 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 sewn or otherwise assembled in one or more such beneficiary countries from fabrics wholly formed and cut, or from components knit –to-shape, 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);

Presidential Proclamation 7626 added the words in bold above. This amendment was effective with respect to goods entered, or withdrawn from warehouse for consumption, on or after August 6, 2002.

The purpose of this 2002 amendment was to expand this provision to encompass garments made from components knit-to-shape in the United States.

U.S. Note 3(d), subchapter XX, HTSUS, provides that:

For purposes of U.S. note 7(i) to subchapter II of this chapter and subheadings 9820.11.03, 9820.11.06, and 9820.11.18, an article otherwise eligible for preferential treatment under such subheadings shall not be ineligible for such treatment because the article contains nylon filament yarn (other than elastomeric yarn) classifiable under subheading 5402.10.30, 5402.10.60, 5402.31.30, 5402.31.60, 5402.32.30, 5402.32.60, 5402.41.10, 5401.41.90, 5402.51.00 or 5402.61.00 of the tariff schedule that entered free of duty as a product of Israel under the terms of general note 8 to the tariff schedule or as a good of Canada or a good of Mexico under the terms of general note 12 to the tariff schedule.

The exception for nylon filament yarn from Israel set forth in U.S. Note 3(d), subchapter XX, HTSUS, applies to the subheading 9802.00.8044 provision. Therefore, the use of the Israeli nylon filament yarn would not render the articles ineligible for classification in subheading 9802.00.8044.

The issue raised is whether the cutting of the slit to facilitate the sewing of the crotch in El Salvador for styles OEO6O and OEO58 for components knit-to-shape in the United States would be considered an incidental operation pursuant to 19 CFR 10.16(b). If the operation is considered incidental, the articles would be eligible for classification in subheading 9802.0.8044, HTSUS.

A very similar issue was considered in a series of rulings and a court case involving pantyhose classified in subheading 9802.00.80, HTSUS. In L'Eggs Products, Inc. v. United States, 704 F. Supp. 1127 (CIT 1989)(involving item 807.00, TSUS, a precursor to subheading 9802.00.80), the court held that pantyhose made from pantyhose tubes sent to Colombia for assembly were eligible for the duty allowance under item 807. The closing of the tubes at each end with thread to form the toe shape was considered an assembly operation. In HRL 559856, dated October 23, 1997, a case involving pantyhose entered in subheading 9802.00.90, HTSUS, Customs concluded that based on L'Eggs and HRL 555446, dated November 6, 1989, the slitting and sewing of the pantyhose tubes to form the crotch was considered an operation incidental to the assembly process.

We concur with the analysis set forth in HRL 559856 and find that in this case, the cutting of the two inch slit to facilitate crotch placement is not a cutting to shape of a garment part, but an adjustment in the shape or form of a component to the extent required by the assembly being performed and therefore is considered incidental to the assembly pursuant to 19 CFR 10.16(b)(5). The sewing of the crotch and inseam is an acceptable assembly operation under 19 CFR 10.16(a). Accordingly, styles OEO60 and OEO58 that are made from components knit-to-shape in the U. S. would qualify for preferential tariff treatment under subheading 9802.00.8044, HTSUS, assuming compliance with all applicable requirements.

You indicated that styles OEO6O and OEO58 should qualify for CBTPA treatment under subheading 9820.11.18, HTSUS. Subheading 9820.11.18, HTSUS, provides as follows:

Knitted or crocheted apparel articles (except t-shirts, other than underwear, classifiable in subheadings 6109.10.00 and 6109.90.10 and described in subheading 9820.11.12) cut and assembled in one or more such countries from fabrics 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 of the tariff schedule and are formed wholly in the United States), if such assembly is with thread formed in the United States..

The garments in question are not eligible for CBTPA treatment under subheading 9820.11.18, HTSUS, because this provision does not encompass articles assembled in a CBTPA country from components knit-to-shape in the U.S.

You indicated that style OFO39 should qualify for CBTPA treatment under subheading 9820.11.09, HTSUS. Subheading 9820.11.09, HTSUS, provides as follows:

Apparel articles (other than socks provided for in heading 6115 of the tariff schedule) knit to shape in such a country from yarns wholly formed in the United States; knitted or crocheted apparel articles (except t-shirts, other than underwear, classifiable in subheading 6109.10.00 and 6109.90.10 and described in subheading 9820.11.12) cut and wholly assembled in one or more such countries from fabrics formed in one or more such countries or from fabrics formed in one or more such countries and the United States, all the foregoing from yarns wholly formed in the United States (including fabrics not formed from yarns, if such fabrics are classifiable in heading 5602 or 5603 of the tariff schedule and are formed in one or more such countries) and subject to the provisions of U.S. note 2(b) to this subchapter

The exception for the use of nylon filament yarn from Israel set forth in U.S. Note 3(d), subchapter XX, HTSUS, does not apply to subheading 9820.11.09, HTSUS . Therefore, based on the facts presented, the yarns used for style OFO39 are not wholly formed in the United States as required in subheading 9820.11.09, HTSUS. Accordingly, this garment is not eligible for preferential treatment under subheading 9820.11.09, HTSUS.

HOLDING:

Styles OEO60 and OEO58 that are assembled in El Salvador from components knit-to-shape in the U. S. would qualify for preferential tariff treatment under subheading 9802.00.8044, HTSUS, assuming compliance with all applicable requirements. Style OFO39, produced as described above, is not eligible for CBTPA treatment.

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,

Myles B. Harmon, Acting Director
Commercial Rulings Division

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See also:

• Tariff No.: 5402.10.30 - Single high tenacity yarn of nylon or polyamides, not put up for retail sale
• Tariff No.: 5402.10.60 - Multiple (folded) or cabled high tenacity yarn (except sewing thread) of nylon or other polyamides, not put up for retail sale
• Tariff No.: 5402.31.30 - Single textured yarn, of nylon or other polyamides, measuring not more than 500 decitex, not put up for retail sale
• Tariff No.: 5402.31.60 - Multiple or cabled textured yarn (except sewing thread), of polyamides, single yarn not more than 500 decitex, not put up for retail sale
• Tariff No.: 5402.32.30 - Single textured yarn, of nylon or other polyamides, measuring more than 500 decitex, not put up for retail sale
• Tariff No.: 5402.32.60 - Multiple or cabled textured yarn (except sewing thread), of polyamides, single yarn more than 500 decitex, not put up for retail sale
• Tariff No.: 5402.41.10 - Synth filament yarn, for doll wigs, of colored multifil, untwisted/with twist < 5 turns/meter, of nylon or other polyamide, not retail sale
• Tariff No.: 5402.51.00 - Nylon or other polyamide yarns, single, with a twist exceeding 50 turns/m, not put up for retail sale
• Tariff No.: 5402.61.00 - Nylon or other polyamide yarn, multiple (folded) or cabled, (except sewing thread), not put up for retail sale
• Tariff No.: 6108.11.00 - Women's or girls' slips and petticoats, knitted or crocheted, of man-made fibers
• Tariff No.: 6108.22.90 - Women's or girls' briefs and panties (other than disposable), of man-made fibers, knitted or crocheted
• Tariff No.: 6109.10.00 - T-shirts, singlets, tank tops and similar garments, knitted or crocheted, of cotton
• Tariff No.: 6109.90.10 - T-shirts, singlets, tank tops and similar garments, knitted or crocheted, of man-made fibers
• Tariff No.: 6212.20.00 - Girdles and panty-girdles
• Tariff No.: 9802.00.80 - U.S. articles assembled abroad, which have not lost their physical identity or have not advanced in value or improved in condition abroad
• Tariff No.: 9802.00.90 - Textile and apparel goods, assembled in Mexico in which all fabric components were wholly formed and cut in the United States, etc.
• Tariff No.: 9820.11.03 - CBTPA goods: Apparel article of chapter 61/62 assembled one or more CBTPA country under certain conditions from fabrics formed and cut in US
• Tariff No.: 9820.11.06 - CBTPA goods: Apparel articles cut in one or more CBTPA from US formed fabric of US formed yarn assembed in CBTPA with US yarn
• Tariff No.: 9820.11.09 - CBTPA goods: Apparel article knit to shape/cut/assembled in one or more CBTPA from US or CBTPA formed fabric of US yarn under quota
• Tariff No.: 9820.11.12 - CBTPA goods: T-shirts, not underwear, made in one or more CBPTA from US yarn and subject to quota in US note 2(c) to subchapter
• Tariff No.: 9820.11.18 - CBTPA goods: Knitted or crocheted apparel, cut and assembled in one or more CBTPA from US fabric of US yarn if assembly with US thread