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NY L86117





August 12, 2005

CLA-2-61:RR:NC:TA:361 L86117

CATEGORY: CLASSIFICATION

Mr. Tom Gould
Zisser Group
3807 W. Sierra Hwy., 4420
Acton, CA 93510

RE: Classification and eligibility under the Tariff Preference Levels of the North American Free Trade Agreement (NAFTA), of a woman’s garment from Mexico; Section XI, Additional U.S. note 3, Harmonized Tariff Schedule of the United States Annotated (HTSUSA).

Dear Mr. Gould:

This is in reply to your letter dated July 11, 2005, requesting a classification ruling and eligibility under the Tariff Preference Levels of the North American Free Trade Agreement (NAFTA), of a woman’s garment from Mexico on behalf of L’Koral Industries.

FACTS:

The submitted garment, style 35K001, is a pair of women’s pants constructed from 63 percent polyester, 34 percent rayon, three-percent spandex woven fabric. The pants have a flat waistband with a button on both the inside and outside of the waistband, a front zipper, and hemmed leg openings.

You have described two scenarios for the production of the pants, as follows:

Scenario 1: Foreign Fabric
The fabric will be woven in China from Chinese origin yarns.

Scenario 2: U.S. Fabric made with non-NAFTA originating yarn The fabric will be woven in the United States using Chinese origin yarns

Under both scenarios, the fabric will be cut into components in the United States, then exported to Mexico, where it will be assembled into a finished good.

ISSUE:

What are the classification and eligibility under the Tariff Preference Levels of the North American Free Trade Agreement (NAFTA) of the subject merchandise?

CLASSIFICATION:

The applicable subheading for style 35K001 will be 6204.63.3510, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for Women’strousers: Of synthetic fibers. The general rate of duty is 28.6 percent ad valorem.

ELIGIBILITY UNDER THE NAFTA:

General Note 12(b), HTSUS, sets forth the criteria for determining whether a good is originating under the NAFTA. General Note 12(b), HTSUS, (19 U.S.C. § 1202) states, in pertinent part, that

For the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as "goods originating in the territory of a NAFTA party" only if--

(i) they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; or

(ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that-- (A) except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein, or

(B) the goods otherwise satisfy the applicable requirements of subdivisions (r), (s) and (t) where no change in tariff classification is required, and the goods satisfy all other requirements of this note; or

(iii) they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials; or

(iv) they are produced entirely in the territory of Canada, Mexico and/or the United States but one or more of the nonoriginating materials falling under provisions for "parts" and used in the production of such goods does not undergo a change in tariff classification because--

(A) the goods were imported into the territory of Canada, Mexico and/or the United States in unassembled or disassembled form but were classified as assembled goods pursuant to general rule of interpretation 2(a), or

(B) the tariff headings for such goods provide for and specifically describe both the goods themselves and their parts and is not further divided into subheadings, or the subheadings for such goods provide for and specifically describe both the goods themselves and their parts,
provided that such goods do not fall under chapters 61 through 63, inclusive, of the tariff schedule, and provided further that the regional value content of such goods, determined in accordance with subdivision (c) of this note, is not less than 60 percent where the transaction value method is used, or is not less than 50 percent where the net cost method is used, and such goods satisfy all other applicable provisions of this note.

Under both scenarios, based on the facts provided, the goods described above do not qualify for NAFTA preferential treatment, because none of the above requirements are met.

Subheading 9802.00.90 provides for the duty-free entry of "Textile and apparel goods, assembled in Mexico in which all fabric components were wholly formed and cut in the United States, provided that such fabric components in whole or in part, (a) were exported in condition ready for assembly without further fabrication, (b) have not lost their physical identity in such articles by change in form, shape or otherwise, and (c) have not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process; provided the goods classifiable in chapters 61, 62, or 63 may have been subject to bleaching, garment dyeing, stone-washing, acid-washing or perma-pressing after assembly as provided for herein." Components may also be subjected to operations incidental to the assembly before, during, or after the assembly without losing the benefits of the subheading. This provision may apply to garments produced under scenario 2, if they meet the above-mentioned requirements.

     Subheading 9802.00.80 provides for partial duty exemption of "Articles, except goods of heading 9802.00.90, assembled abroad in whole or in part of fabricated components, the product of the United States, which (a) were exported in condition ready for assembly without further fabrication, (b) have not lost their physical identity in such articles by change in form, shape or otherwise, and (c) have not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process such as cleaning, lubricating and painting." All three requirements of HTSUSA subheading 9802.00.80 must be satisfied before a component may receive a duty allowance. An article entered under this tariff provision is subject to a duty upon the full value of the imported assembled article, less the cost or value of the U.S. components assembled therein, provided there has been compliance with the documentation requirements of section 10.24, Customs Regulation (19 C.F.R. §10.24). This provision may apply to garments produced under scenario 1, if they meet the above-mentioned requirements.

Goods produced under Scenario 1, may also be subject to a reduced rate of duty based upon the Tariff Preference Levels (TPL) established in Section XI, Additional U.S. Note 3(c), up to the annual quantities specified in subdivision (g)(ii) of Note 3. Upon completion of the required documentation and up to the specified annual quantities, the garments may be eligible for the preferential “Free” rate of duty.

HOLDING:

The garment is classified under heading 6204.63.3510. The garment does not qualify for preferential treatment under General Note 12. Under Scenario 1, it may qualify under heading 9802.00.80 and be subject to Tariff Preference Level described in Section XI, Additional U.S. note 3(c) if the required documentation is provided, up to the specified annual quantities. Under Scenario 2, it may qualify 9802.00.90.

This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 C.F.R. 181).

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 Angela De Gaetano at 646-733-3052.

Should you wish to request an administrative review of this ruling, submit a copy of this ruling and all relevant facts and arguments within 30 days of the date of this letter, to the Director, Commercial Rulings Division, Headquarters, U.S. Customs and Border Protection, 1300 Pennsylvania Ave. N.W., (Mint Annex), Washington, D.C. 20229.

Sincerely,

Robert B. Swierupski
Director,

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