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NY N019427

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November 29, 2007

CLA-2-OT:RR:NC:TA:361

CATEGORY: CLASSIFICATION

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

RE: Classification and country of origin determination for a women’s woven pants with a sash belt; 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; 19 CFR (c)(4)

Dear Ms. Cheung:

This is in reply to your letter dated November 2, 2007, requesting 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 for a pair of women’s pants with a sash belt, which will be imported into the United States.

FACTS:

Style 3000 is a pair of women’s pants constructed from 98 percent cotton and 2 percent spandex woven twill fabric. The pants have a flat waistband with five belt loops, a front zipper with a button and a hook and bar closure that fastens right over left and a woven textile sash belt threaded through the belt loops. The pants also feature two front pockets, two back pockets with a button closure and hemmed leg openings with a side slit.

You present four scenarios for the manufacturing processes. The manufacturing operations for the pants and sash are as follows:

In all four scenarios foreign fabric for the pants is shipped in rolls to Swiss Garments Company in 10th of Ramadan City, Egypt (QIZ). The fabric is cut and assembled in the Egypt QIZ into pants.

Scenario A:

The sash belt is formed in China and shipped to the QIZ factory in Egypt. The sash belt is threaded through the pant belt loops. The pants and sash belt will be exported directly to the United States.

Scenario B:

Foreign man-made fabric for the sash belt will be shipped in rolls to the QIZ factory in Egypt. The QIZ factory will cut, hem and form the sash belt. The sash belt will then be threaded through the belt loops. The pants and sash belt will be exported directly to the United States.

Scenario C:

Man-made fabric for the sash belt will be manufactured in Egypt and shipped in rolls to the QIZ factory in Egypt. The QIZ factory will cut, hem and form the sash belt. The sash belt will then be threaded through the belt loops. The pants and sash belt will be exported directly to the United States.

Scenario D:

Man-made fabric for the sash belt will be manufactured in a QIZ factory in Egypt and shipped in rolls to the QIZ factory in Egypt processing the pants. The pants QIZ factory will cut, hem and form the sash belt. The sash belt will be threaded through the belt loops. The pants and sash belt will be exported directly to the United States.

ISSUE:

What is the classification? Will the garments qualify for duty-free treatment under General Note 3(a)(v), HTSUS, when imported into the U.S?

CLASSIFICATION:

The pants and sash belt fall within the description of a composite good as provided in the Explanatory Notes to the Harmonized Tariff Schedule. The pants and sash belt are sold together at retail as a unit. They are adapted to each other, are mutually complementary and together form a whole that would not normally be offered for sale in separate parts. Therefore, the pants and sash belt are considered a composite good, and as such, are classified under the same Harmonized Tariff number, and the same category number applies to the entire unit. Classification is based on the item that provides the essential character to the unit. As the belt is an accessory to the pants, the essential character is imparted by the pants.   

The applicable subheading for style 3000 will be 6204.62.4021, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Women’s trousers (other than swimwear): Of cotton: Other: Other: Other: Other: Trousers: Women’s: Other. The duty rate will be 16.6% 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/.

Style 3000 falls within textile category designation 348. 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.

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.

As the garment 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 Scenario B, Scenario C and Scenario D. Since the garment is not wholly assembled in a single country in Scenario A, 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":

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 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.

Since the garment is neither knit to shape nor wholly assembled in a single country, Section 102.21 (c) (3) is inapplicable for Scenario A.

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 in Scenario A is cutting and assembling the pants. Therefore, the country of origin is Egypt, the country in which these operations are performed.

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, B, C and D. 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 B, C and D 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.

For Scenario A, the sash belt is a product of China, and the mere repackaging of the sash belt with the pants does not substantially transform the sash 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. Treasury Decision (TD) 91-7, which is an interpretive rule concerning, among other things, the applicability of special tariff treatment programs to collections of articles classified under a single tariff provision such as sets, mixtures, and composite goods, addresses the origin result for the imported pants with a sash belt. In addition to recognizing that there may be multiple countries of origin for these type articles, TD 91-7 specifically states that where an entire imported entity (set or composite good) is not the "product of" the beneficiary country, neither the entity nor any part thereof is entitled to preferential rates of duty.

HOLDING:

The country of origin of the submitted garment in all four scenarios is Egypt. Based upon international textile trade agreements, products of Egypt are not presently subject to visa requirements or quota restraints.

For Scenario A, the entity made up of the pants and sash belt is not the "product of the QIZ." Based upon the information submitted, the garments in Scenarios B, C and D will be considered a product of the Qualifying Industrial Zone (Egypt) 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 Peggy Fitzgerald at 646-733-3052.

Sincerely,

Robert B. Swierupski
Director,
National Commodity

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See also:

• Tariff No.: 6204.62.40 - Women's or girls' trousers, breeches and shorts, not knitted or crocheted, of cotton, nesoi
• Tariff No.: 6209.20.50 - Babies' garments & clothing acc. nesoi, of cotton, incl. sunsuits & sim app, sets & parts of sets, & diapers, not knitted or crocheted