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NY R04996




October 18, 2006

CLA2-RR:E:NC:TA:349 R04996

CATEGORY: CLASSIFICATION

Ms. Alexandra C. Latham
Costco Wholesale
999 Lake Drive
Issaquah, WA 98027

RE: Classification and country of origin determination for beach towels; Products of the West Bank, the Gaza Strip or a Qualifying Industrial Zone; General Note 3(a)(v); 19 CFR 102.21(c)(2); tariff shift

Dear Ms. Latham:

This is in reply to your letter dated September 29, 2006, requesting a classification, eligibility for Duty-Free treatment for products of a Qualifying Industrial Zone (QIZ) and country of origin determination for beach towels which will be imported into the United States.

FACTS:

The subject merchandise consists of beach towels. Samples were not submitted. You state in your letter that manufacturing operations in Egypt will occur in one of the Qualifying Industrial Zones (QIZ). The towels are made from a dyed 100 percent cotton woven terry fabric. The manufacturing operations for the beach towels are as follows:

GERMANY:
-dyestuffs are made and shipped to Egypt.

ISRAEL:
-agents for yarn processing are shipped to Egypt.

EGYPT:
-cotton is spun into a yarn.
-yarn is shipped to QIZ.

EGYPTIAN QIZ:
-cotton fabric is woven and dyed.
-fabric is cut and hemmed creating the towels. -towels are packaged and shipped.

ISSUE:

What are the classification, eligibility for Duty-Free treatment as products of a Qualifying Industrial Zone and country of origin of the subject merchandise?

CLASSIFICATION:

The applicable subheading for the beach towels will be 6302.60.0020, Harmonized Tariff Schedule of the United States (HTSUS), which provides for bed linen, table linen, toilet linen and kitchen linen: toilet linen, of terry toweling or similar terry fabrics, of cotton... towels: other. The general rate of duty will be 9.1 percent 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/.

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at 19 U.S.C. 3592), enacted on December 8, 1994, provided rules of origin for textiles and apparel entered, or withdrawn from warehouse for consumption, on and after July 1, 1996.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

6301-6306 Except for goods of heading 6302 through 6304 provided for in paragraph (e)(2) of this section, the country of origin of a good classifiable under heading 6301 through 6306 is the country, territory or insular possession in which the fabric comprising the good was formed by a fabric making process.

Subheading 6302.60 is not included in the paragraph (e)(2) exception to the above tariff shift rule. As the fabric comprising the towels is formed in a single country, that is, Egypt, as per the terms of the tariff shift requirement, country of origin is conferred in Egypt, specifically in the Egyptian QIZ.

STATUS UNDER THE UNITED STATES-ISRAEL FREE TRADE AGREEMENT

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 the products of the West Bank, Gaza Strip or a 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 beach towels are woven, dyed, cut and sewn in one of the Egyptian Qualifying Industrial Zones. The beach towels meet the country of origin requirements in the West Bank, Gaza Strip or a qualifying industrial zone, specifically, in Egypt, under the applicable rules of origin for textiles and are considered to be a product of the West Bank, Gaza Strip or a qualifying industrial zone.

We are unable to state definitively that the beach towels will or will not satisfy the 35 percent value content requirement. Whether the requirement is satisfied can only be ascertained when the "appraised value" of the beach towels is determined at the time of entry into the United States.

HOLDING:

The country of origin of the beach towels is Egypt. If the beach towels are produced in an approved Qualifying Industrial Zone, they will be considered to be products of the West Bank, Gaza Strip or QIZ and will be eligible for duty free treatment under General Note 3(a)(v), HTSUS, assuming that they are imported directly from the West Bank, Gaza Strip, QIZ or Israel, and the 35 percent value content requirement is satisfied.

The beach towels fall within textile category 363. With the exception of certain products of China, quota/visa requirements are no longer applicable for merchandise which is the product of World Trade Organization (WTO) member countries. The textile category number above applies to merchandise produced in non-WTO member-countries. Quota and visa requirements are the result of international agreements that are subject to frequent renegotiations and changes. To obtain the most current information on quota and visa requirements applicable to this merchandise, we suggest you check, close to the time of shipment, the “Textile Status Report for Absolute Quotas” which is available on our web site at www.cbp.gov. For current information regarding possible textile safeguard actions on goods from China and related issues, we refer you to the web site of the Office of Textiles and Apparel of the Department of Commerce 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 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 John Hansen at 646-733-3043.

Sincerely,

Robert B. Swierupski
Director,

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