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HQ 562987

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April 21,2004

MAR-2 RR:CR:SM 562987 KSG

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.8044

Port Director
Bureau of Customs and Border Protection
2350 North Sam Houston Parkway East
Suite 1000
Houston, Texas 77032-3126

RE: Application for Further Review of Protest No. 5301-03-100651

Dear Director:

This is in reference to a Protest and Application for Further Review filed by Vanity Fair Intimates, L.P. contesting the denial of duty-free treatment under the United States-Caribbean Basin Trade Partnership Act (“CBTPA”).

FACTS:

This case involves women’s panties of man-made fibers entered under preference group A from June 18, 2002, to August 27, 2002, as products of Honduras. The blanket Textile Certificate of Origin for 2002 for styles 484000, 4840801, and 4848001 lists the fabric producer as U.S. (Monroeville Alabama), narrow fabric as U.S. (Georgia narrow Fabric, Jesup, Georgia), yarn producers as U.S. ((1) Dupont Co, Seaford, Delaware; (2) Bayer Co., Charleston, South Carolina; (3) Swift Spinning, Columbus, Georgia; and (4) Dillon Yarn Co., Patterson, New Jersey), and thread producers as U.S. (American & Efird, Inc., Mount Holly, North Carolina). The textile certificate of origin lists a producer in Honduras.

The Manufacturer’s Affidavit of origin for the fabric for 2002 states that the fabric was wholly of U.S. originating yarn and material. The two yarns listed are nylon (made by Dupont) and spandex (made by Bayer).

The Dupont Affidavit of Origin for Yarn lists the yarn as in whole or in part of fibers and/or other materials originating in Canada, Mexico and/or the U.S. However, the address listed for the manufacturing facility of the yarn is Dupont in Chattanooga, Tennessee. Thus while it initially appears that the Dupont Affidavit is inconsistent with the Manufacturer’s Affidavit for the fabric, the yarn affidavit states that the yarn was produced in the U.S.

The Bayer Affidavit of Origin for Yarn lists its yarn as produced in the U.S. wholly of U.S. originating fibers, produced in Goose Creek, South Carolina.

However, the Manufacturer’s affidavit of origin by Georgia Narrow Fabrics LLC for the narrow fabric clearly states that the fabric is a product of Malaysia (Heveafil USA Inc.) and Thailand ( a second affidavit from Georgia Narrow Fabrics states that the fabric is made in the U.S. from non-NAFTA originating yarn).

There was no information presented regarding the cutting of the components.

We note that the Country Declaration filled out by the exporter in Honduras clearly states that styles 4814144, 4814440, 4840001, 4840801, and 4848001 don’t qualify for CBTPA because the “elastic was made with yarn from Taiwan and Malaysia.”

ISSUE:

Whether the 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.

Based on the facts presented, the yarns used by Georgia Narrow Fabrics are not wholly formed in the United States as required in subheading 9802.00.8044, HTSUS. We are unable to determine based on the documents presented which of the listed entries are made of the yarns used by Georgia Narrow Fabrics. Therefore, we are assuming that all of the entries contain narrow fabric made of yarns from Malaysia and Thailand. Further, there was no information presented regarding the cutting of the components. Accordingly, these entries are not eligible for preferential treatment under subheading 9802.00.8044, HTSUS.

HOLDING:

Based on the facts presented above, the protest should be denied in full.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision should be accomplished prior to mailing of this decision. Sixty days from the date of this decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

Myles B. Harmon, 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.: 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.: 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.: 9820.11.18 - 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