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 > 2007 NY Rulings > NY N013914 - NY N013990 > NY N013984

Previous Ruling Next Ruling
NY N013984





July 17, 2007

CLA-2-RR:NC:TA:358

CATEGORY: CLASSIFICATION

Ms. Rebecca Cheung
Macy*s Merchandising Group
11 Penn Plaza
New York, NY 10001

RE: Classification and country of origin determination for boys’ woven shorts; 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. Cheung:

This is in reply to your letter dated July 6, 2007. Your request concerns the classification, and eligibility for preferential duty treatment for garments that may be produced in a Qualifying Industrial Zone (QIZ), in accordance with the United States-Israel Free Trade Area Implementation Act.

FACTS:

The submitted shorts, style 1000, are constructed from 100 percent cotton yarn dyed fabric. The shorts have five belt loops, a front fly zipper, a button at the waistband that closes in the left-over-right direction, side entry pockets below the waist, two set-in rear welt pockets with button closures, expandable pant leg cargo pockets and hemmed leg openings. The shorts will be imported with a textile web belt. The shorts, style 2000, are identical except for a polyurethane belt. The textile web belt and the polyurethane belt both have metal D ring closures. A sample of Style 2000 was not included in the submission.

You have indicated that the garments will be produced in Egypt in an approved “Qualifying Industrial Zone.” The manufacturing operations for the shorts are done in accordance with one of the following scenarios, A, B and C:

Under scenarios A, B and C the shorts will be made from fabric imported in rolls to a QIZ in Egypt where they will be cut into component parts and fully assembled. At issue is the duty free treatment of both styles with both the textile belt and the polyurethane belt made under each of three scenarios, A, B and C.

You describe the scenarios as follows:

SCENARIO A

Belt wholly formed in China, imported into Egypt QIZ to be assembled with shorts for import into the U.S.

SCENARIO B

Belt material (narrow fabric) would be formed in China, cut to width in China and then shipped to Egypt QIZ in rolls. The belt material will be cut to length and formed into belt in Egypt QIZ, assembled with the Egypt QIZ-made shorts, and then the entire good shipped to the U.S.

SCENARIO C

Belt material (narrow fabric) would be formed in China, cut to width in China and then shipped to Egypt QIZ in rolls. The belt material will be cut to length and formed into belt in Egypt QIZ, assembled with the Egypt QIZ-made shorts, and then the entire good shipped to the U.S.

You advise in telephone conversation that in scenarios B and C the belt fabric is sewn and the belt buckle is attached in Egypt.

ISSUE:

What are the classification and status under the US-Israel Free Trade Agreement of the subject merchandise?

CLASSIFICATION:

The shorts and polyurethane belt fall within the description of "sets" as provided in the Explanatory Notes. The shorts and belt consist of at least two different articles which are, prima facie, classifiable in different headings; consist of products or articles put up together to meet a particular need or carry out a specific activity; and are put up in a manner suitable for sale directly to users without re-packing. As the belt is an accessory to the shorts, the essential character of the set is imparted by the shorts.

The shorts and fabric belt are sold at retail as a unit and are considered to be a composite good. They are adapted to each other, are mutually complementary and together form a whole which would not normally be offered for sale in separate parts. The essential character of the shorts and self-fabric belt is imparted by the shorts.

The applicable subheading for the shorts and polyurethane belt set, as well as the shorts and self-fabric belt composite will be 6203.42.4061, Harmonized Tariff Schedule of the United States (HTSUS), which provides for men’s or boys’ trousers and shorts, of cotton, boys’ shorts, other. The general rate of duty is 16.6% ad valorem.

Boys’ cotton shorts with polyurethane belt set fall within textile category designation 347. Boys’ cotton shorts with textile belt fall within textile category designation 347. 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.

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

6201-6208 If the good consists of two or more component parts, a change to an assembled good of heading 6201 through 6208 from unassembled components, provided that the change is the result of the good being wholly assembled in a single country, territory, or insular possession.

Under Scenario A noted above, the entities made up of the shorts and belt (both textile and polyurethane) are not “products of the QIZ.” Under this scenario, the belts are products of China, and the mere repackaging of the belt with the shorts does not substantially transform the belt into a product of the QIZ. Since all components of the entity do not meet the “products of” requirement, the set or composite is ineligible for consideration as a product of the QIZ. See Treasury Decision 91-7 (T.D. 91-7).

Under Scenario B and Scenario C as the short consists of two or more component parts, and is wholly assembled in a single country, that is Egypt, the terms of the tariff shift are met. The country of origin is conferred in Egypt, QIZ, for both Scenario A and Scenario B.

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 (QIZ), 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.

You state that the processing operations will be performed in a QIZ in Egypt for Scenarios A and B. 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 where merchandise may enter without payment of duty or excise taxes; and (3) has been designated by the U.S. Trade representative in a notice published in the Federal Register as a qualifying industrial zone.”

Presidential Proclamation 6955 delegated to the United States Trade Representative the authority to designate qualifying industrial zones. See GN 3(a)(v)(G)(3), supra. The governments of Israel and Egypt jointly requested the designation as a qualifying industrial zone of areas comprising a Greater Cairo zone, Alexandria zone, Suez Canal zone and Central Delta zone. The names and locations of the factories comprising these four zones were specified on maps and materials submitted by Egypt and Israel and on file with the Office of the U.S. Trade Representative. For the purposes of this letter, we will assume that the QIZ you are using will meet the requirements of General Note 3(a)(v)(G), HTSUS.

Under General Note 3 (a)(v), HTSUS, articles the products of the West Bank, Gaza Strip or a QIZ which are imported directly to the United States 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, or QIZ or Israel, plus (2) the direct costs of processing operations performed in the West Bank, Gaza Strip, a QIZ or Israel, is not less than 35% of the appraised value of such articles when imported into the United States. 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 and different article of commerce that has been grown, produced or manufactured in one of those areas.

With respect to the requirement 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: (1) they are shipped directly from the West Bank, the Gaza Strip, a qualifying industrial zone or Israel into the United States without passing through the territory of any intermediate country;

You have stated in your letter that the garments in Scenarios A, B and C will be imported directly from the QIZ to the United States. It cannot be ascertained whether the 35% value content requirement is met until the “appraised value” of the merchandise is determined at the time of entry into the United States.

HOLDING:

As noted in the discussion of QIZ eligibility, under Scenario A, the entities made up of the shorts and belt (both textile and polyurethane) are not “products of the QIZ.” Under such scenario, the belts are products of China, and the mere repackaging of the belt with the shorts does not substantially transform the belt into a product of the QIZ. Since all components of the entity do not meet the “products of” requirement, the set or composite is ineligible for consideration as a product of the QIZ. See Treasury Decision 91-7 (T.D. 91-7).

Based on the information provided, the shorts and belt (both textile and polyurethane) produced under Scenario A indicated above are considered neither products of the QIZ, nor products under the U.S. - Israel Free Trade Area Implementation Act.

Based upon the information provided, the garments in Scenarios B and C will be considered a product of the Qualifying Industrial Zone and will be eligible for preferential duty treatment under General Note 3 (a)(v), HTSUS, assuming that the garments are imported directly from the Qualifying Industrial Zone to the United States and the 35% value content requirement is satisfied. A determination will be made at the time of entry of the merchandise into the United States, whether the above requirements are met.

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 Bruce Kirschner at 646-733-3048.

Sincerely,

Robert B. Swierupski, Director
National Commodity Specialist Division
.

Previous Ruling Next Ruling

See also: