OT:RR:CTF:FTM H312486 TSM
Center Director
Apparel, Footwear & Textiles CEE
U.S. Customs and Border Protection
555 Battery Street, Room 433
San Francisco, CA 94111
Attn: Stacey Carter, Import Specialist
Re: Application for Further Review of Protest No. 2704-20-122927; Tariff classification and preferential tariff treatment under the United States-Peru Trade Promotion Agreement (“PTPA”); T-shirts
Dear Center Director:
The following is our decision with respect to the Application for Further Review of Protest No. 2704-20-122927, timely filed by Sandler, Travis & Rosenberg, P.A. on April 21, 2020, on behalf of their client, Figs, Inc. (hereinafter “Protestant”), regarding the tariff classification under the Harmonized Tariff Schedule of the United States (“HTSUS”), and preferential tariff treatment under the United States-Peru Trade Promotion Agreement (“PTPA”), of certain t-shirts.
FACTS:
At issue in this case are five t-shirt styles, specifically style MXXKW1002, style MXXKW1001, style WXXKW1002, style WXXKW1001, and style W18KW1001.
Style MXXKW1002 is a men’s t-shirt, constructed from 100 percent cotton, finely knit jersey fabric. The t-shirt features a rib knit crew neckline, long, hemmed sleeves, a small woven fabric label sewn onto the bottom left front panel, a small screen print logo on the upper left back panel and a straight, hemmed bottom.
Style MXXKW1001 is a men’s t-shirt, constructed from 100 percent cotton, finely knit jersey fabric. The t-shirt features a rib knit crew neckline, short, hemmed sleeves, a small woven fabric label sewn onto the bottom left front panel, a small screen print logo on the upper left back panel, and a straight, hemmed bottom.
Style WXXKW1002 is a women’s t-shirt, constructed from 50 percent cotton, 50 percent modal rayon, finely knit jersey fabric. The t-shirt features a rib knit crew neckline, long hemmed sleeves, a small woven fabric label sewn onto the bottom left front panel, a small screen-printed logo on the upper left back panel, and a curved, hemmed bottom.
Style WXXKW1001 is a women’s t-shirt, constructed from 50 percent cotton, 50 percent modal rayon, finely knit jersey fabric. The t-shirt features a rib knit V-neckline, short hemmed sleeves, a small woven fabric label sewn onto the bottom left front panel, a small screen-printed logo on the upper left back panel, and a curved, hemmed bottom.
Style W18KW1001 is a women’s t-shirt, constructed from 50 percent cotton, 50 percent modal rayon, finely knit jersey fabric. The t-shirt features a rib knit crew neckline, short hemmed sleeves, a small woven fabric label sewn onto the bottom left front panel, a small screen-printed logo on the upper left back panel, and a curved, hemmed bottom.
According to the yarn producer’s affidavit, the yarn used in the manufacture of the fabrics for the subject t-shirts, was made in Peru. The yarn was composed of cotton fiber from the United States and rayon fiber from Austria. The cotton and cotton/modal rayon fabrics used in the manufacture of the subject t-shirts, were produced entirely in the territory of Peru. Based on the thread manufacturer’s affidavit, the sewing thread used in the manufacturing of the t-shirts was made of 100% spun polyester and produced in Thailand. The t-shirts were shipped directly from Peru to the United States.
The subject merchandise covers one entry, entered on October 26, 2018, and liquidated on October 25, 2019. In its protest, dated April 21, 2020, Protestant argued that the t-shirts at issue are eligible for preferential tariff treatment under the PTPA, because they meet all PTPA requirements pursuant to General Note (“GN”) 32, HTSUS, based on the following:
The garments under consideration were cut & sewn in Peru;
The fabric in the component that determines the tariff classification of the apparel was knit and dyed in Peru out of yarn that originated in Peru;
The sewing thread is classified in a heading that is not required to originate for PTPA apparel;
The garments at issue are not subject to the visible lining requirement;
Apparel does not contain pocket bag fabric;
Apparel does not contain narrow elastics;
Apparel was shipped directly to the United States from Peru.
The following documents were provided with the protest for our review: (1) manufacturer’s affidavit showing that the sewing thread used in the manufacturing of the t-shirts at issue is a 100% spun polyester sewing thread, manufactured in Thailand; (2) yarn manufacturer’s affidavits, showing that the yarns used in the manufacturing of the t-shirts at issue were spun in Peru; and (3) fabric manufacturer’s certificate, showing that the fabrics used in the manufacturing of the t-shirts at issue were knit and dyed in Peru.
ISSUE:
What is the tariff classification and status under the United States-Peru Trade Promotion Agreement (“PTPA”), of the t-shirts at issue?
LAW AND ANALYSIS:
Initially, we note that the matter is protestable under 19 U.S.C. § 1514(a)(2) as a decision on classification, applicable rate and amount of duties chargeable. The protest was timely filed, within 180 days of liquidation of the entries. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, § 2103(2) (B) (ii), (iii) (codified as amended at 19 U.S.C. § 1514(c) (3) (2006)).
Further Review of Protest No. 2704-20-122927 is properly accorded to Protestant pursuant to 19 C.F.R. § 174.24 (a) because Protestant alleges that the decision against which the protest was filed is inconsistent with New York Ruling Letter (“NY”) M84172, dated July 13, 2006, NY M85520, dated August 17, 2006, NY N002998, dated November 13, 2006, and NY N017273, dated October 19, 2007. Further review is also properly accorded to Protestant pursuant to 19 C.F.R. §174.24(b) because Protestant alleges that the decision against which the protest was filed involves questions of law or fact which have not been ruled upon by the Commissioner of CBP or his designee or by the Customs courts.
Classification under the HTSUS is determined in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order.
The 2018 HTSUS provisions under consideration are as follows:
5508 Sewing thread of man-made staple fibers, whether or not put up for retail sale
* * *
6109 T-shirts, singlets, tank tops and similar garments, knitted or crocheted
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The PTPA was approved by the U.S. Congress and enacted into law pursuant to the U.S.-Peru Trade Promotion Agreement Implementation Act, Public Law 110-138, 121 Stat. 1455 (19 U.S.C. § 3805 note). The PTPA was implemented in GN 32, HTSUS. GN 32(b) provides in relevant part:
(b) For the purposes of this note, subject to the provisions of subdivisions (c), (d), (m) and (n) thereof, a good imported into the customs territory of the United States is eligible for treatment as an originating good under the terms of this note if –
* * *
(ii) the good was produced entirely in the territory of Peru, the United States, or both, and –
(A) each of the nonoriginating materials used in the production
of the good undergoes an applicable change in tariff classification specified in subdivision (n) of this note; or
* * *
and the good satisfies all other applicable requirements of this note.
* * *
GN 32(n), Chapter 61, Chapter rule 2 provides, in pertinent part, that:
For purposes of determining whether a good of this chapter is originating, the rule applicable to that good shall only apply to the component that determines the tariff classification of the good and such component must satisfy the tariff change requirements set out in the rule for that good.
* * *
GN 32(n), Chapter 61, Chapter rule 4 provides:
Notwithstanding chapter rule 2 to this chapter, a good of this chapter containing sewing thread of heading 5204 or 5401 shall be considered originating only if such sewing thread is both formed and finished in the territory of Peru, the United States, or both.
* * *
For goods classified under heading 6109, HTSUS, GN 32(n) requires:
A change to headings 6105 through 6111 from any other chapter, except from headings 5106 through 5113, 5204 through 5212, 5307 through 5308, 5310 through 5311, 5401 through 5402, subheading 5403.20, 5403.33 through 5403.39, 5403.42 through 5403.49, headings 5404 through 5408, 5508 through 5516 or 6001 through 6006, provided that the good is cut or knit to shape, or both and sewn or otherwise assembled in the territory of Peru, the United States, or both.
* * *
Upon review, we find that the men’s t-shirts, composed of 100% cotton, are classified under heading 6109, HTSUS, and specifically under subheading 6109.10.00, HTSUS, which provides for “T-shirts, singlets, tank tops and similar garments, knitted or crocheted: Of cotton.” The women’s t-shirts, composed of 50% cotton and 50% modal rayon, are classified under heading 6109, HTSUS, and specifically under subheading 6109.90.10, HTSUS, which provides for “T-shirts, singlets, tank tops and similar garments, knitted or crocheted: Of other textile materials: Of man-made fibers.” 1 The men’s and women’s t-shirts were produced entirely in the territory of Peru, out of yarn and fabric made entirely in the territory of Peru. The thread used in the manufacturing of the men’s and women’s t-shirts at issue, described as the 100% spun polyester sewing thread, was produced in Thailand. The thread is classified under heading 5508, HTSUS, and specifically under subheading 5508.10.90, which provides for “Sewing thread of man-made staple fibers, whether or not put up for retail sale: Of synthetic staple fibers.”
Goods of heading 6109, HTSUS, qualify for preferential tariff treatment under the PTPA, if the requirements of GN 32, HTSUS, are met. Specifically, GN 32(b)(ii)(A) requires that the good was produced entirely in the territory of Peru, the United States, or both, and each of the non-originating materials used in the production of the good undergoes an applicable change in tariff classification specified subdivision (n) of GN 32. In this regard, GN 32(n), Chapter rule 2 to Chapter 61 further specifies that for purposes of determining whether a good of this chapter is originating, the rule applicable to that good shall only apply to the component that determines the tariff classification of the good, and such component must satisfy the relevant tariff change requirements. The specific tariff shift requirements for goods classified under heading 6109, HTSUS, are also found in GN 32(n). In addition, with regard to the sewing thread contained in goods of Chapter 61, GN 32(n) provides that if such sewing thread is of heading 5204 or 5401, HTSUS, it must be both formed and finished in the territory of Peru, the United States, or both, for the good to be considered originating.
With regard to the men’s and women’s t-shirts at issue, applying the relevant requirements of GN 32, HTSUS, we find that since the t-shirts are made of a single knit fabric (for the men’s t-shirts, it is the cotton knit fabric, and for the women’s t-shirts, it is the rayon/cotton knit fabric) and classified under GRI 1 in heading 6109, HTSUS, there is no need to employ an essential character analysis to classify the t-shirts. Accordingly, the above-mentioned Chapter rule 2 has no application in the instant case, and the t-shirts have to be originating by application of the tariff shift rule for heading 6109, HTSUS, with each of the non-originating materials used in the production of the t-shirts undergoing the required change in tariff classification. Pursuant to the documents submitted, the cotton and rayon/cotton knit fabrics were produced entirely in the territory of Peru out of yarn produced entirely in the territory of Peru. Therefore, these fabrics are originating materials and are not required to undergo a change in tariff classification as specified in GN 32(n). Furthermore, the t-shirts are cut and sewn and otherwise assembled in the territory of Peru. With regard to the sewing thread used in the manufacture of the t-shirts, we note that since it is classified under heading 5508, HTSUS, consistent with GN 32(n), Chapter 61, Chapter rule 4, it does not need to be formed and finished in the territory of Peru or the United States for the t-shirts to be considered originating. Accordingly, we conclude that the men’s t-shirts qualify for preferential treatment under the PTPA.
Based on the foregoing, we conclude that the men’s and women’s t-shirts at issue, classified under subheadings 6109.10.00, HTSUS, and 6109.90.10, HTSUS, are eligible for preferential tariff treatment under the PTPA.
HOLDING:
By application of GRIs 1 and 6, we find that the men’s t-shirts at issue are classified under heading 6109, HTSUS, and specifically under subheading 6109.10.00, HTSUS, which provides for “T-shirts, singlets, tank tops and similar garments, knitted or crocheted: Of cotton.” The 2018 column one, general rate of duty is 16.5%. The women’s t-shirts at issue are classified under heading 6109, HTSUS, and specifically under subheading 6109.90.10, HTSUS, which provides for “T-shirts, singlets, tank tops and similar garments, knitted or crocheted: Of other textile materials: Of man-made fibers.” The 2018 column one, general rate of duty is 32%. The men’s and women’s t-shirts at issue are eligible for preferential tariff treatment under the PTPA.
You are instructed to GRANT the protest.
In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the Protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.
Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel, and to the public on the Customs Rulings Online Search System (CROSS) at https://rulings.cbp.gov/ which can be found on the U.S. Customs and Border Protection website at http://www.cbp.gov and other methods of public distribution.
Sincerely,
For Craig T. Clark, Director
Commercial and Trade Facilitation Division