HQ 966650 - Eligibility of men’s knit garments under the African Growth and Opportunity Act (AGOA) - United States International Trade Commision Rulings

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October 29, 2003

CLA-2 RR:CR:TE 966650 TMF

CATEGORY: CLASSIFICATION

TARIFF NO.: 9819.11.12

Marvin Lutz
Consolidated Apparel Group, Inc.
30 Bridge Road
Rouses Point, New York 12979

RE: Eligibility of men’s knit garments under the African Growth and Opportunity Act (AGOA)

Dear Mr. Lutz:

This is in response to your letter dated May 9, 2003, from your company, Consolidated Apparel Group, Inc., to the Bureau of Customs and Border Protection in which you requested a binding ruling on the eligibility of certain men’s knit garments under the African Growth and Opportunity Act (AGOA). Your request, along with four samples (two garments and two fabric swatches), was sent to our office.

FACTS:

You submitted two samples of the three garments at issue: a v-neck style knit pullover and a polo-style knit pullover with attached labels indicating the garments are of 100 percent cotton fiber. You also submitted fabric pieces: a 1x1 rib knit, tubular knit fabric (which will be used for neck openings and cuffs on the crew and v-neck styles), and knit to shape components comprised of 5 flat-knit collars and 10 cuffs for our review.

You stated that the subject garments identified as a polo-style knit pullover (designated style # 523409); a crew style shirt (designated style #520408) and a v-neck style knit pullover (designated #520407) will be manufactured in Kenya from fabric from Taiwan. You stated that the fabric is made of 60 percent cotton and 40 percent polyester, and that the buttons, sewing thread, labels, and non-woven interfacing will come from India, Taiwan, or both. You did not provide the value of the buttons, thread and labels.

You stated that the 1x1 rib knit fabric, will come from Taiwan and will be cut to shape and used in the v-neck and crew style pullovers’ assembly in Kenya. You also stated that the sample of the 5 flat knit collars and 10 flat knit cuffs will be made in Taiwan and will be used on the sample polo-style knit pullover.

Style 520407, the men’s v-neck knit pullover sample garment, is composed of double knit fabric that measures 18 stitches per two centimeters counted in the horizontal direction. The garment has a rib knit V-neckline, a self-fabric half-moon at the rear neckline; narrow jersey knit fabric covering the rear neck seam; long sleeves with rib knit cuffs; and a straight, hemmed bottom.

Style 523409, the men’s polo-style knit pullover sample that you submitted is 100% cotton double knit fabric that measures 10 stitches per two centimeters counted in the horizontal direction. The garment has a rib knit spread collar; a partial front opening with three button closures; long sleeves with rib knit cuffs; a self-fabric half-moon at the rear neckline; narrow jersey knit fabric covering the rear neck seam; non-woven interfacing in the placket; and a straight, hemmed bottom with self-finished side slits.

We note that you did not submit a sample of Style 523408, the men’s crew neck style garment.

You stated that the entire cutting to shape process, assembly and packing of the garments will take place in Kenya and the merchandise will be imported directly to the United States from Kenya with a stopover in South Africa for transfer to a vessel for shipment across the Atlantic Ocean.

ISSUE: Whether the subject men’s knit garments are eligible for preference under the African Growth and Opportunity Act?

LAW AND ANALYSIS:

The African Growth and Opportunity Act (AGOA) provides certain specified trade benefits for countries of sub-Saharan Africa. These benefits include duty-free treatment for certain non-textile articles previously excluded from preferential treatment under the Generalized System of Preferences, and duty- and quota-free treatment for certain textile and apparel articles which meet the requirements set forth in Section 112 of the Act (codified at 19 U.S.C. 3721). Beneficiary countries are designated by the President of the United States after having met eligibility requirements set forth in the AGOA. Once designated, a beneficiary country is entitled to the duty-free treatment for the designated non-textile articles determined not to be import-sensitive in the context of imports from the beneficiary sub-Saharan African countries. A second designation by the United States Trade Representative (USTR), published in the Federal Register, that a beneficiary country has taken the measures required by the Act to prevent unlawful transshipment and has adopted an effective visa system, is necessary before a beneficiary country may enjoy the duty- and quota-free benefits extended to textile and apparel articles under the Act. Kenya was designated a beneficiary country by Presidential Proclamation 7350, published in the Federal Register on October 4, 2000 (65 Fed. Reg. 59321). It was determined to be eligible for textile benefits under the AGOA by the USTR effective January 18, 2001 (66 Fed. Reg. 7836).

The provisions implementing the textile provisions of the AGOA in the Harmonized Tariff Schedule of the United States (HTSUS) are contained, for the most part, in subchapter XIX, Chapter 98, HTSUS (one provision may be found in subheading 9802.00.80, HTSUS). The regulations pertinent to the textile provisions of the AGOA may be found at §§ 10.211 through 10.217 of the Customs Regulations (19 CFR 10.211 through 10.217).

Classification of the Subject Garments and Foreign-Origin Collars and Cuffs

Style 520407, the men’s v-neck pullover, style 520408, the crew style shirt and style 523409, the polo-style knit pullover, are classifiable in subheading 6110.20.2065, HTSUSA, which provides, in pertinent part, for “sweaters, pullovers, waistcoats (vests) and similar articles, knitted or crocheted: of cotton: other: other: other: men’s or boys”. The duty rate is 16.9 percent ad valorem, quota category 338.

Eligibility under Subheading 9819.11.12, HTSUSA

Apparel articles wholly assembled in a sub-Saharan African lesser-developed beneficiary country (LDBC) and directly imported into the U.S. are entitled to duty free and quota-free status, subject to certain restrictions. Such articles are entered under subheading 9819.11.12, HTSUS, which provides as follows:

Apparel articles wholly assembled, or knit-to-shape and wholly assembled, or both, in one or more such lesser developed countries enumerated in U.S. note 2(d) to this subchapter, subject to the provisions of U.S. note 2 to this subchapter, regardless of the country of origin of the fabric or the yarn used to make such articles, if entered during the period beginning on the date announced in a Federal Register notice issued by the United States Trade Representative and continuing through September 30, 2004, inclusive.

U.S. Note 2(d) lists Kenya as qualifying for designation as a lesser-developed beneficiary country. U.S. Note 2, Subchapter XIX, Chapter 98, HTSUS, provides for a quantitative restriction for apparel articles classified in subheading 9819.11.12, HTSUSA.

The specific issue Customs Border and Protection must resolve is whether the subject men’s garments which contain foreign-origin fabric, buttons, non-woven interfacing, sewing thread, labels and knit to shape collars and cuffs, are “wholly assembled, or knit to shape and wholly assembled” pursuant to subheading 9819.11.12, HTSUSA, in Kenya for purposes of receiving AGOA preference.

The double knit fabric, the non-woven interfacing fabric and the 1x1 rib knit fabric will be cut, sewn and assembled together with foreign-origin sewing thread, buttons and labels to make the subject men’s garments in Kenya. AGOA eligibility requires that the apparel articles be "[w]holly assembled in" the lesser developed beneficiary sub-Saharan African country to be eligible for lesser-developed country benefits.

"Wholly assembled in," for the purpose of textile and apparel articles under the AGOA, "means that all of the components of the textile or apparel article (including thread, decorative embellishments, buttons, zippers, or similar components) were joined together in one or more beneficiary countries or one or more lesser developed beneficiary countries." See 19 C.F.R. 10.212. The assembly process of the v-neck, crew neck and polo-style garments meets the regulatory definition of "[w]holly assembled in." Subheading 9819.11.12, HTSUS, specifically provides that the country of origin of the fabric is not a consideration. Since the country of origin of the fabric is not relevant to the receipt of AGOA lesser developed beneficiary country preferential tariff and quota treatment, provided the other requirements of the Act are met, the fact that the fabric originates in Taiwan is not relevant.

However, in the case of the polo-style knit pullover, although it is wholly-assembled in Kenya, it contains foreign-origin knit to shape components, which impacts upon the pullover’s AGOA eligibility.

Collars and Cuffs in the Polo-Style Knit Pullover (Style #523409)

The term "Knit-to-shape components”, when used with reference to textile components, means:

Components that are knitted or crocheted from a yarn directly to a specific shape containing a self-start edge. Minor cutting or trimming will not affect the determination of whether a component is "knit-to-shape." Id.

In the instant case, we find the subject collars and cuffs (which will be used in the polo-style knit pullover) consist of knit-to-shape components as each are made by knitting or crocheting a yarn directly to a specific shape of a collar or cuff and each contains a self-start, finished edge. We refer you to HQ 562572, dated June 16, 2003, in which CBP ruled on substantially similar collars and cuffs, and determined that the collars and cuffs, decribed in detail as “rolls of collar-sized ribbed knit strips held together by a separation thread constituting a line of demarcation between the collars”, were not fabric, but garment parts of subheading 6117.90.9020, HTSUSA. We find the same classification is equally applicable in the instant case.

Like the collars of HQ 562572, the instant collars and cuffs in their condition as imported, cannot overcome their essential character as collars and cuffs, which are garment parts, not fabric. Based on the information submitted, we concluded that the subject collars and cuffs are incomplete, unfinished articles that will ultimately be used as collars and cuffs in the subject polo-style knit pullover. Further, as there is no fabric formation stage (since they are not created from fabric, but are made directly from yarn into the shape of knit components), we find the essential character as collars and cuffs remains. In concurrence with HQ 562572, we find that while subheading 9819.11.12, HTSUSA, allows for the use of foreign yarn or fabric in the production of apparel articles, it does not sanction the use of foreign-origin textile components in the manufacture of apparel articles in lesser-developed countries. Therefore, the subject polo-style, identified as Style #5234090, does not qualify for AGOA eligibility under subheading 9819.11.12, HTSUSA.

Findings and Trimmings

With regard to the foreign-origin buttons, sewing thread and labels, we refer to Note 3, Subchapter XIX, Chapter 98, which provides, in relevant part, that:

[a]n article otherwise eligible for preferential treatment under any provision of [subchapter XIX] shall not be ineligible for such treatment because the article contains—

(i) findings or trimmings of foreign origin, if the value of such findings and trimmings does not exceed 25 percent of the cost of the components of the assembled article;

(b) For purposes of subdivision (a)(i) above, findings or trimmings eligible under such subdivision include sewing thread, hooks and eyes, snaps, buttons, "bow buds", decorative lace trim, elastic strips, and zippers (including zipper tapes) and label. Elastic strips are considered findings or trimmings only if they are each less than 2.54 cm in width and used in the production of brassieres. For purposes of articles described in subheading 9819.11.06 and 9819.11.30, sewing thread shall not be considered to be findings or trimmings.

While "findings and trimmings" for purposes of the AGOA was not specifically defined, the examples set forth above, such as zippers, buttons, decorative lace trim and labels are indicative of the types of components which are considered to be within the purview of this provision. The exception for findings and trimmings was necessarily intended to be of a restrictive nature, as the intent of the statute was to ensure that all fabric components be formed and cut in the U.S. and sub-Saharan African beneficiary countries. "Findings" are generally accepted to be sewing essentials used in textile goods while "trimmings" have been defined as "decoration or ornamental parts." See M. Picken, The Fashion Dictionary (1973). For a foreign textile item to fall within the terms of the exception, it must be either named in the examples of finding or trimmings, or be substantially similar to those articles. See HQ 562349 dated September 12, 2003.

With regard to what items constitute "findings" or "trimmings," Customs has previously held under subheading 9802.00.90, HTSUSA, that fabric items such as shoulder pads, sleeve headers, and velveteen collars are not "findings and trimmings." See Headquarters Ruling Letter (HQ) 559552, dated February 14, 1996, and HQ 558954, dated June 30, 1995. In HQ 559738, dated July 2, 1996, Customs held that a synthetic suede yoke and elbow patches are not "findings and trimmings" because they comprise a large surface area of the garment and serve more than decorative purposes. However, embroidered patch labels which indicate or symbolize the brand name and provide ornamentation have been held to be "findings and trimmings" for purposes of subheading 9802.00.90, HTSUSA (formerly known as the “Special Regime Program”) and the Special Access Program. See HQ 560520, dated September 22, 1997, and HQ 560726, dated December 12, 1997. Moreover, in HQ 956426, dated April 23, 2002, Customs held that a woven decorative patch sewn to the chest area of a sleeveless knit is a "trimming" for purposes of the CBTPA.

Upon examination of the submitted samples containing the foreign-origin buttons, sewing thread and labels, we note that buttons, sewing thread and labels are provided within Note 3, Subchapter XIX, Chapter 98 as findings and trimmings. Although you did not provide the values for the buttons, sewing thread and labels, we find them to constitute “findings” for purposes of the AGOA and provided that their value does not exceed the 25 percent limitation of the “findings and trimmings” exception, they will not preclude the pullovers from preferential treatment under the AGOA. See HQ 562349, supra.

HOLDING:

The subject garments: a crew style shirt (designated style #520408) and the v-neck shirt, (designated #520407 and not submitted in sample form) qualify for AGOA preference in subheading 9819.11.12, HTSUSA. Further, the use of the foreign origin buttons, sewing thread and labels will not render the goods ineligible for preferential treatment under the AGOA provided they otherwise meets the requirements for classification within an AGOA provision and provided the combined value of the foreign-origin buttons, sewing thread and labels does not exceed 25 percent of the total cost of the components of the garment.

The subject polo-style knit pullover, (designated style # 523409), does not qualify for AGOA preference due to the inclusion of foreign origin collars and cuffs. It is classifiable in 6110.20.2065, HTSUSA, which provides, in pertinent part, for “sweaters, pullovers, waistcoats (vests) and similar articles, knitted or crocheted: of cotton: other: other: other: men’s or boys”. The duty rate is 16.9 percent ad valorem, quota category 338.

The designated textile and apparel category may be subdivided into parts. If so, the visa and quota requirements applicable to the subject merchandise may be affected. Since part categories are the result of international bilateral agreements which are subject to frequent renegotiations and changes, to obtain the most current information available, we suggest you check, close to the time of shipment, the Textile Status Report for Absolute Quotas, previously available on the Customs Electronic Bulletin Board (CEBB), which is available on the CPB website 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.

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, Director
Commercial Rulings Division

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