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HQ 960525




September 30, 1997
CLA-2 RR:TC:TE 960525 jb

CATEGORY: CLASSIFICATION

TARIFF NO.: 6104.43.2010

Gonzalo P. Farias
Farias & Farias, Inc.
P.O. Box 243
Laredo, Texas 78042

RE: Country of origin determination for a knit dress; NAFTA not applicable; Article 509; 19 CFR ?102.21(c)(2); tariff shift

Dear Mr. Farias:

This is in reply to your letter dated March 19, 1997, on behalf of your client, Discovery International Associates, Inc., requesting classification under the Harmonized Tariff Schedule of the United States (HTSUS) and a country of origin determination for a women's knit dress which will be imported into the United States.

FACTS:

The subject merchandise consists of a women's knit dress made of 90 percent polyester and 10 percent lycra fabric. The dress features a round neckline, shoulder pads, and long hemmed sleeves. The dress extends from the wearer's neck and shoulders to below the mid-thigh area.
The manufacturing operations are as follows:

KOREA fabric is knit

MEXICO fabric is cut into component parts assembly into the completed garment

ISSUE:

1. What is the proper classification for the subject merchandise?

2. Whether the subject merchandise is eligible for duty free treatment under the North American Free Trade Agreement

3. Can the merchandise be entered with a certificate of eligibility under the NAFTA tariff preferential level (TPL) rate of duty?

4. What is the country of origin of the subject merchandise?

LAW AND ANALYSIS:

Classification

Classification of merchandise under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) is in accordance with the General Rules of Interpretation. GRI 1 requires that classification be determined according to the terms of the headings and any relative section or chapter notes. Where goods cannot be classified solely on the basis of GRI 1, the remaining GRI will be applied, in the order of their appearance.

Heading 6104, HTSUS, provides for among other things, women's dresses. Accordingly, the subject knit dress is classified in subheading 6104.43.2010, HTSUSA, which provides for, women's or girls' suits, ensembles, suit-type jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches and shorts (other than swimwear), knitted or crocheted: dresses: of synthetic fibers: other: women's.

NAFTA Eligibility

The subject knit dress undergoes processing operations in Mexico which is a country provided for under the North American Free Trade Agreement (NAFTA). General Note 12, HTSUSA, incorporates Article 401 of the North American Free Trade Agreement (NAFTA) into the HTSUSA. Note 12(a) provides, in pertinent part:

(ii) Goods that originate in the territory of a NAFTA party under subdivision (b) of this note and that qualify to be marked as goods of Mexico under the terms of the marking rules... and are entered under a subheading for which a rate of duty appears in the "Special" subcolumn followed by the symbol "MX" in parentheses, are eligible for such duty rate... . [Emphasis added]

Accordingly, the knit dress at issue will be eligible for the "Special" "MX" rate of duty provided it is a NAFTA "originating" good under General Note 12(b), Harmonized Tariff Schedule of the Unites States Annotated (HTSUSA), and it qualifies to be marked as a good of Mexico. Note 12(b) provides, in pertinent part,

For the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as "goods originating in the territory of a NAFTA party" only if--

(i) they are goods wholly obtained or produced entirely in the territory of Canada,
Mexico and/or the United States; or

(ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that--

(A) except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein, or

(B) the goods otherwise satisfy the applicable requirements of subdivisions (r), (s) and (t) where no change in tariff classification is required, and the goods satisfy all other requirements of this note; or

(iii) they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials; or

Accordingly, the subject knit dress qualifies for NAFTA treatment only if the provisions of General Note 12(b)(ii)(A) are met, that is, if the merchandise is transformed in the territory of Mexico so that the non-originating material (the fabric formed in Korea) undergoes a change in tariff classification as described in subdivision (t).

As the knit dress is classifiable in subheading 6104.43.2010, HTSUSA, subdivision (t), Chapter 61, rule 20, applies. That note states:

A change to subheadings 6104.41 through 6104.49 from any other chapter, except from headings 5106 through 5113, 5204 through 5212, 5307 through 5308 or 5310 through 5311, chapter 54 or headings 5508 through 5516 or 6001 through 6002, provided that the good is both cut (or knit to shape) and sewn or otherwise assembled in the territory of one or more of the NAFTA parties.

When the fabric for the subject knit dress leaves Korea it falls within headings 6001-6002, HTSUS. As headings 6001 through 6002 are excepted by subdivision (t), chapter 61, rule 20, the fabric does not meet the terms of the note. Accordingly, the subject merchandise is not eligible for NAFTA treatment.

You inquire whether this merchandise is eligible for a Tariff Preference Level (TPL). We have been advised by the United States Trade Representative's Office that TPL's will be the subject of a Federal Register Notice soon to be published by that office. Accordingly, pending the publication of that Notice, this office is not in a position to issue any responses with respect to TPL's. We ask that you resubmit your request once the Notice is published.

Country of origin

On September 5, 1995, Customs published in the Federal Register (60 FR 46188) T.D. 95-69 which set forth final amendments to the Customs Regulations to implement the provisions of section 334 (b) of the Uruguay Round Agreements Act ("the Act"), Public Law 103-465, 108 Stat. 4809, hereinafter 19 U.S.C. 3592, regarding the country of origin of textile and apparel products. These final regulations will apply to goods entered, or withdrawn from warehouse, for consumption on or after July 1, 1996. The regulatory provisions in T.D. 95-69 that implement the basic origin principles of section 334(b) of the Act are contained in a new ?102.21 of the Customs Regulations (19 CFR 102.21).

The final rule for the rules for determining country of origin of a good for purposes of Annex 311 of the NAFTA was published by Customs on June 6, 1996, in the Federal Register (61 FR 28932). Therein it was stated, in pertinent part:

New ?102.21 was modeled on the approach taken in the interim Part 102 texts as published in T.D. 94-4 and thus incorporates a general statement of applicability (paragraph (a)), various definitions (paragraph (b)), general origin rules (paragraphs (c) and (d)), and specific tariff shift and/or other requirements (paragraph (e)) that apply under the second general rule. Of particular note for purposes of the present document is the definition of "textile or apparel product" in ?102.21(b)(5) which delineates the class of goods covered by the ?102.21 rules. That definition identifies those goods with reference to classification in the HTSUS and refers to Chapters 50 through 63 (that is, all of Section XI) of the HTSUS as well as to specific headings and 6-, 8- or 10-digit subheadings of the HTSUS that fall outside Section XI. Thus, if a good is classifiable in an HTSUS provision listed in ?102.21(b)(5), precedence must be given to the ?102.21 rules over any other regulatory provision with regard to that good, including any origin rules contained elsewhere in part 102.

Accordingly, as the subject knit dress is classified in heading 6104, HTSUS, a textile article identified by rules of origin to determine the appropriate country of origin.

Section 102.21(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 was not wholly obtained or produced in a single country, territory, or insular possession, Section 102.21(c)(1) is not applicable.

Section 102.21(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 foreign material 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."

Section 102.21(e) 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":

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.

As the subject knit dress was wholly assembled in a single country, that is Mexico, the terms of the tariff shift are met. Accordingly, the country of origin of the subject merchandise is Mexico.

HOLDING:

The subject knit dress is properly classified in subheading 6104.43.2010, HTSUSA, which provides for women's or girls' suits, ensembles, suit-type jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches and shorts (other than swimwear), knitted or crocheted: dresses: of synthetic fibers: other: women's. The applicable rate of duty is 16.7 percent ad valorem and the quota category is 636.

The country of origin of the subject knit dress is Mexico.

The knit dress is not eligible for the NAFTA preference.

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 is issued on the assumption that all of the information furnished in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect.

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.

Sincerely,

John Durant, Director

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