CLA-2 R:C:S 558954 BLS
District Director of Customs
9 N. Grand Avenue
Nogales, Arizona 85621
RE: Internal Advice No. 66/94; applicability of subheading 9802.00.90, HTSUS,
to women's jacket; velveteen collar; Special Regime Program; findings and trimmings
This is in reference to your letter dated December 6, 1994, forwarding a request for internal advice on behalf of Winer Industries ("Winer"), concerning the eligibility for duty-free treatment under subheading 9802.00.90, Harmonized Tariff Schedule of the United States (HTSUS), of women's jackets imported from Mexico.
Winer states that the jacket shell, linings and fusibles are wholly formed (i.e., woven) and cut in the U.S., with the exception of the cotton (100%) velveteen upper collar, which is woven in China and cut in the U.S. These components are sent to Mexico, where they are assembled by bonding, basting, and sewing operations. Buttonholes are marked and sewn into the jacket before final pressing. Buttons are attached to the garment followed by a final inspection.
Whether the women's jackets are entitled to duty-free treatment under subheading 9802.00.90, HTSUS, upon return from abroad.
LAW AND ANALYSIS:
Annex 300-B of the North American Free Trade Agreement ("NAFTA") is applicable to textile and apparel goods. Appendix 2.4 of Annex 300-B provides that:
[o]n January 1, 1994, the U.S. shall eliminate
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customs duties on textile and apparel goods that
are assembled in Mexico from fabrics wholly formed
and cut in the United States and exported from and
reimported into the United States under:
(a) U.S. tariff item 9802.00.80.10; or
(b) Chapter 61, 62, or 63 if, after such assembly,
those goods that would have qualified for treatment
under 9802.00.80.10 have been subject to bleaching,
garment dyeing, stone-washing, acid-washing or
Thereafter, the U.S. shall not adopt or maintain any
customs duty on textile or apparel goods that
satisfy the requirements of subparagraph (a) or (b)
or the requirements of any sucessor provision to U.S.
tariff item 9802.00.80.10.
Consequently, subheading 9802.00.90, HTSUS, was created to provide for the duty-free and quota-free status to all goods assembled in Mexico, which previously were eligible for entry under the Special Regime Program administered under subheading 9802.00.80, HTSUS. As a result, it is Customs view that all of the policy directives implementing this program should be considered applicable for the administration of subheading 9802.00.90, HTSUS. One such policy under the Special Regime Program included the allowance of "findings, trimmings, and certain elastic strips of foreign origin" to be incorporated into the assembled good "provided they do not exceed 25 percent of the cost of the components of the assembled product." Examples of findings and trimmings are sewing thread, hooks and eyes, snaps, buttons, "bow buds", lace trim, zippers, including zipper tapes, and labels. See 53 Fed. Reg. 15726 (May 3, 1988).
It is Winer's opinion that the velveteen collar is a "trimming" for tariff classification purposes, and that accordingly, the collar should also be considered "trimmings" as that term is used for purposes of the policy directive regarding findings and trimmings which implemented the Special Regime Program. Therefore, Winer contends that the collar should be considered an exception to the requirement under subheading 9802.00.90, HTSUS, that all fabric components be wholly formed and cut in the U.S.
The exception for findings, trimmings, etc., under the Special Regime Program, was necessarily intended to be of a restrictive nature, as the intent of the statute was to ensure that all fabric components be formed and cut in the U.S. In this regard, it is noted, for example, that the exception for foreign-origin elastic strips was limited to strips of less than one inch in width. This
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exception applied to brassiere straps only, and thus could not be used for a more substantial component, such as waistbands, which are in excess of one inch in width.
While "findings and trimmings" for purposes of the Special Regime Program are not specifically defined, the examples set forth above, such as thread, lace trim and labels (as well as elastic trim less than one inch in width), are indicative of the types of components which may be considered exceptions to the requirement that all fabric components be formed and cut in the U.S. Based on statutory intent and the examples set out in the directive, it is Customs position that the velveteen collar in the instant case would not have been considered a "finding" or "trimming" under the Special Regime Program. Thus, since the collar is a fabric component and was not wholly formed and cut in the U.S., the subject women's jacket would not have been eligible for entry under subheading 9802.00.8010, HTSUS, upon importation. Therefore, the jacket will similarly be ineligible for duty-free treatment entry under subheading 9802.00.90, HTSUS, the successor provision to subheading 9802.00.8010, HTSUS, upon return to the U.S.
For purposes of the directives implementing the Special Regime Program administered under subheading 9802.00.8010, HTSUS, which are also applicable to its successor provision, subheading 9802.00.90, HTSUS, a cotton velveteen collar of a women's jacket is not considered a "finding" or "trimming". Since the collar is a fabric component and is not wholly formed and cut in the U.S., the jacket would not have been eligible for duty-free entry under subheading 9802.00.8010, HTSUS. Therefore, the jacket is similarly ineligible for duty-free treatment under subheading 9802.00.90, HTSUS, upon return to the U.S., as the collar was not wholly formed and cut in the U.S.
This decision should be mailed by your office to the internal advice requester no later than 60 days from the date of this letter. On that date the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Ruling Module in ACS and the public via the Diskette Subscription Service, Lexis, Freedom of Information Act and other public access channels 60 days from the date of this decision.
John Durant, Director
Commercial Rulings Division