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HQ 555590

May 21, 1990

CLA-2 CO:R:C:V 555590 DSN


TARIFF NO.: 6307.90.8740

Mr. R. Gus Provost
Ragus Trading Corp.
P.O. Box 526372
Miami, Florida 33152

RE: CBERA treatment and country of origin of surgical towels from the Dominican Republic

Dear Mr. Provost:

This is in response to your letter of February 2, 1990, on behalf of Ragus Trading Corp., requesting a ruling as to whether certain surgical towels produced in the Dominican Republic are entitled to duty-free treatment under the Caribbean Basin Economic Recovery Act (CBERA). You also request the country of origin of the surgical towels. Samples were submitted with your request.


According to your submissions, and conversations with a member of my staff by telephone, 100% cotton fabric will be imported into the Dominican Republic. In the Dominican Republic, the fabric will be dyed, bleached, washed, cut to length and width, and hemmed to create finished surgical towels. After being packaged, the towels are exported to the U.S.


1. Whether the surgical towels are entitled to duty-free treatment under the CBERA when imported into the U.S.

2. Whether the operations performed in the Dominican Republic render the Dominican Republic the country of origin of the surgical towels.


1. Applicability of CBERA

For articles to be eligible for CBERA treatment, they must first be classified under a CBERA eligible provision in the Harmonized Tariff Schedule of the United States Annotated (HTSUSA). An article classifiable under a CBERA eligible provision is entitled to duty-free entry if it is the growth, product or manufacture of a designated beneficiary country (BC), the article is imported directly to the U.S. from a BC, and the sum of the cost or value of the materials produced in a BC, plus the direct cost of processing operations performed in a BC, is not less than 35% of the appraised value of the article at the time it is entered into the U.S.

The Dominican Republic is a BC. Based on the samples submitted, as of May 1, 1990, the surgical towels are classified under subheading 6307.90.8740, HTSUSA, which provides for other made up articles, other, other, surgical towels. See Presidential Proclamation No. 6123, 55 Fed. Reg. 18075 (1990). Articles provided for in a provision for which a rate of duty of "Free" appears in the "Special" subcolumn followed by the symbol "E*" are eligible for duty-free treatment under the CBERA, except for those articles specified in General Note 3(c)(v)(D), HTSUSA, which includes textile articles with a cotton content of 50% or more by weight. The "Special" subcolumn opposite subheading 6307.90.8740, HTSUSA includes the symbol "E*". Therefore, since the surgical towels are composed of 100% cotton, they are excluded from duty-free treatment under the CBERA, and would be fully dutiable at the rate of 7% ad valorem.

2. Country of Origin

Textile articles produced in more than one foreign country are subject to the country of origin criteria set forth in section 12.130, Customs Regulations (19 CFR 12.130). According to 19 CFR 12.130(b):

...a textile product...which consists of materials produced or derived from or processed in, more than one foreign... country shall be a product of that foreign...country where it last underwent a substantial transformation. A textile or textile product will be considered to have undergone a substantial transformation if it has been transformed by means of substantial manufacturing or processing operations into a new and different article of commerce.

In determining whether merchandise has undergone substantial manufacturing or processing operations, we consider the (1) physical change in the material or the article; (2) time involved; (3) complexity of the operations; (4) level or degree of skill and/or technology required; and (5) value added to the article in each country.

19 CFR 12.130(e)(2)(ii) states that an article or material will not be consdiered to be a product of a particular country, by virtue of merely having undergone:
cutting to length or width and hemming or overlocking fabrics which are readily identifiable as being intended for a particular commercial use.

It is clear that this provision does not disqualify the surgical towels from consideration as products of the Dominican Republic. The merchandise imported into the Dominican Republic consists of cotton fabric, which is suitable for multiple uses. There is no evidence, for example, of lines of demarcation on the fabric that would be indicative that the fabric is intended for use as surgical towels. In the Dominican Republic, the cotton fabric will be transformed into a new and different article of commerce as a result of the processing (dyeing, bleaching, cutting to length and width, and hemming) performed there. Therefore, the Dominican Republic would be the country of origin. See Heaquarters Ruling Letter 086665 of March 23, 1990, regarding the country of origin of cotton diapers, in which we held that fabric woven in country A, shipped to country B where it is cut to length and width, and hemmed, results in the diapers being considered products of country B.

We note that at the present time, surgical towels from the Dominican Republic are not subject to quota. However, due to the changeable nature of quota agreements, you are advised to contact your local Customs office prior to importation to determine the current status of any textile agreements with the Dominican Republic. Import restraints are imposed by the U.S. Custom Service under directives of the Committee for the Implementation of Textile Agreements, U.S. Department of Commerce, Washington, D.C. 20230. Further advice or information pertaining to those agreements may be obtained from the chairman of that Committee.


The surgical towels are classified under subheading 6307.90.8740, HTSUSA, which provides for other made up articles, other, other, surgical towels. The surgical towels are ineligible for CBERA treatment under this provision. Therefore, the rate of duty is 7% ad valorem. The country of origin for quota purposes is the Dominican Republic.


Acting Director
Commercial Rulings Division

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