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NY L89386





January 13, 2006

CLA-2-RR:NC:TA:N3:356 L89386

CATEGORY: CLASSIFICATION

Mr. Thomas G. Travis
Sandler, Travis & Rosenberg, P.A.
The Waterford
5200 Blue Lagoon Drive
Miami, FL 33126-2022

RE: Classification and country of origin determination for men’s woven garments; 19 CFR 102.21(c)(4); most important assembly or manufacturing operation; American Samoa; General Note 3(a)(iv), HTSUS; 19 CFR 7.3(d)

Dear Mr. Travis:

This is in reply to your letter dated December 12, 2005, which you submitted on behalf of Suntex Industries, requesting a classification and country of origin determination for men’s woven garments that will be imported into the United States. You state that the manufacturing operations will take place in two different countries, designated as Country “A” (China) and Country “B” (American Samoa). You have provided a sample of the garment parts as they are partially assembled in Country “A” (China) and samples of the finished garments as they will be imported directly into the United States from Country “B” (American Samoa). As requested, your samples will be returned.

FACTS:

Style RR 1002, is a men’s shirt constructed from 65% polyester, 35% cotton, solid color woven fabric. The garment has a banded, point collar; a left over right, full front opening with seven button closures; long sleeves with buttoned cuffs; a narrow, rear yoke; buttoned epaulets on each shoulder; two patch pockets on the chest with flaps and button closures; a embroidered logo on the left sleeve; and a straight, hemmed bottom. The sizing on the sample shirt shows collar and sleeve measurements as collar – 14 inches, sleeve length – 33 inches.

Style RR 1001 is a pair of men’s pants constructed from 65% polyester, 35% cotton, solid color woven fabric. The garment has a flat waistband with seven belt loops; a fly front opening with a zipper closure; a hook and eye on the waistband; two front quarter pockets; two rear pockets, one with a buttoned closure; and unhemmed legs.

The manufacturing operations for the shirt, Style RR 1002, are as follows:
the fabric is cut into component parts the pocket flaps are formed and attached to the front panel the chest pockets are formed and attached the collar and collar band are formed the embroidered logo is applied to the sleeve component the epaulets are formed and attached to the shoulder panel (yoke) the shoulder panel (yoke) is attached to the front and back panels the sleeve seams are closed and the sleeves are formed the cuffs are formed the inner facing is overlock stitched the bottom of the front and back panels is hemmed the button holes are made and the buttons are attached

COUNTRY “B” (AMERICAN SAMOA):

- the collar is attached to the front and back panels - the sleeves are attached to the body of the garment - the cuffs are attached to the sleeves
- the side seams are sewn
- the shirt is ironed, the hangtag is attached, and the shirt is put in a polybag - the shirt is packaged for export directly to the United States

Two manufacturing scenarios are presented for the pants. The operations for Style RR 1001 are as follows:

SCENARIO I:
the fabric is cut into component parts the belt loops are formed the belt loop is attached at one end to the waistband component the front and back pockets are formed and attached the buttonhole is made on the back pocket and the button is attached the zipper is attached to the left side of the fly the side seams are joined the back rise is joined the waistband is formed and the labels and hook and eye are attached the waistband is attached to the garment body the belt loops are attached and bar tacked

COUNTRY “B” (AMERICAN SAMOA):
the inseams are sewn the left and right front and back panels are tacked at the crotch the front rise is sewn the fly is assembled by attaching the left side of the zipper fly to the right side of the fly the right side of the zipper tape is attached the garment is ironed and the hangtag is attached the pants are packaged for export directly to the United States

SCENARIO II:
the fabric is cut into component parts the belt loops are formed the belt loop is attached at one end to the waistband component the front and back pockets are formed and attached the buttonhole is made on the back pocket and the button is attached the left and right zipper tapes are attached to the left and right front panels the side seams are joined the back rise is joined the waistband is formed and the labels and hook and eye are attached the waistband is attached to the garment body the belt loops are attached and bar tacked

COUNTRY “B” (AMERICAN SAMOA):
the inseams are sewn the left and right front and back panels are tacked at the crotch the front rise is sewn the fly is assembled by attaching the right side of the zipper fly to the left side of the fly the garment is ironed and the hangtag is attached the pants are packaged for export directly to the United States

ISSUE:

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

CLASSIFICATION:

The applicable subheading for the shirt, Style RR 1002, will be 6205.30.2030, Harmonized Tariff Schedule of the United States (HTSUS), which provides for men’s or boys’ shirts: of man-made fibers: other: other: dress: other: men’s. The general rate of duty is 29.1 cents per kilogram plus 25.9% ad valorem.

The applicable subheading for the pants, Style RR 1001, will be 6203.43.4010, Harmonized Tariff Schedule of the United States (HTSUS), which provides for men’s or boys’ . . . trousers, . . . and shorts (other than swimwear): of synthetic fibers: other: other: other: other: trousers and breeches: men’s. The general rate of duty is 27.9% ad valorem.

Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUSA and the accompanying duty rates are provided on the World Wide Web at http://www.usitc.gov/tata/hts/.

The shirt falls within textile category designation 640. The pants fall within textile category designation 647. Quota and visa status are the result of international agreements that are subject to frequent renegotiations and changes. To obtain the most current information as to whether quota and visa requirements apply to this merchandise, we suggest that you check, close to the time of shipment, the “Textile Status Report for Absolute Quotas” available at our web site at www.cpb.gov. In addition, you will find current information on textile import quotas, textile safeguard actions and related issues at the web site of the Office of Textiles and Apparel, 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.

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.

Although the garment consists of two or more component parts, it is not wholly assembled in a single country, territory or insular possession. Accordingly, as the terms of the tariff shift are not met, 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 nor wholly assembled in a single country, Section 102.21 (c)(3) is inapplicable.

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.”

For Style RR 1002, the assembly processes in American Samoa, consisting of the attachment of the sleeves, the joining of the side seams, the attachment of the cuffs, rand the attachment of the collar constitute the most important assembly processes.

For Style RR 1001, in Scenario 1 and in Scenario II, the assembly processes in American Samoa consisting of sewing the inseams, sewing the front rise, and assembling the zipper and fly constitute the most important assembly processes.

Accordingly, under Section 102.21 (c)(4), the country of origin of the shirt and the country of origin of the pants in Scenario I and Scenario II is American Samoa, the country in which the most important assembly processes occur.

General Note 3(a)(iv), HTSUS, permits products of insular possessions of the United States 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 1) are the growth or product of the possession, or 2) 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 3) do not contain foreign materials which represent more than 50% of the goods’ total value (for textile and apparel articles subject to textile agreements), and 4) are shipped directly to the customs territory of the United States from the insular possession.

Since American Samoa is an insular possession of the United States, and since the goods which are produced in American Samoa, namely, the man’s shirt and pants, are textile articles that are subject to textile agreements, the “foreign materials” which make up the shirt must not represent more than 50% of the article’s appraised value.

In order to meet the requirements of General Note 3(a)(iv), HTSUS, we must first determine whether the component parts which are imported into American Samoa from China are substantially transformed by processing in American Samoa and thereby become a product of the 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 Chinese component parts should be considered part of the cost of the “foreign materials” or part of the cost of the materials produced in American Samoa for the purpose of applying the 50% foreign value limitation under General Note 3(a)(iv), we must consider whether the component parts undergo a double substantial transformation during the 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. To do this the foreign material must be substantially transformed in the insular possession into a new and different product and then that product must be transformed yet again into another new and different product that is exported directly to the United States. If this happens to the foreign material, then its cost can be considered part of the value of the materials produced in the insular possession.

As an example of the double substantial transformation principle as it was applied to textile wearing apparel, see Headquarters Ruling Letter (HRL) 556214, dated March 20, 1992, in which Customs ruled that foreign rolled fabric that was imported into the Commonwealth of the Northern Mariana Islands where it was cut to shape and then assembled into golf shirts and pullovers did undergo a double substantial transformation. In contrast, the present question involves component parts that are cut in China, not in the insular possession. Further, these parts are partially assembled in China. Therefore, the component parts do not undergo a double substantial transformation in the insular possession and their cost may not be included as part of the value of materials produced in the insular possession.

Despite the fact that the Chinese woven and cut component parts of the garment are considered foreign materials when they are shipped to the insular possession, and regardless of the determination that these parts do not undergo a double substantial transformation when they are processed in the insular possession, the garment may still qualify for duty free tariff status as long as it does not contain foreign materials which represent more than 50% of the total value of the goods and it is shipped directly to the United States from the insular possession. Section 7.3(d) of the Customs Regulations (C.R.) states that such a determination must be based on a cost comparison between:

The manufacturer’s actual materials cost plus the cost of transporting those materials to the insular possession (excluding duties, taxes and charges after landing) versus the final appraised value of the imported goods under Section 402a Tariff Act of 1930, as amended.

We note that a final determination regarding whether the foreign value limitation is satisfied for the instant merchandise can only be made at the time of entry of the goods into the United States.

HOLDING:

The country of origin of the subject merchandise is American Samoa. The component parts cut and partially assembled in China are considered foreign materials for the purpose of calculating the 50% foreign value limitation under General Note 3(a)(iv), HTSUS. However, the garment may still be eligible for duty free status provided that it is imported directly from the insular possession to the United States, and that the 50% foreign value limitation is satisfied at the time of entry. Since American Samoa is not a foreign country and, therefore, the United States has no bilateral quota or visa agreement with it, the garment is not subject to quota or visa requirements.

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 Mary Ryan at 646-733-3271.

Sincerely,

Robert B. Swierupski
Director,

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