CLA-2 CO:R:C:V 555656 SER
Mr. Felix Achille
Produits Nouveaux Co.
P.O. Box 951
Reynoldsburg, OH 43068
RE: Eligibility for duty-free treatment under the CBI and U.S.
Note 2(b), subchapter II, Chapter 98, HTSUS, of acrylic
trophy cases manufactured in Haiti.
Dear Mr. Achille:
This is in reference to your letter of April 30, 1990, in
which you request a ruling on the applicability of duty-free
treatment for acrylic trophy cases and stands produced in Haiti
under the Caribbean Basin Initiative (CBI)(19 U.S.C. 2701-2706).
According to your submission, the acrylic trophy cases and
stands will be manufactured in Haiti from materials of U.S.
origin. These materials consist almost solely of various
colored acrylic sheets--black, white and clear. In Haiti, these
sheets are cut to shape and then glued to form either the cases
or the stands. They will then undergo finishing operations to
complete the stands and cases. The trophy cases will be 24
inches tall, 4 inches wide at the top and 16 inches wide at the
bottom, creating a sloped case for viewing. The stands will be
32 inches high and 16 inches wide and are to be used in
conjunction with the trophy cases.
Are these articles eligible for duty-free treatment under
the CBI or U.S. Note 2(b), subchapter II, Chapter 98, Harmonized
Tariff Schedule of the United States (HTSUS)?
LAW AND ANALYSIS:
Under the CBI, eligible articles the growth, product or
manufacture of a designated beneficiary country (BC) may receive
duty-free treatment if such articles are imported directly to the
U.S. from a BC, and if the sum of 1) the cost or value of the
materials produced in a BC or BC's, plus 2) the direct costs of
processing operations performed in a BC or BC's, is not less than
35% of the appraised value of the article at the time it is
entered into the U.S. See, 19 U.S.C. 2703(a). In addition, the
cost or value of materials produced in the U.S. may be applied
toward the 35% value-content minimum in an amount not to exceed
15% of the imported article's appraised value See Section
10.195(c), Customs Regulations (19 CFR 10.195(c)).
As stated in General Note 3(c)(v)(A), HTSUS, Haiti is a BC.
Based on your diagrams and description of the acrylic cases and
stands, they are properly classified in subheading 9403.70.80,
HTSUSA, which is a CBI eligible provision. In addition, it is
our opinion that cutting the acrylic sheets to shape and gluing
the cut pieces together to create the finished trophy cases and
stands substantially transforms the U.S.-origin sheets into
products of Haiti. Therefore, the cases and stands will be
entitled to CBI duty-free treatment if the 35% value-content
requirement is met and they are imported directly to the U.S.
from Haiti. As insufficient information concerning the direct
costs of processing to be incurred in Haiti has been provided, we
are unable to provide you with a definitive ruling that the cases
and stands will be entitled to CBI treatment. We have enclosed
for your information a copy of the Customs Regulations relating
to the CBI (19 CFR 10.191-10.198).
However, recent legislation has created a new duty-free
program which appears to encompass your proposed transactions.
Section 222 of the Customs and Trade Act of 1990 (Public Law 101-
382) amended U.S. Note 2, subchapter II, Chapter 98, HTSUSA, to
provide for the duty-free treatment of articles (other than
specified products) which are assembled or processed in a
designated CBI BC, wholly of fabricated components or
ingredients (except water) of U.S. origin. This amendment was
effective with respect to goods entered on or after October 1,
U.S. Note 2(b) of subchapter II, Chapter 98, HTSUSA,
provides as follows:
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
(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, not the article itself, before importation
in the United States, enters the commerce of any
foreign country other than a beneficiary country.
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 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.
In regard to the operations performed in Haiti, we believe
that the cutting and assembly of the U.S. acrylic, and the
finishing operations, are encompassed by the operations specified
in U.S. Note 2(b). Therefore, the cases and stands will be
entitled to duty-free treatment under this provision, assuming
the applicable documentation requirements are satisfied. We have
enclosed a copy of a telex to Customs field offices, dated
September 28, 1990, which outlines these requirements.
The acrylic trophy cases and stands will be entitled to
duty-free treatment under the CBI if the 35% value-content
requirement is satisfied and they are imported directly to the
Moreover, the cases and stands, made wholly from products of
the U.S. in Haiti, are entitled to duty-free treatment under
U.S. Note 2(b), subchapter II, Chapter 98, HTSUSA, upon
compliance with the applicable documentation requirements.
John Durant, Director
Commercial Rulings Division