United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 2005 NY Rulings > NY L87250 - NY L87298 > NY L87267

Previous Ruling Next Ruling
NY L87267




September 29, 2005

CLA2-RR:NC:TA:361 L87267

CATEGORY: CLASSIFICATION

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

RE: Classification and country of origin determination for women’s knit garments; 19 CFR 102.21(c)(2); 19 CFR 102.21(c)(4); Commonwealth of the Northern Mariana Islands; General Note 3(a)(iv), HTSUSA.

Dear Ms. Salus:

This is in reply to your letter dated September 2, 2005, requesting a classification and country of origin determination on behalf of United International Corp. The submitted samples and partially assembled components will be returned, as requested.

FACTS:

Style NN502 consists of two garments, a pullover and a knit camisole styled top. The pullover is constructed from 88 percent nylon, 12 percent spandex finely knit openwork fabric; the top is constructed from 95 percent cotton, five-percent spandex knit fabric. The pullover extends from the shoulder past the waist and has a v-neckline, three buttons simulating an opening, short capped sleeves, and a self-finish bottom. The camisole top has ¼ inch adjustable shoulder straps, a v-neckline in front, and a plain, hemmed bottom. The upper back of the camisole extends straight across from side seam to side seam, exposing approximately the upper half of the back. You have indicated that the two garments are intended to be worn together.

Although you have indicated that the two garments are intended to be worn together, they will be classified as two separate garments as required by note 13 to Section XI of the, Harmonized Tariff Schedule of the United States (HTS). That note states: Unless the context otherwise requires, textile garments of different headings are to be classified in their own headings even if put up in sets for retail sale. For the purposes of this note, the expression "textile garments" means garments of headings 6101 to 6114 and headings 6201 to 6211.

Style 357882 is a woman’s pullover constructed from 94 percent tencel, six-percent spandex knit fabric with more than nine stitches per two centimeters measured in the direction that the fabric was formed. The pullover has a boat neckline, short sleeves, and an elasticized smocked bottom. The upper part of each sleeve is split from the edge to the shoulder seam.

Style WS6AP1004A is a woman’s pullover constructed from 98 percent cotton, two-percent spandex rib knit fabric. The garment ha a rounded neckline, cap sleeves, and the bottom finished with overlock stitching. The sleeves and a half-moon shaped insert below the front neckline are constructed from 100 percent cotton woven fabric; the second half-moon shaped insert in the front, below the woven section, is constructed from 100 percent cotton open crocheted fabric.

You have described the various manufacturing operations that will take place in order to produced the submitted garments in either China or Saipan. However, you have also indicated that the actual countries of production may change, and asked that the ruling apply to the processes described, regardless of the countries in which they are performed.

For each style, you also submitted the partially assembled component panels as they will be exported from Country A (China). The manufacturing operations for the submitted styles are as follows.

STYLE NN5102
The pullover is made from several segments of knit openwork fabric sewn together to form the front and back panels. The camisole top is made, essentially from a front and back panel. The binding that finishes the back and armholes of the camisole forms the front of the shoulder straps. The back portion of the shoulder straps are elasticized strips with adjusters.

Country A: CHINA
Cut fabric into component parts
For the camisole styled top: Form and sew the back elastic strap with strap adjusters and O ring. For the pullover:
Join the four pieces to form the upper front (bust and shoulders) of the garment Join the two lower horizontal pieces of the lower front Join the upper and lower parts of the front with a strip of the openwork fabric Sew the buttons onto the upper front
Join the three horizontal pieces of the upper back Join the three horizontal pieces of the lower back Join the upper and lower parts of the back with a strip of the openwork fabric

Country B: Saipan:
For the camisole styled top:
Sew the binding onto the front panel
Join the side seams of the front and back panels, attaching the labels Attach main and care labels at center back neckline Sew the binding onto the top of the back panel, the armholes, and form the front straps. Sew the back (elasticized) portion of the shoulder straps to the upper back panel. Attach the front and back portions of the straps at the O ring. Hem the bottom.
For the Pullover:
Sew the binding on the back neckline
Sew the main and size label at the center back neckline Fold and hem the back neckline
Join the front and back panels at the shoulder seams Sew the sleeves to the body
Join the front and back panels at the side seams, attaching the labels Fold and hem the armhole openings of the front and back panels

Style 357822: The pullover is made from a front and back panel, which includes the sleeve segments, and waistband panels.

Country A: CHINA
Cut the fabric into component parts
Overlock the hem of the waistband
Smock the waistband panels
Sew the waistband panels to each other at the sides Overlock the shoulders/sleeve vent sections of front and back panels

Country B: Saipan:
Join the front and back panels at the side seams. Fold and hem sleeve ends
Join the front and back panels at the shoulder seams Fold and hem the sleeve vents
Attach the care label at the neckline
Fold and hem the neckline
Attach the main label at the neckline
Join the waistband to the bottom of the front and back panels

Style WS6AP1004A: The pullover is made from a front panel, a back panel, two woven sleeves, a woven insert, and a crocheted insert.

Country A: CHINA
Sew the crocheted panel to binding and front panel Shirr the woven front panel
Sew the shirred woven panel to binding and front panel Shirr the sleeve panels
Sew the sleeve panels to binding

Country B: Saipan:
Join the front and back panels at the right shoulder seam Sew the main label at the back neckline
Sew the binding onto the neckline
Join the left shoulder seam
Attach the sleeves to the body
Join the side seams, attaching the care label Overlock stitch the bottom of the garment

ISSUE:

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

CLASSIFICATION:

The applicable subheading for the camisole top of style NN502, will be 6114.30.1020, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for Other garments, knitted or crocheted: of Man-made fibers: Tops: Women’s or girls’. The general rate of duty is 28.2% ad valorem.

The applicable subheading for the pullover of style NN502, and for style 357882 will be 6110.30.3055, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for pullovers...knitted or crocheted: Of man-made fibers: Women’s. The general rate of duty is 32% ad valorem.

The applicable subheading for style WS6AP1004A will be 6110.20.2075, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for pullovers...knitted or crocheted: Of cotton: Women’s. The general rate of duty is 16.5% ad valorem.

Style WS6AP1004A falls within textile category designation 339; style 357882, and both the pullover and the top of style NN502 fall 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.CBP.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:

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 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 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. If the good is not knit to shape and does not consist of two or more component parts, a change to heading 6101 through 6117 from any heading outside that group, except from heading 5007, 5111 through 5113, 5208 through 5212, 5309 through 5311, 5407 through 5408, 5512 through 5516, 5806, 5809 through 5811, 5903, 5906 through 5907, and 6001 through 6002, and subheading 6307.90, and provided that the change is the result of a fabric-making process. If the good is knit to shape, 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 term “Wholly assembled” is defined in section 102.21(b)(6) 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.

The camisole top of style NN502 is not knit to shape and consists of two or more components. As the camisole top meets the above definition of “wholly assembled,” the terms of the tariff shift have been met. Accordingly, the country of origin is the country is Country B, (Saipan), as this is the country in which the camisole top was wholly assembled.

For the pullover of style NN502, and for styles 357882 WS6AP1004A, the garments are not knit to shape and consist of two or more components. As the garments are assembled in more than one country, territory or insular possession, the terms of the tariff shift are not met, and, therefore, 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 three remaining styles are neither knit to shape nor wholly assembled in a single country, territory or insular possession, 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".

The most important assembly operations for the remaining three garments are as follows: For the pullover of style NN502L, sewing the binding on the back neckline, joining the front and back panels at the shoulder seams, sewing the sleeves to the body, and joining the front and back panels at the side seams. For style 357882, joining the front and back panels at the side seams, joining the front and back panels at the shoulder seams, and join the waistband to the bottom of the front and back panels. For style WS6AP1004A, joining the front and back panels at the right shoulder seam, sewing the binding onto the neckline, joining the left shoulder seam, attaching the sleeves to the body, and joining the side seams.

Accordingly, the country of origin for the three garments is Country B (Saipan), the country in which the above named assembly operations occur.

The following information applies when country B is Saipan, Commonwealth of the Northern Mariana Islands.

General Note 3 (a) (iv), HTSUSA, permits products of insular possessions of the United States (of which the Commonwealth of the Northern Mariana Islands is one) to be imported into the United States free of duty obligations if certain requirements are fulfilled. Duty free status is granted to those goods which Are the growth or product of the possession; or Are manufactured or produced in any such possession from materials which are the growth, product or manufacture of any such possession or of the customs territory of the United States, or of both; and Do not contain foreign materials which represent more than 50 percent of the goods’ total value (for textile and apparel articles subject to textile agreements); and Are shipped directly to the customs territory of the United States from the insular possession.

Since the Commonwealth of the Northern Mariana Islands is an insular possession of the United States, and since the good which is produced in the Commonwealth of the Northern Mariana Islands is a textile article that is subject to textile agreements, the “foreign materials” which make up the garments must not represent more than 50 percent of the article’s appraised value.

In order to meet the requirements of General Note 3(a)(iv), HTSUSA, we must determine whether the component panels which are imported into the Commonwealth of the Northern Mariana Islands from China are substantially transformed by processing in the Commonwealth and therefore become a product of that insular possession. A substantial transformation occurs when an item emerges from a process with a new name, character or use that is different from that possessed by the item prior to processing.

In determining whether the cost or the value of the Chinese component panels should be considered part of the cost of the “foreign materials” or of the cost of materials produced in the Commonwealth of the Northern Mariana Islands for the purpose of applying the 50 percent foreign value limitation under General Note 3(a)(iv), we must consider whether the component panels undergo a double substantial transformation during processing in the insular possession.

Treasury Decision (T.D.) 88-17, effective April 13, 1988, determined that the concept of the double substantial transformation should be used in deciding whether foreign material that does not originate in the insular possession may nevertheless qualify as part of the value of material produced in the insular possession. To do this the foreign material must be substantially transformed in the insular possession into a new and different product and then that product must be transformed yet again into another new and different product which is exported directly to the United States. If this happens to the foreign material, then its cost can be considered part of the value of materials produced in the insular possession.

For an example of the double substantial transformation principle as it was applied to textile wearing apparel we look to Headquarters Ruling Letter (HRL) 556214, dated March 20, 1992, in which Customs ruled that foreign rolled fabric that was imported into the Commonwealth of the Northern Mariana Islands where it was cut to shape and then assembled into golf shirts and pullovers did undergo a double substantial transformation. In contrast, the present question involves component panels that are cut in China, not in the Commonwealth of the Northern Mariana Islands. Therefore, the component panels do not undergo a double substantial transformation in the insular possession and their cost may not be included as part of the value of materials produced in the Northern Mariana Islands.

Despite the fact that the Chinese knitted and cut component panels of the garments are considered foreign materials when they are shipped to the Commonwealth of the Northern Mariana Islands, and regardless of the determination that these panels do not undergo a double substantial transformation when they are processed in the insular possession, the garments may still qualify for duty free tariff status as long as they do not contain foreign materials which represent more than 50% of the total value of the goods and it is shipped directly to the United States from the insular possession. Section 7.3 (d) of the Customs Regulations (C.R.) states that such a determination must be based on a cost comparison between: the manufacturer’s actual materials cost plus the cost of transporting those materials to the insular possession (excluding duties, taxes and charges after landing) versus the final appraised value of the imported goods under Section 402a, Tariff Act of 1930, as amended.

We note that a final determination regarding whether the foreign value limitation is satisfied for the instant merchandise can only be made at the time of entry of the goods into the United States.

HOLDING:

The country of origin of the garments is Country B. 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.

If Country B is the Commonwealth of the Northern Mariana Islands, the component panels cut in China, are considered foreign materials for the purpose of calculating the 50 percent foreign value limitation under General Note 3(a)(iv), HTSUSA. However, the garments may still be entitled to duty free status under General Note 3(a)(iv), HTSUSA, provided that it is imported directly from the Commonwealth of the Northern Mariana Islands to the United States, and that the 50 percent foreign value limitation is satisfied at the time of entry. Since the Commonwealth of the Northern Mariana Islands is not a foreign country and, therefore, the United States has no bilateral quota or visa agreement with it, the garments are neither subject to quota restraints nor to 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 Angela DeGaetano at 646-733-3052.

Sincerely,

Robert B. Swierupski
Director,

Previous Ruling Next Ruling

See also: