CLA-2 CO:R:C:S 557216 WAW
John S. Rode, Esq.
Rode & Qualey
295 Madison Avenue
New York, N.Y. 10017
RE: Eligibility of neoprene knee brace and neoprene-nylon
material for duty-free treatment under U.S. Note 2(b),
subchapter II, Chapter 98, HTSUS; "product of"
Dear Mr. Rode:
This is in response to your letter dated March 29, 1993, on
behalf of Becton Dickinson and Company, concerning the
eligibility of "Ace" Brand neoprene knee brace from the Dominican
Republic for duty-free treatment under U.S. Note 2(b), subchapter
II, Chapter 98, Harmonized Tariff Schedule of the United States
(HTSUS) ("Note 2(b)"). Samples of the merchandise were enclosed
for our review.
FACTS:
You state that Becton Dickinson will import sheets
manufactured in Taiwan of neoprene-nylon material measuring 4
inches by 8 inches into Puerto Rico. This material is composed of
neoprene rubber to which knit nylon fabric is laminated on beth
the inner and outer surfaces, through the use of heat sensitive
adhesive. In Puerto Rico, the neoprene-nylon material will be cut
to the shape and size of the component parts of the knee brace.
The completed knee brace will be packaged and shipped to the U.S.
for import, distribution, and sale.
ISSUE:
(1) What is the tariff classification of the neoprene-nylon
material?
(2) What is the tariff classification of the knee brace
manufactured out of the neoprene-nylon material?
(3) Whether the neoprene knee brace will be eligible for
duty-free treatment under Note 2(b).
LAW AND ANALYSIS:
I. Classification of the neoprene-nylon material
The classification of goods under the HTSUS is governed by
the General Rules of Interpretation (GRI's), taken in order. GRI
1 provides that classification shall be determined according to
the terms of the headings 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 GRI's may be applied, taken in
order.
The two headings at issue-in the classification of the
neoprene-nylon material are: .heading 4008, HTSUS, which provides
for "[p]lates, sheets, strip, rods and profile shapes, of
vulcanized rubber other than hard rubber" and heading 5906,
HTSUS, which provides for "[r]ubberized textile fabrics, other
than those of heading 5902."
The Harmonized Commodity Description and Coding System
Explanatory Notes (ENs) to Chapter 40, state the following, on
page 580, regarding rubber and textile combinations:
The classification of rubber and textile combinations is
essentially governed by Note 1 (ij) to Section XI, Note 3 to
Chapter 56 and Note 4 to Chapter 59... The following
products are covered by this Chapter:
* * * * *
(d) Plates, sheets and strip of cellular rubber, combined
with textile fabrics (as defined in Note 1 to Chapter
59), felt or nonwovens, where the textile is present
merely for reinforcing purposes.
The ENs to heading 4008 also state that this heading excludes
rubberized textile fabrics as defined in Legal Note 4 to Chapter
59 (heading 59.86). According to Legal Note 4 to Chapter 59,
HTSUS, for the purposes of heading 5906, HTSUS, the expression
"rubberized textile fabric" means:
(d) Plates, sheets or strip, of cellular rubber, combined
with textile fabric, where the textile fabric is more
than mere reinforcement, other than textile products of
heading 5811.
It is our position that the nylon fabric laminated to the
neoprene rubber is more than mere reinforcement. The textile
fabric provides a protective cover for the neoprene and gives it
a different visual appearance and tactile quality. In addition,
when the material is made into the knee brace, the nylon fabric
helps to wick away perspiration and provides elasticity to the
knee brace. Therefore, the neoprene-nylon material is considered
a "rubberized textile fabric" and it is classified in heading
5906, HTSUS.
We analyzed a small sample from the submitted disk of
material and found that it weighed 917 grams/meter squared. The
analyzed sample is more than 70 percent by weight of rubber and
is classifiable in subheading 5906.91.20, HTSUS, which provides
for "[r]ubberized textile fabrics, other than those of heading
5902: [o]ther: [k]nitted or crocheted: [o]f man-made fibers:
[o]ver 70 percent by weight of rubber or plastics."
II. Classification of the neoprene-nylon knee brace
The knee brace is potentially classifiable in three HTSUS
headings. The headings at issue are:
Heading 6212, HTSUS Brassieres, girdles, corsets,
braces, suspenders, garters and
similar articles and parts thereof,
whether or not knitted or
crocheted.
Heading 6307, HTSUS Other made up articles of textiles,
including dress patterns.
Heading 9021, HTSUS Orthopedic appliances, including
crutches, surgical belts and
trusses; splints and other fracture
appliances;. . . and other
appliances which are worn or
carried, or implanted in the body,
to compensate for a defect or
disability...
It is your position that the knee brace is classifiable in
heading 9021, HTSUS, by virtue of Legal Note l(b) to Chapter 90,
HTSUS, which provides the following:
This Chapter does not cover:
* * * * *
(b) Supporting belts or other support articles of
textile material, whose intended effect on the
organ to be supported or held derives solely from
their elasticity ( for example, maternity belts,
thoracic support bandages, abdominal support
bandages, support for joints or muscles) (Section
XI);
You contend that the intended effect of the brace on the knee is
derived from the neoprene rubber, which keeps the muscles pliable
during activity by retaining body heat. Therefore, the effect on
the knee is not related solely to elasticity.
In Headquarters Ruling Letter (HRL) 952568 dated January 28,
1993, we had occasion to classify a neoprene knee brace (style
6906) that was substantially similar to the subject merchandise.
In that ruling, we determined that the knee brace was not
classifiable in heading 9021, HTSUS, as the neoprene of which the
knee brace was constructed provided support to the wearer because
of its elasticity and the ENs to heading 9021 specifically stated
that textile support articles akin to the knee brace were not
provided for in that heading.
Moreover, we also held that the knee brace was not
classifiable in heading 6212, HTSUS, based on criteria used to
determine what type of support articles are provided for in
heading 6212, HTSUS. See HRL 952390 dated December 16, 1992,
which discusses the criteria for determining what is classifiable
as "belts" in heading 6212, HTSUS.
Finally, we concluded that the neoprene knee brace was
classifiable in heading 6307, HTSUS. The ENs to 6307 provide the
following:
This heading covers made up articles of any textile material
which are not included more specifically in other headings
of Section XI or elsewhere in the Nomenclature.
It includes, in particular:
(27) Support articles of the kind referred to in Note l(b)
to Chapter 90 for joints (e.g., knees, ankles, elbows or
wrists) or muscles (e.g., thigh muscles), other than those
falling in other headings of Section XI.
The knee brace was a made up textile article that was not
more specifically provided for elsewhere in the HTSUS and the
above EN specifically provided for items such as the neoprene
knee brace. Therefore, it was classifiable in heading 6307,
HTSUS. As the knee brace at issue here is of the same
construction as the brace in HRL 952568, we see no reason to
deviate from this precedent. Therefore, the subject merchandise
is also classifiable under subheading 6307.90.9986, HTSUS.
III. Eligibility of neoprene knee brace for duty-free treatment
under Note 2(b)
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
textile and apparel articles, and petroleum and petroleum
products) which are assembled or processed in a Caribbean Basin
Economic Recovery Act (CBERA) beneficiary country (BC) wholly of
fabricated components or ingredients (except water.) of U.S.
origin. This amendment was effective with respect to goods
entered on or after October 1, 1990.
Note 2(b) specifically 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 stated in this paragraph, the term "beneficiary country"
means a country listed in General Note 3(c)(v)(A).
Although Note 2(b)(i)(A) and (B) are separated by the word
"or," it is our opinion that Congress did not intend to preclude
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.
Pursuant to General Note 3(c)(v)(A), HTSUS, the Dominican
Republic is a designated BC for CBERA purposes. Note 2(b)
specifies four categories of products which are excluded from
duty-free treatment under this provision: textile articles;
apparel articles; petroleum; and certain products derived from
petroleum. The articles which are the subject of this case are
not within any of these categories (see T.D. 91-88 dated October
18, 1991) and, therefore, are eligible for duty-free treatment
under this provision provided that all of the other requirements
are satisfied.
To qualify for Note 2(b) duty-free treatment, an eligible
article must be assembled or processed in a BC entirely of
components or ingredients that are a "product of" the U.S.
Components or ingredients that are imported into the U.S. may
become "products of" the U.S. if they undergo a process of
manufacture in the U.S. which results in a substantial
transformation. See sections 10.12(e) and 10.14(b), Customs
Regulations (19 CFR 10.12(e) and 10.14(b)). General Note 2,
HTSUS, states that the term "customs territory of the U.S.", as
used in the tariff schedule, includes Puerto Rico. Therefore,
consistent with sections 10.12(e) and 10.14(b), described above,
components or ingredients that are imported into Puerto Rico may
become "products of" the U.S. for purposes of Note 2(b) treatment
if they undergo a process of manufacture in Puerto Rico which
results in a substantial transformation.
At issue is whether the neoprene-nylon material imported into
Puerto Rico becomes a product or manufacture of the U.S. by being
substantially transformed there. The courts have held that a
"substantial transformation" occurs "when an article emerges from
a manufacturing process with a name, character, or use which
differs from those of the original material subjected to the
process." See The Torrington Co. v. United States, 764 F.2d 1563
(Fed. Cir. 1985).
Because the article in question consists, in large part, of
textile material, section 12. 130, Customs Regulations ( 19 CFR
12.130), is applicable. Section 12.130, Customs Regulations (19
CFR 12.130), sets forth criteria for determining whether a
textile or textile product has been substantially transformed.
Pursuant to the regulations, a textile or textile product will be
considered to have undergone a substantial transformation if it
has been transformed by means of substantial manufacturing or
processing operations into a new and different article of
commerce. See 19 CFR 12.130(b). According to section
12.130(d)(2), the following will be considered in determining
whether merchandise has been subjected to substantial
manufacturing or processing operations: (1) the physical change
in the material or article; (2) the time involved; (3) the
complexity of the operations; (4) the level or degree of skill
and/or technology required; and (5) the value added to the
article in each country or territory. Any one or a combination of
these factors may be determinative and other factors may also be
considered. 19 CFR 12.130(d).
Examples of processes which generally will result in a
substantial transformation and those which usually will not are
set forth in 19 CFR 12,130(e). According to 19 CFR 12.130(e)(iv),
the cutting of fabric into parts and the assembly of those parts
into the completed article in a foreign country or insular
possession will usually result in a substantial transformation of
the fabric so as to confer country of origin.
We have consistently held that the cutting of fabric into
specific or defined shapes suitable for use as components in an
assembly operation is sufficient to substantially transform the
fabric into a new and different article of commerce. See HRL
067823 dated June 2, 1982; HRL 555189 dated June 12, 1989; and
C.S.D. 89-27(4) (HRL 554929 dated November 3, 1988). With regard
to the facts in this case, we find that the foreign neoprene-nylon material which is cut in"Puerto Rico into component parts
suitable for use in the production of a knee brace, results in a
substantial transformation of the foreign material into a new and
different article of commerce.
In regard to the operations performed in the Dominican
Republic, we believe that sewing the knee brace components
together to produce the finished knee brace is encompassed by the
operations specified in Note 2(b). Therefore, if in fact, all of
the materials, including the thread used to sew the knee brace
components together, are of 100 percent U.S.-origin and the
merchandise is shipped directly to the U.S. from the Dominican
Republic without entering into the commerce of any foreign
country other than a BC, and the applicable documentation
requirements are satisfied, the neoprene knee brace will be
entitled to duty-free treatment under this provision.
HOLDING:
The neoprene-nylon materials are classified in subheading
5906.91.20, HTSUS, which provides for "[r]ubberized textile
fabrics, other than those of heading 5902: [o]ther: [k]nitted or
crocheted: [o]f man-made fibers: [o]ver 70 percent by weight of
rubber or plastics."
The knee brace is classified in subheading 6307.90.9986,
HTSUS, which provides for "[o]ther made up articles, including
dress patterns: [o]ther: [o]ther: [o]ther: [o]ther: [o]ther:
[o]ther." The rate of duty is 7 percent ad valorem.
Due to the changeable nature of the statistical annotation
(the ninth and tenth digits of the classification) and the
restraint (quota/visa) categories, you should contact your local
Customs office prior to importation of this merchandise to
determine the current status of any import restraints or
requirements.
The neoprene knee brace which is made in the Dominican
Republic entirely of U.S.-origin materials may enter into the
U.S. duty-free pursuant to Note 2(b), provided the documentation
requirements set forth in Customs telex #9264071 dated September
28, 1990 (copy enclosed) are satisfied.
Sincerely,
John Durant, Director
Commercial Rulings Division