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NY L81189





January 4, 2005

CLA-2-61:RR:NC:TA:359 L81189

CATEGORY: CLASSIFICATION

Mr. Arthur W. Bodek
Mr. John A. Schoenig
Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, LLP 399 Park Avenue 25th Floor
New York, NY 10022-4877

RE: Classification and country of origin determination for women’s and girls’ knit and woven upper body garments; United States – Israel Free Trade Agreement; 19 CFR Section 12.130; 19 CFR Section 102.21; General Note 8, HTS

Dear Messrs. Bodek and Schoenig:

In your letter dated December 3, 2004, you requested a tariff classification ruling and a country of origin determination for four garments that will be imported into the United States on behalf of your client, BCTC Corp. The samples submitted with your request will be returned as you have requested.

FACTS:

Style WS512252 is a women’s 57% cotton, 38% polyester 5% spandex knit long sleeved garment which features a full frontal opening secured by seven snap closures, two front pockets at the waistline, and cuff tie-strings.

Style DN553372 is a girls’ 100% polyester woven shirt-jacket which features a hood, vented long sleeves without cuffs, and a full frontal opening secured by a zipper. The item will be worn primarily for protection against the elements.

Style DN553374 is a girls’ 100% polyester knit jacket which features a full frontal opening secured by a zipper, a hood, two front pockets located at the waistline, rib knit cuffs and a rib knit waistband.

Style DN5334716 is a women’s 95% cotton, 5% spandex knit cardigan which features a full frontal opening secured by a zipper, a hood and two front zippered pockets located at the waistline.

The fabric for all the garments will be formed in Taiwan or elsewhere in Asia.

For style WS512252, all cutting and assembly operations are performed in Malaysia.

For styles DN553372, DN553374 and DN5334716, the manufacturing processes will be as follows:

Country A (Israel):

-The fabric will be cut into all its component parts

Country B (China):

-All the component pieces will be assembled into each completed garment -The finished garment will be inspected, pressed and packed for export

ISSUE:

What are the classification and country of origin of the garments?

CLASSIFICATION:

The applicable subheading for styles WS512252 and DN5334716 will be 6110.20.2075, Harmonized Tariff Schedule of the United States (HTS), which provides for sweaters, pulloversand similar articles, knitted or crocheted: Of cotton: Other: Other: Other: Women’s or girls’. The general rate of duty is 16.5% ad valorem.

The applicable subheading for style DN553372 will be 6202.93.5021, HTS, which provides for Women’s or girls’ overcoatsand similar articlesother than those of heading 6204: Anoraksand similar articles: Of man-made fibers: Other: Other: Other: Other: Girls’. The general rate of duty is 27.7% ad valorem.

The applicable subheading for style DN553374 will be 6102.30.2020, Harmonized Tariff Schedule of the United States (HTS), which provides for Women’s or girls’ overcoats, carcoatsand similar articles, knitted or crocheted, other than those of heading 6104: Of man-made fibers: Other: Other: Girls’. The general rate of duty is 28.2% ad valorem.

The textile category designation for styles WS512252 and DN5334716 is textile category designation 339. The textile category designation for styles DN553372 and DN553374 is textile category designation 635.

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. Part categories are the result of international bilateral agreements which are subject to frequent renegotiations and changes. To obtain the most current information as to whether quota and visa requirements apply to this merchandise, we suggest that you check, close to the time of shipment, the “Textile Status Report for Absolute Quotas” available at our web site at www.cbp.gov. In addition, you will find current information on textile import quotas, textile safeguard actions and related issues at the web site of the Office of Textiles and Apparel, at otexa.ita.doc.gov.

COUNTRY OF ORIGIN - LAW AND ANALYSIS:

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 FR 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 the 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." As style WS512252 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

6101 – 6117 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.

As style WS512252 was completely assembled in a single country, that is, Malaysia, as per the terms of the tariff shift requirement, country of origin is conferred in Malaysia.

EXCEPTION FOR UNITED STATES-ISRAEL FREE TRADE AGREEMENT:

For styles DN553372, DN553374 and DN5334716, you have stated that the fabric is cut into garment parts in Israel. Section 334(b)(5) of the Uruguay Round Agreements Act provides that:

This section shall not affect, for the purposes of the customs laws and administration of quantitative restrictions, the status of goods that, under rulings and administrative practices in effect immediately before the enactment of this Act, would have originated in, or been the growth, product, or manufacture of, a country that is party to an agreement with the United States establishing a free trade area, which entered into force before January 1, 1987. For such purposes, such rulings and administrative practices that were applied, immediately before the enactment of this Act, to determine the origin of textile and apparel products covered by such agreement shall continue to apply after the enactment of this Act, and on and after the effective date described in subsection (c), unless such rulings and practices are modified by the mutual consent of the parties to the agreement.

Israel is the only country which qualifies under the terms of Section 334(b)(5). As the Section 334 rules of origin for textiles and apparel products do not apply to Israel, we refer to the 19 C.F.R. §12.130 rules of origin, the rules of origin applicable to textiles and textile products before the enactment of Section 334. Section 334(b)(5) makes clear that if country of origin was conferred in Israel under Section 12.130, Israel will now be accorded the same treatment. This interpretation of Section 334(b)(5) was confirmed in a Notice of a general statement of policy, Treasury Decision 96-58, appearing in the Federal Register, Vol. 61, No. 148, dated July 31, 1996.

Accordingly, pursuant to Section 12.130(b), the standard of substantial transformation governs the country of origin determination where textile and textile products are processed in more than one country. The country of origin of textile products is deemed to be that foreign territory or country where the article last underwent a substantial transformation. Substantial transformation occurs when an article is transformed into a new and different article of commerce by means of substantial manufacturing or processing.

Section 12.130(d) sets forth criteria for determining whether a substantial transformation of a textile product has taken place. These criteria are not exhaustive; one or any combination of criteria may be determinative, and additional factors may be considered.

Section 12.130(d)(1) states that a new and different article of commerce will usually result from a manufacturing or processing operation if there is a change in: (i) Commercial designation or identity,
(ii) Fundamental character, or
(iii) Commercial use.

Section 12.130(d)(2) states that for determining whether the merchandise has been subjected to substantial manufacturing or processing operations, the following will be considered: (i) The physical change in the material or article; (ii) The time involved in the manufacturing or processing; (iii) The complexity of the manufacturing or processing; (iv) The level or degree of skill and/or technology required in the manufacturing or processing operations; (v) The value added to the article or material.

Section 12.130(e)(1) states, in pertinent part, that an article will usually be a product of a particular country when it has undergone in that country: (iv) Cutting of the fabric into parts and the assembly of these parts into the completed article; or (v) Substantial assembly by sewing and/or tailoring of all cut pieces of apparel articles which were cut from the fabric in another country into a component garment. (e.g., the complete assembly and tailoring of all cut pieces of a suit-type jacket, suit or a shirt).

It is the consistently held position of Customs that the cutting of fabric into garment parts is a substantial transformation of the fabric and that those garment parts become the product of the country in which they are cut. It is also the consistently held position of Customs that when garment parts are cut in one country but the garment in assembled in another country, unless the assembly operation is a substantial assembly such as that referred to in Section 12.130(e)(1)(v), the country or origin remains the country in which the garment parts are cut. See, for example, HRL 088235 dated March 15, 1991, and the rulings that are cited in that ruling.

In this case, since the fabric for styles DN553372, DN553374 and DN5334716 is cut into garment parts in Israel, Israel is the country of origin for those styles of the imported apparel. This is because in Israel the fabric is substantially transformed into garment parts that are designated for particular articles of apparel, thereby creating a new and different article of commerce. The mere assembly of goods on the other hand, is not enough to substantially transform the components of an article into a new and different article of commerce.

"IMPORTED DIRECTLY" FROM ISRAEL:

Under General Note 8, Harmonized Tariff Schedule of the United States (HTS), products of Israel are eligible, when imported into the United States, for the "special" duty rate set forth in the tariff schedule only if each article is imported directly from Israel into the customs territory of the United States (General Note 8(b)(ii)). Since styles DN553372, DN553374 and DN5334716 are shipped from Israel to China for final assembly of their component parts into the finished garments, these styles do not qualify for the "special" duty rate.

HOLDING:

The country of origin of styles DN553372, DN553374 and DN5334716 is Israel. Based upon international textile trade agreements products of Israel are not subject to quota nor the requirement of a visa. The garments are not eligible for the “special” duty rate as they are not imported directly from Israel.

The country of origin of styles WS512252 is Malaysia.

Style WS512252 falls within textile category designation 339. Quota and visa status are the result of international agreements that are subject to frequent renegotiations and changes. To obtain the most current information as to whether quota and visa requirements apply to this merchandise, we suggest that you check, close to the time of shipment, the “Textile Status Report for Absolute Quotas” available at our web site at www.cbp.gov. In addition, you will find current information on textile import quotas, textile safeguard actions and related issues at the web site of the Office of Textiles and Apparel, at otexa.ita.doc.gov.

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 C.F.R. §177.9(b)(1). This sections 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 C.F.R. §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 C.F.R. §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 Camille R. Ferraro at 646-733-3049.

Sincerely,

Robert B. Swierupski
Director,

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