CLA-2 RR:TC:SM 560320 JML
Mr. Ron Hodge
F.H. Kaysing Co. of Wichita
P.O. Box 12497
Wichita, KS 67277
RE: Eligibility of gas lantern mantles made in Costa Rica for
duty-free treatment under U.S. Note 2(b),
Subchapter II, Chapter 98, HTSUS; textiles;
T.D. 91-88.
Dear Sir:
This is in response to your letter of February 10, 1997,
requesting a reconsideration of New York Ruling Letter ("NY")
A87191, dated September 20, 1996. Specifically, you request a
reconsideration of the above referenced ruling to obtain duty-free treatment for gas lantern mantles under U.S. Note 2(b),
Subchapter II, Chapter 98, Harmonized Tariff Schedule of the
United States ("HTSUS") ("CBI II"). In that ruling, however, the
issue of the whether or not the gas lantern mantels were eligible
for CBI II treatment was not specifically addressed. Our
decision on that issue follows.
FACTS:
Your client, The Coleman Co., Inc. ("Coleman"), intends to
manufacture incandescent gas lantern mantles in Costa Rica from
United States ("U.S.")-origin components, ingredients and
materials. Coleman will supply U.S.-origin, impregnated, knitted
rayon mantle sacks and U.S.-origin wire clips to Costa Rica.
Once in Costa Rica, the mantles are placed on a mandrel, the wire
will be trimmed and bent to shape, and the clips laced into the
mantle sacks. Lastly, the mantles will be heat sealed into
polybags for packaging and returned to the U.S. for retail sale.
ISSUE:
Whether the incandescent gas lantern mantles are entitled to
duty-free treatment under U.S. Note 2(b), Subchapter II, Chapter
98, HTSUS.
LAW AND ANALYSIS:
Section 222 of the Customs and Trade Act of 1990 (Public Law
101-382) amended U.S. Note 2, Subchapter II, Chapter 98, HTSUS,
to provide for the duty-free treatment of articles, other than
specified products, which are assembled or processed in a
Caribbean Basin Economic Recovery Act ("CBERA") beneficiary
country ("BC") in whole of fabricated components or ingredients
(except water) of U.S. origin.
Specifically, Note 2(b) provides as follows:
(b) 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
States, or
(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, nor the article
itself, before importation into the United
States, enters the commerce of any
foreign country other than a
beneficiary country.
As used in this paragraph, the term "beneficiary
country" means a
country listed in general note 7(a).
Pursuant to General Note 7(a), HTSUS, Costa Rica has been
designated as a BC for CBERA purposes. 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 duty-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.
U.S. Note 2(b), however, specifically excludes textiles and
textile articles from duty-free treatment under CBI II. In NY
A87191, the article was determined to be classified in subheading
5908.00.00, HTSUS, (incandescent gas mantles and tubular knitted
gas mantle fabric therefor, whether or not impregnated). In
Treasury Decision ("T.D.") 91-88, 25 Cust. Bull. 45 (1991),
Customs determined that only those articles classified in HTSUS
provisions which include a textile category number should be
considered "textile" and "apparel" articles for purposes of U.S.
Note 2(b), Subchapter II, Chapter 98, HTSUS. As the
classification of the lantern mantles, subheading 5908.00.00,
HTSUS, is not a provision which includes a textile category
number, the lantern mantles are eligible for duty-free treatment
assuming, compliance with the requirements of U.S. Note 2(b).
In regard to the processing performed in Costa Rica --
trimming and bending the wire clips to shape, lacing them through
the mantle sacks, and packaging the article for retail sale -- we
believe these operations are within those contemplated by U.S.
Note 2(b). Therefore, assuming the finished articles are made
entirely of U.S.-origin materials and components, all U.S.-origin
materials and components are shipped directly from the U.S. to
the BC, the finished articles in turn are shipped directly to the
U.S. without entering the commerce of any foreign country other
than a BC, and the appropriate documentary requirements are
satisfied, the incandescent gas lantern mantles will be entitled
to duty-free treatment under U.S. Note 2(b).
HOLDING:
The incandescent gas lantern mantles, made in Costa Rica
from U.S.-origin materials, ingredients or components, are
entitled to duty-free treatment under U.S. Note 2(b), Subchapter
II, Chapter 98, HTSUS, upon compliance with the export/import
directly and documentary requirements of this provision (see
enclosed telex 9264071, dated September 28, 1990).
A copy of this ruling letter should be attached to the entry
documents filed at the time this merchandise is entered. If the
documents have been filed without a copy, this ruling should be
brought to the attention of the Customs officer handling the
transaction.
Sincerely,
John Durant, Director
Tariff Classification Appeals Division
Enclosure