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HQ 560320

May 20, 1997

CLA-2 RR:TC:SM 560320 JML


Mr. Ron Hodge
F.H. Kaysing Co. of Wichita
P.O. Box 12497
Wichita, KS 67277

RE: Eligibility of gas lantern mantles made in Costa Rica for duty-free treatment under U.S. Note 2(b), Subchapter II, Chapter 98, HTSUS; textiles; T.D. 91-88.

Dear Sir:

This is in response to your letter of February 10, 1997, requesting a reconsideration of New York Ruling Letter ("NY") A87191, dated September 20, 1996. Specifically, you request a reconsideration of the above referenced ruling to obtain duty-free treatment for gas lantern mantles under U.S. Note 2(b), Subchapter II, Chapter 98, Harmonized Tariff Schedule of the United States ("HTSUS") ("CBI II"). In that ruling, however, the issue of the whether or not the gas lantern mantels were eligible for CBI II treatment was not specifically addressed. Our decision on that issue follows.


Your client, The Coleman Co., Inc. ("Coleman"), intends to manufacture incandescent gas lantern mantles in Costa Rica from United States ("U.S.")-origin components, ingredients and materials. Coleman will supply U.S.-origin, impregnated, knitted rayon mantle sacks and U.S.-origin wire clips to Costa Rica. Once in Costa Rica, the mantles are placed on a mandrel, the wire will be trimmed and bent to shape, and the clips laced into the mantle sacks. Lastly, the mantles will be heat sealed into polybags for packaging and returned to the U.S. for retail sale.


Whether the incandescent gas lantern mantles are entitled to duty-free treatment under U.S. Note 2(b), Subchapter II, Chapter 98, HTSUS.


Section 222 of the Customs and Trade Act of 1990 (Public Law 101-382) amended U.S. Note 2, Subchapter II, Chapter 98, HTSUS, to provide for the duty-free treatment of articles, other than specified products, which are assembled or processed in a Caribbean Basin Economic Recovery Act ("CBERA") beneficiary country ("BC") in whole of fabricated components or ingredients (except water) of U.S. origin.

Specifically, Note 2(b) provides as follows:

(b) No article (except a textile article, apparel article, or petroleum, or any product derived from petroleum, provided for in heading 2709 or 2710) may be treated as a foreign article, or as subject to duty, if--

(i) the article is--

(A) assembled or processed in whole of fabricated components that are a product of the United States, or

(B) processed in whole of ingredients (other than water) that are a product of the United States, in a beneficiary country; and

(ii) neither the fabricated components, materials or ingredients, after exportation from the
United States, nor the article itself, before importation into the United States, enters the commerce of any foreign country other than a beneficiary country.

As used in this paragraph, the term "beneficiary country" means a country listed in general note 7(a).

Pursuant to General Note 7(a), HTSUS, Costa Rica has been designated as a BC for CBERA purposes. Although U.S. Note 2(b)(i)(A) and (B) are separated by the word "or," it is our opinion that Congress did not intend to preclude duty-free treatment under this provision to an article which is created in a BC both by assembling and processing U.S. fabricated components and by processing U.S. ingredients.

U.S. Note 2(b), however, specifically excludes textiles and textile articles from duty-free treatment under CBI II. In NY A87191, the article was determined to be classified in subheading 5908.00.00, HTSUS, (incandescent gas mantles and tubular knitted gas mantle fabric therefor, whether or not impregnated). In Treasury Decision ("T.D.") 91-88, 25 Cust. Bull. 45 (1991), Customs determined that only those articles classified in HTSUS provisions which include a textile category number should be considered "textile" and "apparel" articles for purposes of U.S. Note 2(b), Subchapter II, Chapter 98, HTSUS. As the classification of the lantern mantles, subheading 5908.00.00, HTSUS, is not a provision which includes a textile category number, the lantern mantles are eligible for duty-free treatment assuming, compliance with the requirements of U.S. Note 2(b).

In regard to the processing performed in Costa Rica -- trimming and bending the wire clips to shape, lacing them through the mantle sacks, and packaging the article for retail sale -- we believe these operations are within those contemplated by U.S. Note 2(b). Therefore, assuming the finished articles are made entirely of U.S.-origin materials and components, all U.S.-origin materials and components are shipped directly from the U.S. to the BC, the finished articles in turn are shipped directly to the U.S. without entering the commerce of any foreign country other than a BC, and the appropriate documentary requirements are satisfied, the incandescent gas lantern mantles will be entitled to duty-free treatment under U.S. Note 2(b).


The incandescent gas lantern mantles, made in Costa Rica from U.S.-origin materials, ingredients or components, are entitled to duty-free treatment under U.S. Note 2(b), Subchapter II, Chapter 98, HTSUS, upon compliance with the export/import directly and documentary requirements of this provision (see enclosed telex 9264071, dated September 28, 1990).

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.


John Durant, Director

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