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HQ 967492





June 21, 2005

CLA-2 RR:CR:TE 967492 TMF

CATEGORY: CLASSIFICATION

TARIFF NO.: 6110.20.2075

Customs and Border Protection
Port of New Orleans
423 Canal Street
New Orleans, LA 70130
Attn: Protest Office, Room 236

RE: Eligibility of women’s acrylic knitted blouses; Notice to Redeliver; Country of Origin; Protest # 2002-04-101315

Dear Sir or Madam:

This is in reply to your correspondence forwarding Application for Further Review of Protest (AFR) 2002-04-101315, filed by the law firm of Meeks and Sheppard, LLP, on behalf of Goody’s Family Clothing, Inc.

FACTS:

The protest and request for Application for Further Review (hereinafter “AFR”), which was timely filed on November 1, 2004 is against Customs and Border Protection’s (CBP) issuance of two Notices to Redeliver on August 4, 2004 for certain acrylic knitted cardigans and pullovers, identified as styles 1634709 and 1634710, respectively, that were imported by the protestant, under subheading 6110.20.2075, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for “sweaters, pulloversand similar articles, knitted or crocheted: Of cotton: Other,” dutiable at 16.5 percent ad valorem.

According to counsel for the protestant, the samples at issue consist of knitted panels and other components which were knit in Australia, then exported to China where they were looped and linked into finished goods. The protestant states the goods are knit to shape and have a country of origin of Australia.

CBP requested redelivery on August 4, 2004 because the goods were determined to be not knit to shape as they did not contain a self-start bottom. Based on this, the Port determined that the goods’ country of origin is China, not Australia, as provided by section 102.21 of the Customs Regulations, thereby resulting in a required 339 visa from China.

Style 1634709, the cardigan, is composed of two front panels, two front bottom band pieces, a back panel, a back bottom piece, two sleeves, two knit cuffs, knit strips for the facing of the front placket and a strip of knit fabric for neckline capping.

Style 1634710, the pullover, consists of one front panel, one back panel, two knit sleeves, a front bottom piece, a back bottom piece, and knit capping material for the neckline.

Both garments have in common separate waistbands, knitted cuffs and neckbands, front and back panels and sleeves that have a bottom designed to not unravel once the pink waste yarn is removed. The front and back panels have self-finished sides, full fashion marks at the armholes and partial lines of demarcation at the neck. The sleeve panels have self-finished sides and full fashion marks at the armholes.

The manufacturing operations, which were provided by counsel for the protestant are as follows:

Australia

[For both styles, the front and back panel, sleeve panels, waistband, cuffs and neckband are knit to shape in Australia from yarn that is a product of China.] A placket is also knit in Australia for style 1634709. Each panel is individually knit on the knitting machine, and not in blanket form.

The front and back panels are knit with contoured armholes. Approximately four inches from the top of the neck area on the front and back panels there is a thin stripe of contrasting-colored yarn where the knitting construction changes.

Both the front and back panels are knit with contrasting-colored yarn along the panel’s bottom and top. The purpose of the contrasting-colored yarn on the bottom of the panel is to adjust for tension and distortion in the knitting process in order to achieve the desired measurements for the panels. The purpose of the contrasting-colored yarn on the top of the panels is to serve as a linking aid. There is also a small amount of contrasting-colored yarn at the armholes, which is trimmed off, and also serves as a linking aid. The sole difference between the cardigan and crew neck knit panels is on the front panel. The cardigan has a change in the knitting construction pattern in the center of the panel, which creates a center line of demarcation.

The sleeve panels are contoured at the armholes where they join the body panels. The sleeve panels also feature several rows of contrasting-colored yarn located at the top and bottom of the panels. Like the front and back panel, the purpose of the contrasting-colored yarn on the bottom of the sleeve panels is to adjust for tension and distortions in the knitting process in order to achieve the desired measurements for the panels. The rows of contrasting-colored yarn at the top of the sleeve panels serve as a linking aid.

In addition, several trim components are also knit in Australia: the waistband, neckband, cuffs and the placket for style 1634709.

China

The individual panels and other components are sent to China, where the front panel of the cardigan is cut into a front left panel and front right panel. In China, the contrasting-colored yarn along the bottom of each panel is removed by hand. The contrasting-colored yarn at the top of each of the panels is trimmed. The contrasting-colored yarn located at the armholes on the sleeve panels is also trimmed off. All the panels and other components are linked together into a finished garment. In addition, buttonholes are made and buttons are attached on the cardigan. The garments are finished and packaged for export.

The protestant states that the Application for Further Review (AFR) is warranted as there are outstanding questions of law or fact, which have not been ruled upon by CBP, a CBP designee or by the Customs Courts.

ISSUE:

What is the country of origin of the subject garments?

Were the Notices to Redeliver proper?

LAW AND ANALYSIS:

The criteria required for the granting of a request for further review are set forth in 19 C.F.R. § 174.24 of the Customs Regulations. This section states, in pertinent part, that further review of a protest which otherwise would be denied by the Port Director will be accorded to a party filing an application for further review which meets the requirements of § 174.25 when the decision against which the protest was filed:

(a) Is alleged to be inconsistent with a ruling of the Commissioner of Customs or his designee, or with a decision made at any port with respect to the same or substantially similar merchandise;

(b) Is alleged to involve questions of law or fact which have not been ruled upon by the Commissioner of Customs or his designee or by the Customs courts;

(c) Involves matters previously ruled upon by the Commissioner of Customs or his designee or by the Customs courts but facts are alleged or legal arguments presented which were not considered at the time of the original ruling; or

(d) Is alleged to involve questions which the Headquarters Office, United States Customs Service, refused to consider in the form of a request for internal advice pursuant to § 177.11(b)(5) of this chapter.

The facts leading to this protest indicate that the Port issued two Notices to Redeliver after determining that the merchandise at issue was not knit to shape and thus China was its country of origin, not Australia as claimed. In this case, counsel for the protestant asserts that AFR is warranted in this case based on 174.24(b) above. We disagree. However, having reviewed counsel’s submission, AFR is warranted on the basis of 174.24(a), alleging inconsistency with CBP prior rulings that address whether an article is knit to shape.

The main issue is whether the subject garments are knit to shape so that we may determine their country of origin as outlined in 19 C.F.R § 102.21.

Knit to Shape

The question in this case is whether the subject articles are knit to shape. We refer to Section 102.21(b), which states:

(3) Knit to shape. The term knit to shape applies to any good of which 50 percent or more of the exterior surface area is formed by major parts that have been knitted or crocheted directly to the shape used in the good, with no consideration being given to patch pockets, appliqués, or the like. Minor cutting, trimming, or sewing of those major parts will not affect the determination of whether a good is "knit to shape".

(4) Major parts. The term major parts means integral components of a good but does not include collars, cuffs, waistbands, plackets, pockets, linings, paddings, trim, accessories, or similar parts.

In the case at issue, both the front and back panels along with the two sleeves are integral components as defined above. All have been knitted or crocheted to the shape used in the good without consideration of any patch pockets, appliqués, or the like. In fact, the back and front panels and sleeves compose 50 percent or more of the garments’ entire surface area. We note that it is clearly established that CBP views integral components to include the instant panels and sleeves. See CBP Informed Compliance Publication (ICP) What Every Member of the Trade Community Should Know About: Knit to Shape Apparel Products (Jan. 1999).

In the case of the cardigan, the front panel has a line of demarcation as a result of a change in the knitting pattern construction that establishes the location for cutting the front panel into two front panels in China. This aspect does not undermine the nature of the panels as major parts or as knit to shape. In the case of both samples, each panel has a self-start bottom. A self-start bottom is defined as:

A finished bottom edge which is the beginning of a continuously knit garment. As such, the edge is finished when it comes off the machine. Id.

Both of the instant panels require that the constrasting-colored yarn at the bottom must be removed by hand. This removal does not change the self-finished edge; it remains intact. In fact, we agree with counsel and note that the removal by hand of the several rows of contrasting-colored yarn does not undermine the concept of a self-start bottom.

The self-start edge is clearly established, the addition of the knit band at the bottom of the panels does not change the character of the panels; they still remain major parts which are designed to the shape that is used in each garment. See HQ 959484, dated October 3, 1996, in which CBP determined that a knitted cardigan sweater that features a separate waistband is considered to be knit to shape.

As the subject garments contain panels which are knitted or crocheted to the shape as used in the good and these panels comprise 50 percent or more of the surface area, we find the subject merchandise is knit to shape. Classification of the garments in heading 6110 is not in dispute.

Country of Origin

Section 334 of the Uruguay Round Agreements Act (codified at 19 U.S.C. 3592), enacted on December 8, 1994, provided rules of origin for textiles and apparel entered, or withdrawn from warehouse for consumption, on and after July 1, 1996. Section 102.21, Customs Regulations (19 C.F.R. §102.21), published September 5, 1995, in the Federal Register, implements Section 334 (60 Fed. Reg. 46188). Section 334 of the URAA was amended by section 405 of the Trade and Development Act of 2000, enacted on May 18, 2000, and accordingly, section 102.21 was amended (68 Fed. Reg. 8711). Thus, 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.

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." In this case, all the panels and other components for the two styles at issue were knit to shape in Australia and then sent to China where they were linked together into finished garments. 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 foreign material 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)(1) states that "The following rules will apply for purposes of determining the country of origin of a textile or apparel product under paragraph (c)(2) of this section:"

(3) If the good is knit to shape, except for goods of subheading 6117.10 provided for in paragraph (e)(2) of this section, a change to heading 6101 through 6117 from any heading outside that group, provided that the knit to shape components are knit in a single country, territory or insular possession.

The instant knit to shape components are knitted in a single country and are classified in heading 6117 as parts of garments. Section 102.21(e) requires a tariff shift to heading 6101 through 6117 from any heading outside that group, provided that the knit to shape components are knit in a single country, territory or insular possession. The tariff shift occurs from heading 6117 to 6110. As 6117 is a heading within the group, the tariff shift is not met.

We must look to section (c)(3) which provides, in relevant part, that where the country of origin 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.” In the case of the subject garments, inasmuch as all the sweater components are knit in a single country, Australia, it is Australia, which is the country of origin of the subject sample goods.

Therefore, as the panels and other components were completely knit in Australia, in accordance with 19 C.F.R. §102.21(c)(3), the country of origin of the goods is Australia. As the country of origin is Australia, the Notices to Redeliver are invalid and must be cancelled.

HOLDING:

The country of origin of the merchandise is Australia. As goods of Australia, these garments do not require a visa for category 339 and the protest is allowed.

In accordance with 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 of 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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