NY L89495 - Classification and country of origin determination for women’s undergarments; Treatment for products of the West Bank, Gaza Strip, or a Qualifying Industrial Zone (QIZ); General Note 3(a)(v); 19 C.F.R. 102.21(c)(2); T.D. 98-62 - United States International Trade Commision Rulings

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NY L89495

January 17, 2006

CLA2-RR:NC:TAB:354 L89495

CATEGORY: CLASSIFICATION

Ms. Sandra Tovar
CST, Inc.
120 C Commerce Circle
Fayetteville, GA 30214

RE: Classification and country of origin determination for women’s undergarments; Treatment for products of the West Bank, Gaza Strip, or a Qualifying Industrial Zone (QIZ); General Note 3(a)(v); 19 C.F.R. 102.21(c)(2); T.D. 98-62

Dear Ms. Tovar:

This is in reply to your letter dated December 15, 2005, written on behalf of your client, Holt Hosiery, requesting a classification and country of origin determination for underwear camisoles and panties that will be imported into the United States.

FACTS:

The subject merchandise consists of a woman’s underwear panty and an underwear camisole. Both garments are produced of 90% nylon, 7% spandex, and 3% cotton.

The following manufacturing operations apply to both the panty and camisole:

Manufacturing Scenario #1:

Yarns are knit into tubular fabric and dyed in Italy. The tubes are shipped from Italy to an Israeli QIZ that you state will be located in Israel. The knitted tubular fabric will have no demarcation lines for cutting. In the Israeli QIZ, the tubular fabric will be cut to shape and sewn into finished camisoles and panties. The garments will be inspected and packed for export to the U.S.

Manufacturing Scenario #2:

Yarns are knit into tubular fabric and dyed in Italy. The tubes are shipped from Italy to an Israeli QIZ that you state will be located in Israel. The knitted tubular fabric will have no demarcation lines for cutting. The fabric will be cut to shape in the Israeli QIZ, shipped to Serbia for sewing and finishing, and returned to Israel for quality inspection and shipping to the U.S.

ISSUE:

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

CLASSIFICATION:

The applicable subheading for the panties will be 6108.22.9020, Harmonized Tariff Schedule of the United States (HTSUS), which provides for women’s or girls’ slips, briefs, panties, nightdresses, pajamas, negligees, bathrobes, dressing gowns and similar articles, knitted or crocheted: briefs and panties: of man-made fibers, women’s. The general rate of duty will be 15.6% ad valorem. The applicable tariff provision for the camisoles will be 6109.90.1065, HTSUS, which provides for T-shirts, singlets, tank tops and similar articles, knitted or crocheted: of other textile materials: of man-made fiber: women’s or girls’: tank tops and singlets: women’s. The general rate of duty will be 32% ad valorem.

Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at http://www.usitc.gov/tata/hts/.

Under General Note 3(a)(v), HTSUS, articles the “product of” the West Bank, Gaza Strip or a QIZ which are imported directly into the U.S. from the West Bank, Gaza Strip, a QIZ or Israel qualify for duty-free treatment, provided the sum of (1) the cost or value of materials produced in the West Bank, Gaza Strip, QIZ or Israel, plus (2) the direct costs of processing operations performed in the West Bank, Gaza Strip, QIZ or Israel, is not less than 35% of the appraised value of such articles when imported into the U.S. An article is considered to be a “product of” the West Bank, Gaza Strip, or a QIZ if it is either wholly the growth, product or manufacture of one of those areas or a new or different article of commerce that has been grown, produced or manufactured in one of those areas.

General Note 3(a)(v)(G), HTSUS, 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 (3) has been designated by the U.S. Trade Representative in a notice published in the Federal Register as a qualifying industrial zone.”

Origin Determination – Scenarios 1 and 2

Treasury Decision 98-62 dated July 13, 1998, determined that pursuant to the agreement between the governments of Israel and 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. 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

6101-6117 (1) If the good is not knit to shape and consists of two or more component parts, except for goods of subheading 6117.10 provided for in paragraph (e)(2) of this section, 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.

In the scenarios under consideration, the undergarments are not knit to shape and consist of two or more component parts. Therefore, the remaining issue that must be determined is whether the undergarments are “wholly assembled” in the QIZ.

The term “wholly assembled” is defined in 19 C.F.R. 102.21(b)(6) as:

Wholly assembled. 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, appliqués, 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.

In the case of scenario #1, because the garments will consist of two or more component parts and will be wholly assembled in what we will assume to be a qualifying QIZ, under 19 C.F.R. 102.21(e), the garments will be considered “products of” Israel, where the Israeli QIZ is located, as per the terms of the tariff shift requirement.

In the case of scenario #2, because the garments will consist of two or more component parts and will be wholly assembled in Serbia, the country of origin of the garments will be Serbia, the country where the articles are assembled into completed garments. In this scenario, the garments will be subject to the general rate of duty and the goods will not qualify for preferential treatment under the USIFTA.

Status Under The United States-Israel Free Trade Agreement for Scenario #1:

Pursuant to the authority conferred by section 9 of the U.S.-Israel Free Trade Area Implementation Act of 1985 (19 U.S.C. 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, provided certain requirements are met. Such treatment was effective for products 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 that are products of the West Bank, Gaza Strip, or qualifying industrial zone which are imported directly to the U.S. from the West Bank, Gaza Strip, a qualifying industrial zone or Israel qualify for duty-free treatment, provided the sum of 1) the cost or value of materials produced in the West Bank, Gaza Strip, a qualifying industrial zone or Israel, plus (2) the direct costs of processing operations performed in the West Bank, Gaza Strip, a qualifying industrial zone or Israel, is not less than 35% of the appraised value of such articles when imported into the U.S. An article is considered to be a product of the West Bank, Gaza Strip or a qualifying industrial zone if it is either 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.

Based upon the above production information, the garments in scenario #1 meet the country of origin requirements in the West Bank, Gaza Strip or a qualifying industrial zone under the applicable rules of origin for textiles, if they are made in an approved qualifying industrial zone.

With respect to the requirements that the articles be imported directly, General Note 3(a)(v)(B) (1) provides that:

Articles are “imported directly” for purposes of this paragraph if--
they are shipped directly from West Bank, the Gaza Strip, a qualifying industrial zone or Israel into the United States without passing through the territory of any intermediate country;

Based upon the facts presented, it appears that the garments in this scenario will satisfy this requirement.

We are unable to state definitively whether the garments will or will not satisfy the 35% value content requirement. Whether the requirement is satisfied can only be ascertained when the “appraised value” of the garments is determined at the time of entry into the United States.

HOLDING:

Based on the information provided, the country of origin of the undergarments in scenario #1 will be Israel, the country where the QIZ is located. In this regard, they will be considered products of a qualifying industrial zone, and will be eligible for preferential duty treatment under General Note 3(a)(v), HTSUS, assuming that they are imported directly from the West Bank, Gaza Strip, a QIZ or Israel, and the 35% value content requirement is satisfied. As stated above, whether the 35% value content requirement will be met must await actual entry of the merchandise.

The country of origin of the undergarments in scenario #2 will be Serbia. They will not qualify for preferential treatment under the USIFTA, therefore, the general rates of duty will apply in this scenario.

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 Deborah Marinucci at 646-733-3054.

Sincerely,

Robert B. Swierupski
Director,

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