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NY N024011





March 25, 2008

CLA2-OT:RR:NC:TA:361

CATEGORY: CLASSIFICATION

Mr. Joseph F. Barry
CAF Worldwide Inc.
154-09 146th Avenue
Jamaica, New York 11434

RE: Classification and country of origin determination for women’s and men’s knit t-shirts; 19 CFR 102.21(c)(2); Commonwealth of the Northern Mariana Islands; General Note 3(a)(iv), HTSUS

Dear Mr. Barry:

This is in reply to your letter dated February 25, 2008, requesting a classification and country of origin determination for t-shirts, which will be imported into the United States, on behalf of your client YS Garments Inc. dba Next Level Apparel.

FACTS:

Style 3300L (garment A) is a woman’s t-shirt constructed of 100 percent cotton knit fabric. The garment features a crew neck, short hemmed sleeves and a hemmed bottom. The garment extends below the waist.

Style 3300L (garment C) is a woman’s t-shirt constructed of 90 percent cotton and 10 percent polyester knit fabric. The garment features a crew neck, short hemmed sleeves and a hemmed bottom. The garment extends below the waist.

Style 3600 (garment B) is a man’s black t-shirt constructed of 100 percent cotton, finely knit jersey fabric. The garment features a crew neck, short hemmed sleeves and a hemmed bottom. The garment extends below the waist.

Style 3600 (garment D) is a man’s grey t-shirt constructed of 90 percent cotton and 10 percent polyester, finely knit jersey fabric. The garment features a crew neck, short hemmed sleeves and a hemmed bottom. The garment extends below the waist.

Foreign fabric in uncut and unmarked rolls will be shipped to the Commonwealth of the Northern Mariana Islands. All other operations including cutting, sewing, assembling, inspecting and packing will be performed in the CNMI.

We are returning your samples.

ISSUE:

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

CLASSIFICATION:

The appropriate subheading for the women’s knitted t-shirts will be 6109.10.0040, HTSUS, which provides for T-shirts, singlets, tank tops and similar garments, knitted or crocheted: of cotton: other: T- shirts: women's. The duty rate will be 16.5% ad valorem.

The appropriate subheading for the men’s knitted t-shirts will be 6109.10.0012, HTSUS, which provides for T-shirts, singlets, tank tops and similar garments, knitted or crocheted: of cotton: men’s: other t- shirts. The duty rate will be 16.5% 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 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 submitted garment is not knit to shape and consists of two or more components. The garment is wholly assembled in a single country, territory or insular position. Therefore the country of origin is the Commonwealth of the Northern Mariana Islands.

General Note 3 (a) (iv), HTSUS, 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 garment 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), HTSUS, we must determine whether the fabric, which is imported into the Commonwealth of the Northern Mariana Islands from a foreign country, 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 foreign fabric 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 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 for purposes of the foreign value limitation. To do this the foreign material must be substantially transformed in the insular possession and then this different product must be transformed yet again into another new and different product which is exported to the United States. In the present case, foreign made rolled fabric in bolts is sent to the CNMI where it is cut into the component panels (first substantial transformation). Afterwards, all of the component panels are assembled together into the garments in the CNMI (second substantial transformation). In each instance the requirement that a new and different article of commerce be produced is satisfied (that is, the component panel of the first substantial transformation and the finished garment of the second). Therefore, the cost of the foreign material (the fabric) is considered part of the value of materials produced in the insular possession. (HQ 559137, September 7, 1995, is noted).

 In your letter you inquire whether the goods may be marked "Made in U.S.A." or “Made in the USA of imported fabric”. Please note that if a good is determined to be an article of U.S. origin, it is not subject to the country of origin marking requirements of 19 U.S.C. §1304. Whether an article may be marked with the phrase "Made in the USA", “Made in the USA of imported fabric” or similar words denoting U.S. origin, is an issue under the authority of the Federal Trade Commission (FTC). We suggest that you contact the FTC Division of Enforcement, 6th and Pennsylvania Avenue, N.W., Washington, D.C. 20508 on the propriety of proposed markings indicating that an article is made in the U.S.

HOLDING:

The women’s t shirts fall within textile category 339. The men’s t shirts fall within textile category 338. The country of origin of the garments is the Commonwealth of the Northern Mariana Islands. Based upon international textile trade agreements products of the CNMI are neither subject to quota nor the requirement of a visa.

Further, the cost of the fabric imported into the CNMI is not considered "foreign material" for purposes of calculating the foreign value limitation under General Note 3(a)(iv), HTSUS. If the t-shirts are imported directly from the CNMI to the United States, and if all required documentation needed to substantiate qualification under the foreign value limitation is submitted at the time that entry of the merchandise is made, then the t-shirts will be entitled to duty-free treatment under General Note 3(a)(iv), HTSUS.

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,

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