CLA-2-61:OT:RR:NC:WA:356
Mr. Francisco Gomez, Jr.
R.L. Jones Customhouse Brokers
484 Tecate Road
Tecate, CA 91980
RE: The tariff classification and eligibility under 9802.00.50, 9802.00.80, and 9801.00.20, HTSUS, of men’s knit pullover garments from Mexico
Dear Mr. Gomez:
In your letter dated September 4, 2012, and in subsequent correspondence dated October 22, 2012, you requested a tariff classification ruling on behalf of Secura, Inc. dba Free Movement. Your request concerns the applicability of 9802.00.50, 9802.00.80, and 9801.00.20, Harmonized Tariff Schedule of the United States, (HTSUS), to certain men’s knit pullovers that will be assembled in Mexico. Your sample will be returned, as requested.
The submitted garment is a men’s pullover constructed from 100% cotton, finely knit jersey fabric that measures 35 stitches per 2 centimeters counted in the horizontal direction. The garment has a rib knit round neckline; long, hemmed sleeves; pieced inserts at the elbows; an embroidered logo on the lower right front panel; self-fabric binding on the rear neckline and shoulder seams; contrasting satin binding on the inside sleeve seams and on the inside side seams; and a straight, hemmed bottom.
There is a woven fabric drawstring pouch with an inserted paper notebook pinned to the center rear neckline of the garment. The notebook is a Moleskine green soft covered notebook that measures approximately 4” x 2 ½” and consists of 28 white blank perforated detachable sheets. The first page is printed with the words, “In case of loss, please return to:” and “As a reward: $” with lined spaces for the owner’s contact information and reward amount.
The drawstring pouch is constructed of 100% cotton textile material. It is designed for the storage, protection, portability and organization of its contents. The pouch has one unlined compartment with a drawstring closure at the top. It is of a durable construction, suitable for repetitive use and measures approximately 3” (W) x 4.75” (H).
You provide the following production scenario for the pullover garment:
Step 1: 100% cotton fabric of foreign origin purchased in the United States will be cut to pattern pieces in the United States. The cut components will be shipped to Mexico to be joined together by sewing. Trim components (consisting of the satin ribbon applied to the interior seams, a satin loop label, and a non-woven brand name/country of origin/fiber content label) of Chinese origin will be shipped to Mexico with the cut to shape components. All components will be assembled in Mexico into a pullover garment.
Step 2: The pullover garments will be shipped to the United States where they will be garment dyed and embroidered.
Step 3: The dyed and embroidered pullovers will be returned to Mexico to be inspected, repaired when required, and pressed. You state that repairs are sometimes required after garments have been subjected to the garment dyeing process as some stitches become broken and seams become open and need reworking.
Step 4: A cotton drawstring pouch, a small paper notebook, and a small safety pin of Chinese origin are imported into the United States and sent to Mexico to be attached to the pullover. After the garments are pressed, the paper notebook is inserted into the drawstring pouch and attached to the inside rear neckline of the garment with the safety pin.
The applicable subheading for the pullover garment will be 6110.20.2069, HTSUS, which provides for: Sweaters, pullovers, sweatshirts, waistcoats (vests) and similar articles, knitted or crocheted: Of cotton: Other: Other: Other: Men's or boys': Other. The duty rate will be 16.5 percent ad valorem.
The applicable subheading for the notebook will be 4820.10.2060, HTSUS, which provides for Registers, account books, notebooks, order books, receipt books, letter pads, memorandum pads, diaries and similar articles: Diaries, Notebooks and address books, bound; memorandum pads, letter pads and similar articles: Other. The rate of duty will be Free.
The applicable subheading for the drawstring pouch will be 4202.92.6091, HTSUS, which provides in part, for Other bags and containers, Of cotton, Other. The duty rate will be 6.3 percent ad valorem.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at http://www.usitc.gov/tata/hts/.
Subheading 9802.00.80, HTSUS, provides for:
Articles, except goods of heading 9802.00.90 and goods imported under provisions of subchapter XIX of this chapter and goods imported under provisions of subchapter XX, assembled abroad in whole or in part of fabricated components, the product of the United States, which (a) were exported in condition ready for assembly without further fabrication, (b) have not lost their physical identity in such articles by change in form, shape or otherwise, and (c) have not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process such as cleaning, lubricating and painting.
All three requirements of subheading 9802.00.80, HTSUS, must be satisfied before a component may receive a duty allowance. An article entered under this tariff provision is subject to duty upon the full appraised value of the imported assembled article, less the cost or value of the U.S. components assembled therein, upon compliance with the documentation requirements of section 10.24, Customs Regulations (19 CFR §10.24).
Section 10.14(a), Customs Regulations (19 CFR §10.14(a)), provides in part that the components must be in a condition ready for assembly without further fabrication at the time of their exportation from the U.S. to qualify for the exemption. Components will not lose their entitlement to the exemption by being subjected to operations incidental to the assembly either before, during, or after their assembly with other components.
Section 10.16(a), Customs Regulations (19 CFR §10.16(a)), provides that the assembly operation performed abroad may consist of any method used to join or fit together solid components, such as welding, soldering, riveting, force fitting, gluing, laminating, sewing, or the use of fasteners. Operations incidental to the assembly process are not considered further fabrication operations, as they are of a minor nature and cannot always be provided for in advance of the assembly operations. However, any significant process, operation or treatment whose primary purpose is the fabrication, completion, physical or chemical improvement of a component precludes the application of the exemption under HTSUS subheading 9802.00.80 to that component. See 19 CFR §10.16(c).
Section 10.25, Customs Regulations (19 CFR §10.25), provides that where a textile component is cut to shape (but not to length, width or both) in the United States from foreign fabric and exported to another country, territory, or insular possession for assembly into an article that is then returned to the United States and entered, or withdrawn from warehouse for consumption on or after July 1, 1996, the value of the textile component shall not be included in the dutiable value of the article.
In the instant situation, the front and back panels and the sleeves are cut to shape in the United States from foreign fabric and are eligible for the duty allowance. However, the rib knit fabric for the neckband and the jersey knit fabric for the neck and shoulder seam binding are cut to length and width in the United States to form rectangular shapes. These components are not considered cut to shape pursuant to Section 10.25, Customs Regulations. As such, they are not eligible for a duty allowance under HTSUS 9802.00.80.
Accordingly, the pullover garment, assembled in Mexico from component parts cut in the United States, may be eligible for a partial duty exemption under HTSUS heading 9802.00.80. An article entered under this tariff provision is subject to duty upon the full value of the assembled article, less the cost or value of such U.S. components, upon compliance with the documentary requirements of section 10.24, Customs Regulations (19 CFR §10.24).
You also ask whether the inspection, repairing of threads and seams, and pressing of the garment as stated in Step 3 are operations that are eligible for treatment under subheading 9802.00.50, HTSUS, as repairs or alterations.
Subheading 9802.00.50, HTSUS, provides a full or partial duty exemption for articles returned to the United States after having been exported to be advanced in value or improved in condition by repairs or alterations. Articles returned to the United States after having been repaired or altered in Mexico, whether or not pursuant to a warranty, may be eligible for duty-free treatment, provided the documentary requirements of section 181.64(c), Customs Regulations (19 CFR §181.64(c), are satisfied.
19 CFR §181.64(a), states that “repairs or alterations” means restoration, addition, renovation, redyeing, cleaning, resterilizing, or other treatment which does not destroy the essential characteristics of, or create a new or commercially different good from, the good exported from the United States.
However, entitlement to this tariff treatment is precluded in circumstances where the operations performed abroad destroy the identity of the exported articles or create new or commercially different articles through a process of manufacture. Subheading 9802.00.50, HTSUS, treatment is also precluded where the exported articles are incomplete for their intended use and the foreign processing operation is a necessary step in the preparation or manufacture of finished articles.
In this instance, the garments are complete for their intended use as wearing apparel prior to being exported to undergo the inspection, repair and pressing operations. As exported from the United States, the garments are finished products suitable for use as wearing apparel. The merchandise in its condition as exported from the United States and as returned to the United States can be marketed and sold to consumers for the same use. The operations performed on the goods do not result in the loss of the good’s identity nor create a new article with a different commercial use.
Therefore, the aforementioned operations constitute an acceptable alteration within the meaning of subheading 9802.00.50, HTSUS. The garments will qualify for the special tariff treatment of that provision, provided that the documentary requirements of 19 CFR §181.64 are satisfied.
You also inquire whether the provisions of subheading 9801.00.20, HTSUS, apply to this merchandise. Subheading 9801.00.20 provides for: Articles, previously imported, with respect to which the duty was paid upon such previous importation or which were previously free of duty pursuant to the Caribbean Basin Economic Recovery Act or Title V of the Trade Act of 1974, if (1) reimported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, after having been exported under lease or similar use agreements, and (2) reimported by or for the account of the person who imported it into, and exported it from, the United States.
Based on the information you have supplied, the provisions of subheading 9801.00.20, HTSUS, do not apply to this merchandise.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 CFR 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 Mary Ryan at 646-733-3271.
Sincerely,
Thomas J. Russo
Director
National Commodity Specialist Division