United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 2008 NY Rulings > NY N025651 - NY N025742 > NY N025706

Previous Ruling Next Ruling
NY N025706





April 15, 2008

CLA-2-OT:RR:NC:TA:361

CATEGORY: CLASSIFICATION

Ms. Yi Shu
Augusta Sportswear
425 Park West Drive
Grovetown, GA. 30813

RE:     Classification and country of origin determination for women’s knit pants; Duty-Free treatment for products of the West Bank, Gaza Strip, or a Qualifying Industrial Zone; United States - Israel Free Trade Agreement; General Note 3(a)(v); 19 CFR (c)(2) Dear Ms. Shu:

This is in reply to your letter dated April 1, 2008, requesting classification and eligibility for preferential duty treatment for garments that may be produced in a Qualifying Industrial Zone (QIZ) in Egypt.

FACTS:

Style 877 is a pair of women’s pants constructed from 92 percent polyester and 8 percent cotton knit fabric. The pull-on pants feature an elasticized waistband with a drawstring, an eight inch long zipper opening on each leg and hemmed leg openings.

You indicated that the garment will also be imported in girls’ sizes and identified as style 878.

The garments will be cut, sewn, finished and packed in a QIZ in Egypt from uncut and unmarked foreign materials. The raw material list is as follows:

CHINA:

Double knit fabric

ISRAEL:

Thread
Elastic
Polybag
Carton

HONG KONG:

Main label
Wash label
Hangtag
Zipper

U.A.E.:

Polybag sticker
Carton sticker

ISSUE:

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

CLASSIFICATION:

The applicable subheading for the women’s sizes will be 6104.63.2011, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Women’s trousers (other than swimwear): Knitted or crocheted: Of synthetic fibers: Other: Other: Trousers: Women’s: Other. The duty rate will be 28.2% ad valorem.

The applicable subheading for the girls’ sizes will be 6104.63.2028, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Girls’ trousers (other than swimwear): Knitted or crocheted: Of synthetic fibers: Other: Other: Trousers: Girls’: Other: Other. The duty rate will be 28.2% ad valorem.

     The pants in both women’s and girls’ sizes falls within textile category designation 648. The designated textile and apparel categories and their quota and visa status are the result of international agreements that are subject to frequent renegotiations and changes. To obtain the most current information, we suggest that you check, close to the time of shipment, the U.S. Customs Service Textile Status Report, an internal issuance of the U.S. Customs Service, which is available at the Customs Web Site at WWW.CBP.GOV. In addition, the designated textile and apparel categories may be subdivided into parts. If so, visa and quota requirements applicable to the subject merchandise may be affected and should also be verified at the time of shipment.

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.

     General Note 3(a)(v)(G), HTS, defines a "qualifying industrial zone" as any area that: "(1) encompasses portions of the territory of Israel and Jordan or Israel and Egypt; (2) has been designated by local authorities as an enclave where merchandise may enter without payment of duty or excise taxes; and (3) has been designated by the U.S. Trade representative in a notice published in the Federal Register as a qualifying industrial zone." You have indicated that the goods will be produced in a formally designated qualifying industrial zone.

     Treasury Decision 98-62 dated July 13, 1998, determined that pursuant to the agreement between the Governments of Israel and Jordan, and by mutual consent of the U.S. and Israel, Customs will exclusively apply the textile and apparel rules of origin set forth in 19 C.F.R. §102.21 in determining the country of origin of a textile or apparel product processed in a qualifying industrial zone.

     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‚Äď6117

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.

    In the scenario under consideration, the pants are not knit to shape and consist of two or more component parts. Therefore, the remaining issue that must be determined is whether the pants are "wholly assembled" in the QIZ.

      The term "wholly assembled" is defined in 19 C.F.R. 102.21(b)(6) as:

Wholly assembled. The term "wholly assembled" when used with reference to a good means that all components, of which there must be at least two, preexisted in essentially the same condition as found in the finished good and were combined to form the finished good in a single country, territory, or insular possession. Minor attachments and minor embellishments (for example, appliqués, beads, spangles, embroidery, buttons) not appreciably affecting the identity of the good, and minor subassemblies (for example, collars, cuffs, plackets, pockets), will not affect the status of a good as "wholly assembled" in a single country, territory, or insular possession.

     Because the pants will consist of two or more component parts and will be wholly assembled in what we assume to be a qualifying QIZ, under 19 C.F.R. 102.21(e), the pants will be considered "products of" Egypt, where the QIZ is located, as per the terms of the tariff shift requirement.

STATUS UNDER THE UNITED STATES-ISRAEL FREE TRADE AGREEMENT

Pursuant to the authority conferred by section 9 of the U.S.-Israel Free Trade Area Implementation Act of 1985 (19 U.S.C. §2112 note), the President issued Proclamation No. 6955 dated November 13, 1996 (published in the Federal Register on November 18, 1996 (61 Fed. Reg. 58761)), which modified the Harmonized Tariff Schedule of the United States (HTSUS) (by creating a new General Note 3(a)(v)) to provide duty-free treatment to articles which are the product of the West Bank, Gaza Strip or a qualifying industrial zone, provided certain requirements are met. Such treatment was effective for products of the West Bank, Gaza Strip or a qualifying industrial zone entered or withdrawn from warehouse for consumption on or after November 21, 1996. Under General Note 3(a)(v)(A)(2), HTSUS, articles the products of the West Bank, Gaza Strip or a qualifying industrial zone which are imported directly to the U.S. from the West Bank, Gaza Strip, a qualifying industrial zone or Israel qualify for duty-free treatment, provided the sum of 1) the cost or value of materials produced in the West Bank, Gaza Strip, a qualifying industrial zone or Israel, plus 2) the direct costs of processing operations performed in the West Bank, Gaza Strip, a qualifying industrial zone or Israel, is not less than 35% of the appraised value of such articles when imported into the U.S.

Based upon the above production information, if manufactured in a qualifying industrial zone, the garment meets the country of origin requirements in the West Bank, Gaza Strip or a qualifying industrial zone, specifically, in Egypt. Under the applicable rules of origin for textiles, it would be considered a product of the West Bank, Gaza Strip or a qualifying industrial zone, specifically Egypt.

      With respect to the requirement that the article be imported directly, General Note 3(a) (v)(B) (1) provides that:

      Articles are "imported directly" for purposes of this paragraph if-- (1) they are shipped directly from West Bank, the Gaza Strip, a qualifying industrial zone or Israel into the United States without passing through the territory of any intermediate country;        Based upon the facts presented, it appears that the garment will satisfy this requirement. We are unable to state definitively that the garment will or will not satisfy the 35% value content requirement. Whether the requirement is satisfied can only be ascertained when the "appraised value" of the garment is determined at the time of entry into the United States.

HOLDING:

Based on the information provided, the garment will be considered a product of Egypt. If the garment is produced in an approved Qualifying Industrial Zone, the garment will be considered to be a product of the West Bank or Gaza Strip or qualifying industrial zone, and will be eligible for preferential duty treatment under General Note 3(a)(v), HTSUS, assuming that the garment is imported directly from the QIZ in Egypt, and the 35 percent value content requirement is satisfied. Again, the determination of whether the 35 percent value content requirement will be met must await actual entry of the merchandise.

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 C.F.R. §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).

     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.


Previous Ruling Next Ruling

See also: