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HQ 966762

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February 13, 2004

CLA-2: RR:CR:TE 966762 KSH

CATEGORY: CLASSIFICATION

TARIFF NO.: 6110.20.2065, 6105.10.0010

Port Director
Port of Newark/New York
C/O Residual Liquidation and Protest Branch 1100 Raymond Blvd.
Suite 402
Newark, New Jersey 07102

RE: Application for Further Review of Protest 4601-03-102840

Dear Port Director:

This is in reply to your correspondence forwarding Application for Further Review of Protest (AFR) 4601-03-102840, filed by Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, LLP, on behalf of Oved Apparel. In written submissions and in a telephone conference between members of my staff and counsel for the protestant on January 6, 2004, the protestant claims the subject merchandise is eligible for preferential treatment under the AGOA.

The protest is against Customs and Border Protection’s (CBP) classification of eight entries of men’s and boy’s knit pullovers under subheadings 6110.20.2065 and men’s knit shirts under subheading 6105.10.0010 of the Harmonized Tariff Schedule of the United States (HTSUS).

Protestant entered the merchandise subject to this protest free of duty in subheading 9819.11.12, HTSUS. However, the merchandise was liquidated under subheadings 6110.20.2065, HTSUS, and 6105.10.0010, HTSUS on June 27, 2003 and July 11, 2003, dutiable at 17.3% ad valorem and 20% ad valorem, respectively.

Protestant filed a protest with an application for further review on September 25, 2003, challenging the decision of the Port Director not to accord the merchandise the benefits of the AGOA and declining to liquidate the merchandise in subheading 9819.11.12, HTSUSA. The importer’s AFR request was approved. The protest was timely filed pursuant to 19 U.S.C. 1514 (c)(3) and 19 C.F.R. 174.12 (e)(1).

In support of protestant’s application for further review, protestant alleges that the port’s decision is inconsistent with rulings with respect to the same or substantially similar merchandise in which CBP determined that lines of demarcation in a rectangular knit panel were not acceptable lines of demarcation. See Headquarters Ruling Letter (HQ) 962358, dated February 26, 1999. Protestant also alleges that the application for further review involves questions of law or fact which have not been ruled upon by the Commissioner of Customs or his designee or by the Customs courts. Further review is warranted pursuant to 19 CFR §§174.24(a) and 174.25.

FACTS:

The garments in issue are men’s and boys’ knit pique polo shirts with flat knit collars. They are composed of sixty percent cotton fibers and forty percent polyester fibers. Samples have not been provided for review.

Protestant states that the fabric is imported in rolls into Lesotho from China for the body and the collar. The collar fabric is imported into Lesotho from China as a roll of individual knit rectangular panels separated by rows of drop stitches. In Lesotho, the fabric is spread out on a table and cut along the lines of demarcation. A curved paper pattern is laid on top of the rectangular panel and the collar undergoes minor trimming and shaping. The components are assembled into finished garments in Lesotho.

ISSUE:

Whether the subject apparel articles are eligible for preferential treatment under the AGOA?

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. The Kingdom of Lesotho has been designated a "beneficiary sub-Saharan African country," a "lesser developed beneficiary sub-Saharan African country" (LDBC) and has been declared by the U.S. Trade Representative to have satisfied the requirements of the Act protecting against transshipment. See Presidential Proclamation 7350, 65 Fed. Reg. 59321 (2000); 66 Fed. Reg. 21192 (2001).

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).

Apparel articles wholly assembled in a sub-Saharan African lesser developed beneficiary country (LDC) and directly imported into the U.S. are entitled to duty 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 Lesotho as qualifying for designation as a LDC. U.S. Note 2, Subchapter XIX, Chapter 98, HTSUS, provides for a quantitative restriction for apparel articles classified in subheading 9819.11.12, HTSUS.

The provisions of the AGOA only allow foreign yarn or fabric to be used in the manufacture of apparel articles in LDC’s. It does not extend duty-free treatment to foreign formed textile components (i.e. cut to shape or knit to shape collars and cuffs). See HQ 965871, dated September 25, 2002 and HQ 562612, dated April 30, 2003.

Protestant argues that GRI 1 precludes classification of the collars in Chapter 61, HTSUS. In support, protestant cites to Note 1, Chapter 61, HTSUS, which provides that “This chapter applies only to made up knitted or crocheted articles. We refer protestant to Note 7(f) of Section XI, HTSUSA, which states that the term "Made Up" means, among other things, "knitted or crocheted to shape, whether presented as separate items or in the form of a number of items in the length." In this instance, the collars are presented in the form of a number of items in the length. Further, without application of a paper pattern (which aids in further sizing), the subject collars, in their condition as imported into Lesotho, resemble a collar designed for further use in the assembly of a shirt. The cutting process involving the paper pattern does not confer the identity of the component. Indeed, CBP’s definition of knit to shape as set forth in 19 C.F.R. 10.211 states that “minor cutting or trimming will not affect the determination of whether an apparel article is ‘knit-to-shape’.” Minor cutting or trimming, in this instance, for aesthetic appeal does not persuade us that the collars are not knit to shape.

We refer you to the following rulings issued by CBP on substantially similar knitted shirt collars: HQ 966634, dated September 10, 2003, HQ 966584 dated September 22, 2003, and HQ 966693, dated November 26, 2003. These rulings address CBP’s position on the classification of knit to shape collars substantially similar to the one under consideration. Those rulings are dispositive of the issues you have raised herein.

At this time we decline to address that portion of protestant’s submission in which protestant argues that CBP rulings which determined that various merchandise panels were not knit to shape are controlling and prevent further consideration of application of GRI 2(a). This office is in the process of reviewing comments received in response to a solicitation of comments on Interim Regulations, published as T.D. 03-15, to implement section 3108 of the Trade Act of 2002. Some of the comments are directly related to the issue raised by the protestant in citing these rulings. See Notice, Trade Benefits Under the African Growth and Opportunity Act, 68 Federal Register 13820, dated March 21, 2003. The Final Rule document will address protestant’s arguments as regards this issue.

Protestant also submits that the classification of the merchandise herein is virtually identical to the classification of a woven fabric in HQ 955661, dated June 9, 1994. In HQ 955661, we classified a woven fabric in subheading 5208.29.6090, HTSUS

Notably, HQ 955661 did not involve a determination of eligibility under the AGOA. rather than as a handkerchief of subheading 6213.20.2000, HTSUS. We determined that GRI 2(a) was not applicable therein because the article did not have the essential character of a handkerchief because there were no lines of demarcation, cutting lines, or hemmed edges. We also stated that we could not perceive a handkerchief emerging from the material. Unlike the merchandise at issue in HQ 955661, the collars are presented with clear lines of demarcation and are both dedicated for use as and have the character of collars fixed with certainty at the time of importation into the LDBC. We cannot perceive the collars emerging as an another article.

HOLDING:

The protest and application for further review should be denied in full. Garments assembled in an AGOA LDC using foreign (third country) textile components (i.e., collars) are not eligible for preferential tariff treatment under subheading 9819.11.12, HTSUS.

A copy of this decision should be attached to the Customs Form 19 and provided to the protestant as part of the notice of action on the protest.

Sincerely,

Myles B. Harmon, Director
Commercial Rulings Division

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See also:

• Tariff No.: 5208.29.60 - Bleached woven fabrics of cotton, nesoi, containing 85% or more cotton by weight, weighing not more than 200 g/m2, of numbers 43-68
• Tariff No.: 6105.10.00 - Men's or boys' shirts, knitted or crocheted, of cotton
• Tariff No.: 6110.20.20 - Sweaters, pullovers and similar articles, knitted or crocheted, of cotton, nesoi
• Tariff No.: 6213.20.20 - Handkerchiefs, not knitted or crocheted, of cotton, nesoi
• 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.: 9819.11.12 - AGOA goods: Apparel articles assembled in a lesser developed AGOA and subject to quota in US note 2 to this subchapter entered til 9/30/2012