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NY K81692




February 5, 2004

CLA2-61:RR:NC:TA-359: K81692

CATEGORY: CLASSIFICATION

Ms. Rhoda A. Salus
Sandler, Travis & Rosenberg, P.A.
The Waterford
5200 Blue Lagoon Drive
Miami, Florida 33126-2022

RE: Classification and country of origin determination for women’s knitwear; United States - Israel Free Trade Agreement; Products of the Al-Kerak Industrial Estate, Jordan, Qualifying Industrial Zone; 19 CFR 102.21(c)(4); General Note 3(a)(v), Harmonized Tariff Schedule of the United States (HTS); Treasury Decision 98-62

Dear Ms. Salus:

This is in reply to your letter dated January 7, 2004, which was submitted on behalf of your client, Union Capital International, requesting a classification and country of origin determination for women’s knitwear that will be imported into the United States. Your sample and its component parts are returned as requested.

FACTS:

The subject merchandise consists of a woman’s knitted cardigan, Style AC2602TG, which has a fiber content of 100% polyester. The finely knit fabric of the cardigan has more than nine stitches per two centimeters, measured in the direction in which the stitches are formed. The cardigan features a full-front opening with a zipper closure; a permanently attached, self fabric hood with a drawstring closure; two curved pockets in the front at the waist; long sleeves with an inserted elastic tightening at the cuffs; a hemmed bottom and a placket facing on the inside of each half of the front opening.

You also submitted the component panels and parts to show the garment in its various stages of production. They are enclosed in three packages:

First Package - marked “Style: AC2602TG: Country A - Cutting Panel”: -one back panel
-two front panels
-one narrow strip of fabric to be used as the drawstring of the hood -two sleeve panels
-two narrow strips of fabric to be used as placket facings -one narrow strip of fabric to be used as the inside neck binding -two sections of fabric to be used as the pockets -two sections of fabric to be used as the hood;

Second Package - marked “Country A - Workshop Section”: -the formed hood including the formed drawstring which is threaded through it -the two placket facings with an interlining sewn to each -the two front panels with a pocket sewn to each panel;

Third Package - marked “Country B - Workshop Section”: (this consists of two unfinished versions of the cardigan; the reference at the right side of each entry is to a sequential step in the assembly process)
-the two front panels sewn at the shoulder seams to the back -the sleeves, with the elastic inserted at the cuffs, are

The following processing steps are not shown on the two unfinished cardigans that you submitted; but they are shown on the descriptive sheets as part of the assembly operation and the finished sample is marked with the number of each step: -the zipper and the placket facing sewn to the front panels -------(B6)

The manufacturing operations for the cardigan are as follows:

In Country A (China)
-cut the rolled fabric into component panels, sections and strips -open drawstring holes in the hood
-construct the hood
-construct the placket with the facing
-sew the pockets to the front panels;

In Country B (Jordan)
-sew the front and back panels at the shoulder seams -sew the sleeves to the body
-sew the side seams
-insert elastic into the sleeve ends and hem the sleeves -hem the bottom of the body
-sew the placket facing and the zipper to the body -sew the hood and the neck binding to the body -attach the labels.

We note your statement that the processing that is scheduled to take place in Jordan actually occurs at the Al-Kerak Industrial Estate, which is an approved Qualifying Industrial Zone (QIZ).

ISSUE:

What are the classification and country of origin of the subject merchandise?

CLASSIFICATION:

Although you propose that the garment under consideration should be classified as a woman’s knitted jacket, we note that it fails to provide the wearer with sufficient protection from the elements due to the absence of a tightening at the bottom of the garment. The applicable subheading for the woman’s knitted cardigan, Style AC2602TG, will be 6110.30.3055, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for sweaters, pullovers --- and similar articles, knitted or crocheted: of man-made fibers: other: other: other: other: other: women’s. The general rate of duty will be 32% ad valorem.

The cardigan falls within textile category designation 639. The designated textile and apparel categories and their quota and visa status are the result of international agreements that are subject to frequent renegotiations and changes. To obtain the most current information, we suggest that you check, close to the time of shipment, the U.S. Customs Service Textile Status Report, an internal issuance of the U.S. Customs Service, which is available at the Customs Web Site at WWW.CUSTOMS.GOV. In addition, the designated textile and apparel categories may be subdivided into parts. If so, visa and quota requirements applicable to the subject merchandise may be affected and should also be verified at the time of shipment.

COUNTRY OF ORIGIN - LAW AND ANALYSIS:

On December 8, 1994, the President signed into law the Uruguay Round Agreements Act. Section 334 of that Act (codified at 19 U.S.C. 3592) provides new rules of origin for textiles and apparel entered, or withdrawn from warehouse, for consumption, on and after July 1, 1996. On September 5, 1995, Customs published Section 102.21, Customs Regulations, in the Federal Register, implementing Section 334 (60 FR 46188). Thus, effective July 1, 1996, the country of origin of a textile or apparel product shall be determined by sequential application of the general rules set forth in paragraphs (c)(1) through (5) of Section 102.21.

You have stated that the processing operations in Jordan are performed in the Al-Kerak Industrial Estate, Jordan, Qualifying Industrial Zone (QIZ). General Note 3(a)(v) (G), HTSUSA, defines a “qualifying industrial zone” as any area that (1) encompasses portions of the territory of Israel and Jordan or Israel and Egypt; (2) has been designated by local authorities as an enclave where merchandise may enter without payment of duties or excise taxes; and (3) has been designated by the United States Trade Representative in a notice published in the Federal Register as a qualifying industrial zone.

By letters dated June 30, 1997, and July 1, 1997, to the U.S. Trade Representative, the Governments of Jordan and Israel, respectively, requested the designation of the industrial zone in the Irbid Industrial Zone, Jordan, as a QIZ. Pursuant to subsequent consultations among the three governments, the Governments of Israel and Jordan entered into a written agreement dated November 16, 1997, relating to the establishment of the Israeli-Jordanian Irbid Qualifying Industrial Zone as a QIZ. This included the following provision, entitled “Rules of Origin”:

The [Governments of Israel and Jordan] agree that the origin of any textile or apparel product that is processed in the Irbid, Jordan, Qualifying Industrial Zone, regardless of the origin or place of processing of any of its inputs or materials prior to entry into, or subsequent withdrawal from, the zone, will be determined solely pursuant to the rules of origin for textile and apparel products set out in Section 334 of the Uruguay Round Agreements Act, 19 U.S.C. Section 3592.

By notice published in the Federal Register on March 13, 1998 (63 FR 12572), the Office of the U.S. Trade Representative formally designated the Israeli-Jordanian Irbid Qualifying Industrial Zone as a bona fide qualifying industrial zone. In a subsequent agreement dated September 16, 1999, the Governments of Israel and Jordan agreed to the creation of three additional qualifying zones of which the Al-Kerak Industrial Estate was one. Treasury Decision (T.D.) 98-62, published in the Federal Register on June 26, 1998, (63 FR 34960), affirmed that pursuant to the agreement between the Government of Israel and the Government of Jordan, and by mutual consent of the U.S. and Israel, Customs will exclusively apply the textile and apparel rules of origin set forth in 19 C.F.R. Section 102.21 in determining the country of origin of a textile or apparel product processed in a qualifying industrial zone.

Paragraph (c)(1) states that "The 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." As the subject merchandise is not wholly obtained or produced in a single country, territory or insular possession, paragraph (c)(1) of Section 102.21 is inapplicable.

Paragraph (c)(2) states that "Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) of this section, the country of origin of the good is the single country, territory, or insular possession in which each of the foreign materials 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 this section:"

Paragraph (e) in pertinent part states that "The following rules shall apply for purposes of determining the country of origin of a textile or apparel product under paragraph (c)(2) of this section":

HTSUS Tariff shift and/or other requirements

6110.30 If the good is not knit to shape and consists of two or more component parts, 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.

Paragraph (b) (6) defines “wholly assembled” as follows: The term “wholly assembled” when used with reference to a good means that all components, of which there must be at least two, preexisted in essentially the same condition as found in the finished good and were combined to form the finished good in a single country, territory or insular possession. Minor attachments and minor embellishments (for example, appliques, beads, spangles embroidery, buttons) not appreciably affecting the identity of the good, and minor subassemblies (for example, collars, cuffs, plackets, pockets) will not affect the status of a good as “wholly assembled” in a single country, territory or insular possession.

Section 102.21(e) states that the good must be assembled in a single country, territory or insular possession. However, this cardigan is assembled in two countries. Accordingly, as the cardigan does not satisfy the conditions of the tariff shift, Section 102.21(c)(2) is inapplicable.

Section 102.21(c)(3) states that, "Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) or (2) of this section":

(i) If the good was knit to shape, the country of origin of the good is the single country, territory, or insular possession in which the good was knit; or

(ii) Except for goods of heading 5609, 5807, 5811, 6213, 6214, 6301 through 6306, and 6308, and subheadings 6209.20.5040, 6307.10, 6307.90, and 9404.90, if the good was not knit to shape and the good was wholly assembled in a single country, territory, or insular possession, the country of origin of the good is the country, territory, or insular possession in which the good was wholly assembled.

As the subject merchandise is neither knit to shape nor wholly assembled in a single country, Section 102.21 (c)(3) is inapplicable.

Section 102.21 (c)(4) states, "Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1), (2) or (3) of this section, the country of origin of the good is the single country, territory or insular possession in which the most important assembly or manufacturing process occurred".

In the case of the subject merchandise, the woman’s knitted cardigan, Style AC2602TG, the following constitute the most important assembly processes: (1) the sewing of the front and back panels at the shoulder seams; (2) the sewing of the sleeves to the body; (3) the sewing of the side seams; (4) the sewing of the placket facing and the zipper to the body; and (5) the sewing of the hood and the neck binding to the body, all of which occur in Jordan. Accordingly, the country of origin of the woman’s knitted cardigan, Style AC2602TG, is Jordan.

STATUS UNDER THE UNITED STATES-ISRAEL FREE TRADE AGREEMENT

Pursuant to the authority conferred by section 9 of the U.S.-Israel Free Trade Area Implementation Act of 1985 (19 U.S.C. Section 2112 note), the President issued Proclamation No. 6955 dated November 13, 1996 [published in the Federal Register on November 18, 1996 (61 Fed. Reg. 58761)], which modified the Harmonized Tariff Schedule of the United States, HTSUS, by creating a new General Note 3(a)(v) to provide duty-free treatment to articles which are the product of the West Bank, Gaza Strip or a qualifying industrial zone entered or withdrawn from warehouse for consumption on or after November 21, 1996. Under General Note 3(a)(v), HTSUS, articles which are the products of the West Bank, Gaza Strip or a qualifying industrial zone which are imported directly into the United States from the West Bank, Gaza Strip, a qualifying industrial zone or Israel itself qualify for duty-free treatment, provided that the sum of (1) the cost or value of materials produced in the West Bank, the Gaza Strip, a qualifying industrial zone or Israel, plus (2) the direct cost of processing operations performed in the West Bank, the Gaza Strip, a qualifying industrial zone or Israel is not less than 35% of the appraised value of such articles when imported into the United States. An article is considered to be a product of the West Bank, the Gaza Strip or a qualifying industrial zone if it is wholly the growth, product or manufacture of one of those areas or a new and different article of commerce that has been grown, produced or manufactured in one of those areas.

Regarding the requirement that the articles be imported directly, General Note 3(a)(v)(B)(1), HTSUS, provides that
articles are “imported directly” for purposes of this paragraph if (1) they are shipped directly from the West Bank, the Gaza Strip, a qualifying industrial zone or Israel into the United States without passing through the territory of any intermediate country. You have stated in your submission that your understanding is that the women’s knitted cardigan will be directly “shipped directly from the Jordanian QIZ into the United States without being shipped through any other intermediate country.” However, concerning the value content, we are unable to comment on whether the imported goods will meet the 35% value content requirement. This can only be ascertained at the time of the entry of this merchandise into the commerce of the United States when the appraised value of the cardigan is determined by a Customs’ import specialist.

HOLDING:

The country of origin of the women’s knitted cardigan, Style AC2602TG, is Jordan. Based on the information provided the cardigan will be imported directly from the QIZ in Jordan. Under General Note 3(a)(v), HTSUS, the cardigan is eligible for duty-free treatment if the 35% value content requirement is met. This will be determined at the time the merchandise enters the commerce of the United States. Based upon international textile trade agreements products of Jordan are neither subject to quota nor the requirement of a visa.

The holding set forth above applies only to the specific factual situation and merchandise identified in the ruling request. This position is clearly set forth in section 19 CFR 177.9(b)(1). This section states that a ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect.

This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177). Should it be subsequently determined that the information furnished is not complete and does not comply with 19 CFR 177.9(b)(1), the ruling will be subject to modification or revocation. In the event there is a change in the facts previously furnished, this may affect the determination of country of origin. Accordingly, if there is any change in the facts submitted to Customs, it is recommended that a new ruling request be submitted in accordance with 19 CFR 177.2.

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Mike Crowley at 646-733-3049.

Sincerely,

Robert B. Swierupski
Director,

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