CLA-2-62:RR:NC:TA:357 K82686
Mr. Bill Julich
Delmar International
147-55 175th St.
Jamaica, NY 11434
RE: Classification and country of origin determination for a boys’ coat; United States Israel Free Trade Agreement; 19 CFR Section 12.130; 19 C.F.R. Section 102.21; General Headnote 8, HTS.
Dear Mr. Julich:
This is in reply to your letter received on January 30, 2004, on behalf of Welltex, Ltd., dba US2.COM, requesting a country of origin determination for a boys’ coat. The coat will be imported in size ranges 12-18 months, 2T-4T, 4-7 and 8-20. Samples were submitted and are being returned as you requested.
FACTS:
Style 90294 is an outerwear coat with a shell made form an 80% wool/20% nylon woven fabric. It has a notched lapel, a double-breasted front closure with buttons, a self-fabric simulated rear belt segment, pockets with flaps, a velvet collar and a taffeta lining.
Three manufacturing scenarios for the coat are described, as follows:
SCENARIO 1:
KOREA:
- Fabric is sourced
ISRAEL:
- Garment parts are cut to shape
CHINA:
- Cut parts are assembled into finished garment
SCENARIO 2:
CANADA:
- Fabric is sourced
ISRAEL:
- Garment parts are cut to shape
CHINA:
- Cut parts are assembled into finished garment
SCENARIO 3:
ITALY:
- Fabric is sourced
ISRAEL:
- Garment parts are cut to shape
CHINA:
- Cut parts are assembled into finished garment
ISSUE:
What are the classification and country of origin of the coat?
CLASSIFICATION:
The applicable subheading for the coat in sizes 12-18 months will be 6209.10.0000, Harmonized Tariff Schedule of the United States (HTS), which provides for babies’ garments and clothing accessories, of wool or fine animal hair. The duty rate will be 31.8 cents/kg plus 14.4 percent ad valorem. In the remaining sizes the applicable subheading for the coat will be 6201.11.0020, Harmonized Tariff Schedule of the United States (HTS), which provides for boys’ overcoats, carcoats, capes, cloaks and similar coats, of wool or fine animal hair. The duty rate will be 41 cents/kg plus 16.3 percent ad valorem.
In size range 12-18 months this coat falls within textile category designation 439; in the remaining sizes this coat falls within textile category designation 434. 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 Textile Status Report for Absolute Quotas, which is available at our 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:
On December 8, 1994, the President signed into law the Uruguay Round Agreements Act. Section 334 of that Act (codified at 19 U.S.C. ?3592) provides new rules of origin for textiles and apparel entered, or withdrawn from warehouse, for consumption, on and after July 1, 1996. On September 5, 1995, Customs published Section 102.21, Customs Regulations, in the Federal Register, implementing Section 334 (60 FR 46188). Thus, effective July 1, 1996, the country of origin of a textile or apparel product shall be determined by sequential application of the general rules set forth in paragraphs (c)(1) through (5) of Section 102.21.
EXCEPTION FOR UNITED STATES ISRAEL FREE TRADE AGREEMENT:
You have stated that the woven fabric is cut into garment parts in Israel. Section 334(b)(5) of the Uruguay Round Agreements Act provides that:
This section shall not affect, for purposes of the customs laws and administration of quantitative restrictions, the status of goods that, under rulings and administrative practices in effect immediately before the enactment of this Act, would have originated in, or been the growth, product or manufacture of, a country that is a party to an agreement with the United States establishing a free trade area, which entered into force before January 1, 1987. For such purposes, such rulings and administrative practices that were applied, immediately before the enactment of this Act, to determine the origin of textile and apparel products covered by such agreement shall continue to apply after the enactment of this Act, and on and after the effective date described in subsection(c), unless such rulings and practices are modified by the mutual consent of the parties to the agreement.
Israel is the only country which qualifies under the terms of Section 334(b)(5). As the Section 334 rules of origin for textiles and apparel products do not apply to Israel, we refer to the 19 C.F.R. 12.130 rules of origin, the rules of origin applicable to textiles and textile products before the enactment of Section 334. Section 334(b)(5) makes clear that if country of origin was conferred in Israel under Section 12.130, Israel will now be accorded the same treatment. This interpretation of Section 334(b)(5) was confirmed in a Notice of a general statement of policy, Treasury Decision 96 58, appearing in the Federal Register, Vol. 61, No. 148, dated July 31, 1996.
Accordingly, applying Section 12.130(b), the standard of substantial transformation governs the country of origin determination where textiles and textile products are processed in more than one country. The country of origin of textile products is deemed to be that foreign territory or country where the articles last underwent a substantial transformation. Substantial transformation is said to occur when the article has been transformed into a new and different article of commerce by means of substantial manufacturing or processing.
Section 12.130(d) sets forth criteria for determining whether a substantial transformation of a textile product has taken place. These criteria are not exhaustive; one or any combination of criteria may be determinative, and additional factors may be considered.
Section 12.130(d)(1) states that a new and different article of commerce will usually result from a manufacturing or processing operation if there is a change in:
(i) Commercial designation or identity,
(ii) Fundamental character, or
(iii) Commercial use.
Section 12.130(d)(2) states that for determining whether the merchandise has been subjected to substantial manufacturing or processing operations, the following will be considered:
(i) The physical change in the material or article;
(ii) The time involved in the manufacturing or processing;
(iii) The complexity of the manufacturing or processing;
(iv) The level or degree of skill and/or technology required in the manufacturing or processing operations;
(v) The value added to the article or material.
Section 12.130(e)(1) states, in pertinent part, that an article will usually be a product of a particular country when it has undergone in that country:
(iv) Cutting of the fabric into parts and the assembly of these parts into the completed article; or
(v) Substantial assembly by sewing and/or tailoring of all cut pieces of apparel articles which were cut from the fabric in another country into a component garment. (e.g., the complete assembly and tailoring of all cut pieces of a suit type jacket, suit or a shirt).
Customs has consistently held that the cutting of fabric into garment parts is a substantial transformation of the fabric and that those garment parts become the product of the country in which they are cut. It is also the consistently held position of Customs that when garment parts are cut in one country but the garment in assembled in another country, unless the assembly operation is a substantial assembly such as that referred to in Section 12.130(e)(1)(v), the country of origin remains the country in which the garment parts are cut. See, for example, HQ 088235 dated March 15, 1991, and the rulings that are cited in that ruling.
Since, in this case fabric is cut into garment parts in Israel, Israel is the country of origin of the coat. This is because in Israel the fabric is substantially transformed into garment parts which are designated for a particular article of apparel, thereby creating a new and different article of commerce. The assembly of goods, on the other hand, is not enough to substantially transform the components of an article into a new and different article of commerce.
"IMPORTED DIRECTLY" FROM ISRAEL:
Under General Note 8, Harmonized Tariff Schedule of the United States (HTS), products of Israel are eligible, when imported into the United States, for the "special" duty rate set forth in the tariff schedule only if each article is imported directly from Israel into the customs territory of the United States (General Note 8(b)(ii)). Since the coats that are the subject of this ruling are shipped from Israel to China for final assembly of the component parts into the finished coats, then exported to the U.S. directly from China, the coats do not qualify for the "special" duty rate.
HOLDING:
The country of origin of the coat is Israel. Based upon international textile trade agreements products of Israel are not subject to quota or the requirement of a visa. The coat is not eligible for the "special" duty rate because is not imported directly from Israel.
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). Should it be subsequently determined that the information furnished is not complete and does not comply with 19 C.F.R. 177.9(b)(1), the ruling will be subject to modification or revocation. In the event there is a change in the facts previously furnished, this may affect the determination of country of origin. Accordingly, if there is any change in the facts submitted to Customs, it is recommended that a new ruling request be submitted in accordance with 19 C.F.R. 177.2.
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 William Raftery at 646 733 3047.
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 William Raftery at 646-733-3047.
Sincerely,
Robert B. Swierupski
Director,
National Commodity
Specialist Division