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HQ 966896

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April 21, 2004

CLA-2: RR:CR:TE 966896 KSH

CATEGORY: CLASSIFICATION

TARIFF NO.: 6110.20.2065, 6105.10.0030

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

RE: Application for Further Review of Protest 4601-03-150098

Dear Port Director:

This is in reply to your correspondence forwarding Application for Further Review of Protest (AFR) 4601-03-150098, filed by Expeditors International, on behalf of their client, The Gap, Inc. Protestant claims the subject merchandise is eligible for preferential treatment under the African Growth and Opportunity Act (AGOA).

The protest is against Customs and Border Protection’s (CBP) classification of eight entries of men’s and boy’s knit garments under subheadings 6110.20.2065 and subheading 6105.10.0030 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 6105.10.0030, HTSUS, dutiable at 17.3% ad valorem and 20% ad valorem, respectively. The liquidations occurred between June 20, 2003 and July 25, 2003.

Protestant filed a protest with an application for further review on September 18, 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) 953234, dated May 13, 1993 and HQ 089203, dated July 19, 1991. 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 four styles of men’s and boys’ knit shirts composed of one hundred percent cotton. Style 164101 is a men’s pullover garment constructed of finely knit pique fabric that measures 21 stitches per 2 centimeters counted in the horizontal direction. Style 164101 has a mitered V-neckline, short hemmed sleeves, and a hemmed bottom. Style 160927 is a men’s pullover garment constructed from jersey knit fabric that measures 24 stitches per 2 centimeters counted in the horizontal direction. Style 160927 has a rib knit crew neckline, long raglan sleeves, a rib knit insert across the center chest, and a hemmed bottom with side slits. Style 134354 is a boys’ polo shirt constructed of pique knit fabric that measures 10 stitches per linear centimeter counted in the horizontal direction and 19 stitches per linear centimeter counted in the vertical direction. Style 134354 has a rib knit spread collar, a partial front opening with two button closures, short sleeves with rib knit cuffs and a hemmed bottom with side slits. Style 159914 is a boys’ pullover constructed of 1x1 rib knit fabric that measures 48 stitches per 2 centimeters counted in the horizontal direction. Style 159914 has a rib knit crew neckline, short, hemmed sleeves, and a hemmed bottom. Samples have been provided for review. Protestant states that the garments contain foreign flat-knit collars and cuffs.

Protestant states that the collars and cuffs are formed in a foreign country on a weft knit machine designed to make fabric pieces of set lengths of rectangular or square shapes. The collars and cuffs are formed on a roll by joining the collars and cuffs with a separation thread. The rolls of collars and cuffs are subsequently shipped to Lesotho where they are assembled.

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 pursuant to GRI 1, the collar and cuff pieces should be considered fabric. Protestant alleges that the goods are classifiable in heading 6006, HTSUS, as other knitted or crocheted fabrics of synthetic fibers. Note 8 of Section XI, HTSUS, provides in relevant part, “[f]or purposes of chapters 50 to 60: (a) Chapters 50 to 55 and 60 and, except where the context otherwise requires, chapters 56 to 59, do not apply to goods made up within the meaning of note 7.” Note 7(f) of Section XI, HTSUS, states that the term "Made Up" means, "[k]nitted or crocheted to shape, whether presented as separate items or in the form of a number of items in the length." Protestant asserts that the collars are subject to further working because the raw edges must be sewn to prevent unraveling and they must be sewn into wearing apparel.

Protestant additionally argues that the collars are not knit to shape because they are not contoured at critical points. In support of this argument protestant cites to Customs Regulations 19 CFR §102.21(b)(3) and (4) which define “knit to shape” and “major parts”. We note that the aforementioned regulations are inapplicable. The cited regulations define “knit to shape” for purposes of determining origin and do not define “knit to shape components”. Rather, we refer protestant to Customs Interim Regulations 19 CFR §10.212, for the definition of “knit to shape components” for purposes of determining the eligibility of such articles for preferential treatment under the AGOA. (See 68 Fed Reg. 13820 (March 21, 2003)).

In this instance, the collars for Style 164101 and Style 134354 are presented in the form of a number of items in the length. Further, 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 does not confer the identity of the component. Indeed, CBP’s definition of knit to shape as set forth in 19 C.F.R. 10.212 states that “minor cutting or trimming will not affect the determination of whether a component is ‘knit-to-shape’.” Minor cutting or trimming does not persuade us that the collars are not knit to shape.

We refer protestant 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; HQ 966693, dated November 26, 2003; and HQ 562527, dated June 16, 2003 (knit collar-sized strips folded over with 1.5 inch angled cut classified in heading 6117, HTSUS). These rulings address CBP’s position on the classification of knit to shape collars substantially similar to the ones under consideration. Those rulings are dispositive of the issues protestant has raised herein.

The collars for Style 160927 and 159914 are imported into Lesotho in continuous lengths that must be cut to a specified length or width. Style 160927 and Style 159914 are eligible for preferential treatment under the AGOA. At this time we decline to set forth our analysis with regard to the eligibility of Style 160927 and Style 159914 as 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 which are directly related to the eligibility of garments such as these two styles. 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 our reasoning as it regards the eligibility of garments produced in the same manner as these.

HOLDING:

The protest and application for further review should be allowed in part and denied in part.

In accordance the Protest/Petition Processing Handbook, (CIS HB, January 2002, pp 18 and 21), 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 in accordance with the decision must be accomplished prior to mailing the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.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.: 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.: 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