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HQ 965962




January 8, 2003

CLA-2 RR:CR:TE 965962 jsj

CATEGORY: CLASSIFICATION

TARIFF NO.: 6110.30.3055

Mr. Arthur W. Bodek
Grunfeld, Desiderio, Lebowitz,
Silverman & Klestadt, LLP
245 Park Avenue
33rd Floor
New York, New York
10167-3397

RE: Country of Origin; 19 C.F.R. 102.21(c)(2); Knit-to-Shape; Major Parts; Minor Cutting, Trimming or Sewing; Liz Claiborne, Inc. Style No.: CIMU9511.

Dear Mr. Bodek:

The purpose of this correspondence is to respond to your request of September 4, 2002, directed to the Director of the National Commodity Specialist Division. The correspondence in issue requested, on the behalf of your client, Liz Claiborne, Inc., a binding country of origin ruling on merchandise described by the importer as a woman’s pullover.

This ruling is being issued subsequent to the following: (1) A review of your submissions dated September 4, 2002, and December 2, 2002; (2) A review of the sample completed garment; (3) A review of the ten sample panels, identified as A – E, for both the front and back, and the sample neck and armhole capping, all as formed in Hong Kong; and (4) A telephone conference conducted on November 22, 2002, with a representative of my office and counsel for the importer.

FACTS

The article in issue, when completely assembled, will be a woman’s tank-top style upper body garment. It is manufactured of a 1 x 1 rib knit fabric that is eighty percent rayon and twenty percent nylon.

The garment, for Customs purposes, will be manufactured in the following respects in the following countries:

Hong Kong:

Five front vertical components are individually knit to form the front of the garment. The components, all with self-start bottoms, are identified by the importer as panels A through E. Panels A and E have straight bottoms, contours for armholes and a neckline contour. Panels A and E, the end panels, are approximately four (4) inches wide and extend the length of the garment. Panels B, C and D are interior panels. Each has a straight bottom and neckline contour. Panels B and D are approximately three and one-fourth (3 ¼) inches wide. Panel C, the center panel, is approximately two and three-fourths (2 ¾) inches wide.

Five back vertical components are individually knit to form the back of the garment. They are identical in all material respects to the components that form the front of the garment. The components are identified by the importer as panels A through E. Panels A and E have straight bottoms, contours for armholes and a neckline contour. Panels A and E, the end panels, are approximately four (4) inches wide and extend the length of the garment. Panels B, C and D are interior panels. Each has a straight bottom and neckline contour. Panels B and D are approximately three and one-fourth (3 ¼) inches wide. Panel C, the center panel, is approximately two and three-fourths (2 ¾) inches wide.

Customs is advised that panel C of both the front and back of the garment “will be knitted with several rows of contrasting-colored yarns at the top which will not appear in the finished garment.” Submission of Counsel, Sept. 4, 2002, p.3. The additional rows are “added during the knitting process to preserve the integrity of the component and to serve as a “handle” during the subsequent linking of the collar trim.” Id. The contrasting-colored rows of yarn are designed to unravel when the top thread is pulled away. See id.

Customs specifically notes that the reference to the vertical components as “panels A – E” is the importer’s designation. The Customs Service concludes that the word “panel” has a meaning understood within the garment industry that is different from the meaning inferred by the importer. This distinction will be addressed in this ruling letter.

Capping for the garment neckline and armholes is also formed in Hong Kong.

China:

The ten vertical components that form the front and back of the garment are sewn together. Capping is sewn around the neckline and armholes. Decorative beads are sewn in rows in select locations on the front of the garment.

ISSUE

What is the country of origin of the women’s upper body tank-top style garment that is knitted in ten separate, vertical components in Hong Kong and assembled in China ?

LAW AND ANALYSIS

The Uruguay Round Agreements Act, particularly section 334, codified at 19 U.S.C. 3592, sets forth the rules of origin for textile and apparel products. The Customs Service, pursuant to the authority delegated to the Secretary of the Treasury, published regulations, 19 C.F.R. 102.21, implementing the law as set forth by Congress for the origin of textile and apparel products entered, or withdrawn from warehouse, for consumption subsequent to July 1, 1996.

Section 102.21 (a) of Customs Regulations establishes, with specifically delineated exceptions, that “this section shall control the determination of the country of origin of imported textile and apparel products for purposes of the Customs laws.” Textile and apparel products that are encompassed within the scope of section 102.21 are any goods classifiable in Chapters 50 through 63 of the HTSUSA, as well as other goods classifiable under other specifically enunciated subheadings. See 19 C.F.R. 102.21 (b)(5). The article in issue, a woman’s upper body knit garment, is classified in Chapter 61. It is, therefore, an apparel article for the purposes of determining origin.

The country of origin of textile and apparel products is determined by the sequential application of section 102.21 (c)(1) through (c)(5). Paragraph (c)(1) provides that “[t]he country of origin of a textile or apparel product is the single country, territory or insular possession in which the good was wholly obtained or produced.” Since the garment is made from components formed in Hong Kong that are assembled in China, the origin cannot be determined by reference to paragraph (c)(1).

Paragraph (c)(2) of section 102.21 provides that where the country of origin cannot be determined according to paragraph (c)(1), resort should next be to paragraph (c)(2). The country of origin, according to paragraph (c)(2), is “the single country, territory or insular possession in which each foreign material incorporated in that good underwent an applicable change in tariff classification, and/or met any other requirement, specified for the good in paragraph (e)” of section 102.21. Paragraph (e), as applicable to the instant determination, establishes a tariff shift rule which provides, in part:

HTSUS Tariff Shift and /or Other Requirement 6101 - 6117 (1) If the good is not knit to shape and consists of two or more component parts, except for goods of subheading 6117.10, provided for in paragraph (e)(2) of this section, a change to an assembled good of heading 6101 through 6117 from unassembled components, provided that the change is the result of the good being wholly assembled in a single country, territory or insular possession.

The Customs Service, in order to ascertain the applicability of section 102.21 (c)(2), must resolve the issue of whether the Liz Claiborne garment is “knit to shape” as addressed in the tariff shift rule of paragraph (e). The phrase “knit to shape” is defined in section 102.21 (a)(3). The term “knit to shape” means:
any good of which 50 percent or more of the exterior surface area is formed by major parts that have been knitted or crocheted directly to the shape used in the good, with no consideration being given to patch, pockets, appliques, or the like. Minor cutting, trimming or sewing of those major parts will not affect the determination of whether the good is “knit to shape. 19 C.F.R. 102.21 (a)(3).

It is Customs initial determination, from an examination of the samples, that the ten fabric components identified by the importer as panels A – E of both the front and back of the garment are not “major parts.” The garment, therefore, does not have fifty percent or more of the exterior surface area formed by “major parts” that have been knitted directly to the shape used in the good.

The term “major parts,” as used in section 102.21 (a)(3), is defined as “integral components of a good but does not include collars, cuffs, waistbands, plackets, pockets, lining, padding, trim, accessories, or similar parts.” 19 C.F.R. 102.21 (a)(4). Integral components of knit to shape garments, as intended by Customs Regulations, are those components, such as the front, back and sleeve “panels.” It is Customs understanding that a “panel” is a distinct section of a garment. Panels are “integral components” because they are recognizable as significant or principal parts in the manufacture of the garment. See e.g. Reader’s Digest Complete Guide to Sewing at 58-59, 86-87 and 114-15. The instant vertical strips of knit fabric are not “integral components” and, therefore, not “major parts” as intended by Customs Regulations.

The Customs Service will not suggest a number of knit components beyond which the components will not be deemed integral and, therefore, not be “major parts.” Customs will, instead, rely on its understanding of the knit to shape garment trade. It is Customs understanding, as reflected in the Customs Service Informed Compliance Publication What Every Member of the Trade Community Should Know About: Knit to Shape Apparel Products (Jan. 1999), that “integral components” are understood to be garment panels, generally front, back and sleeve panels. These panels make up a principal part of the garment and the garment that they will become a part of is readily recognizable from an examination of the component.

Counsel suggests, based on the definition of “major parts,” that there are only two parts of knit to shape garments: integral components and collars, cuffs, waistbands, plackets, pockets, lining, padding, trim, accessories, or similar parts. Counsel’s reasoning suggests that if the part of the garment in issue is not a collar, cuff, waistband, placket, pocket, lining, padding, trim, accessory, or a similar part, then it is “integral.” Customs disagrees with this reasoning. Collars, cuffs, waistbands, plackets, pockets, lining, padding, trim, accessories and similar parts do not form the body of a garment.

It is also Customs determination that the amount of sewing involved in the assembly of the finished garment is not minor. 19 C.F.R. 102.21 (a)(3). Although minor sewing of major parts, similar to minor cutting, does not affect the determination of whether the good is “knit to shape,” the sewing involved in the assembly of the instant garment is extensive. Ten individual components, not including the capping, must be sewn together to form the body of the finished garment. The sewing of ten seams the full length of the garment from top to bottom is major assembly, not minor sewing. If the sewing was only minor, the components to be assembled would reasonably resemble the finished garment.

Customs examination of CROSS, Customs Rulings Online Search System, for prior ruling letters that addressed the issue of “minor sewing” indicates that this issue has not previously been formally encountered by Customs. The issue of what constitutes “minor cutting” has, however, been addressed and will be drawn on by analogy. When the cutting involved, according to HQ 960516 (July 14, 1998), “merely separates the shaped neckline” which neckline is clearly dedicated and fully fashioned or shaped in the knitting process, the cutting is considered to be minor. Cutting operations that cut a fabric panel to form the shape of a neck contour or that cut the shape of armholes constitute more than minor cutting as envisioned by the drafters of section 102.21 (c)(2). See HQ 960871 (Nov. 24, 1997), HQ 959484 (Oct. 3, 1996) and HQ 959582 (Sept. 9, 1996).

It is Customs conclusion that the instant sewing involves more than the joining of fabric panels. It involves the joining of individual strips to form “integral components.” Since the sewing necessary to complete the garment involves the assembly of fabric strips into “major parts,” it is not minor as intended in Customs Regulations.

Customs notes that since capping is not a “major part” of the garment, sewing the capping to the garment is not a relevant consideration in resolving the question of whether the amount of sewing necessary to assemble the finished garment is minor. See 19 C.F.R. 102.21 (a)(3). This reasoning also applies to the attachment, by sewing, of the beads.

Counsel suggests that the “sewing of knit to shape components is per se minor” and directs Customs attention Customs comments in the Final Rule addressing the Rules of Origin for Textile and Apparel Products. See 60 Fed. Reg. 46188 (Sept. 5, 1995). Counsel specifically notes Customs comment addressing the definition of “knit-to-shape” in which it was stated that “[t]he modified definition specifically excludes from consideration certain exterior features (that is, patch pockets, appliques, or the like) but includes “sewing” as one of the specified permissible minor operations.” Id. at 46190.

Customs review of the language of the final regulations and the comments in the final notice, in their entirety, lead it to the conclusion that the intent was to permit sewing operations, provided that the sewing operations were minor. Counsel correctly notes, as set forth in the final notice, that the proposed definition of “knit-to-shape” was ultimately considered by Customs to be “too tightly drawn” and unnecessarily restricted the application of section 334 (b)(2)(B) of the Act. Id. at 46190. Customs does not, however, conclude that Congress intended sewing to be per se minor and that the language utilized in the final regulations support this interpretation. See 19 C.F.R. 102.21 (a)(3). If counsel’s argument were to be accepted, Customs would consider trimming and cutting operations per se minor as well, which it, for reasons provided in other rulings, does not. See HQ 960871, HQ 959484 and HQ 959582.

Customs, relying on 19 C.F.R. 102.21 (c)(2), concludes that the country of origin of the garment is China. China is the single country in which the foreign material formed in Hong Kong and incorporated into the good underwent a change in tariff classification and met the requirements of paragraph (e). The Liz Claiborne women’s top is not a “knit to shape” garment and consists of two or more components. The garment, at the time of importation into the United States, is an assembled good of heading 6110, HTSUS, as the result of the assembly of unassembled components, and was wholly assembled in a single country, China.

HOLDING

The country of origin of the Liz Claiborne, Inc. women’s knit upper body tank-top style garment classified in heading 6110, HTSUS, is China.

The women’s upper body garment is classified in subheading 6110.30.3055, Harmonized Tariff Schedule of the United States Annotated.

The General Column 1 Rate of Duty is thirty-two and two-tenths (32.2) percent, ad valorem.

The textile quota category is 639.

The designated textile and apparel category may be subdivided into parts. If subdivided, any quota and visa requirements applicable to the subject merchandise may be affected. Since part categories are the result of international bilateral agreements which are subject to frequent negotiations and changes, to obtain the most current information available, we suggest you check, close to the time of shipment, the Status Report On Current Import Quotas (Restraint Levels) an internal issuance of the U.S. Customs Service which is updated weekly and is available for inspection at your local Customs Service office. The Status Report On Current Import Quotas (Restraint Levels) is also available on the Customs Electronic Bulletin Board (CEBB) which can be found on the U.S. Customs Web site at www.customs.gov.

Due to the changeable nature of the statistical annotation (the ninth and tenth digits of the classification) and the restraint (quota/visa) categories, you should contact your local Customs office prior to importation of this merchandise to determine the current status of any import restraints or requirements.

Sincerely,

Myles B. Harmon, Acting Director
Commercial Rulings Division

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