CLA-2 RR:CR:SM 561868 KSG
Susan L. Renton
Sandler, Travis & Rosenberg, P.A.
1300 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-3002
RE: 9802.00.90; findings; elastic rubber tape; Special Regime Program
Dear Ms. Renton:
This is in response to your letter of February 16, 2001, on behalf of Elastomer, Inc., requesting a binding ruling on the status of certain rubber tape under the Special Regime Program and the Special Access Program.
FACTS:
Elastomer, Inc. produces rubber tape in India. Some of it is imported into the U.S., classified in subheading 4008.21.0000 of the Harmonized Tariff Schedule of the United States ("HTSUS") which provides for "Plates, sheets, strip, rods and profile shapes, of vulcanized rubber other than hard rubber: of noncellular rubber: plates, sheets and strip." The imported tape is then sold to customers who export the tape to Mexico for assembly into garments. Elastomer, Inc. also ships rubber tape directly to the Caribbean and sells it directly to customers in those countries for assembly into garments.
The rubber tape is used in the assembly of finished garments, including bathing suits and undergarments (but not including brassieres). The finished garments are imported into the U.S. The rubber tape ensures sufficient tension in the arm and leg openings of the garments. You have submitted a sample of the rubber tape. The sample is less than 1/2 inch in width.
ISSUE:
Whether the above-described rubber tape used in the assembly of finished garments is considered a “finding or trimming” for purposes of determining whether the garments are eligible for duty-free treatment under subheading 9802.00.90, HTSUS.
LAW AND ANALYSIS:
Regarding the portion of your request relating to the Special Access Program, the Committee for the Implementation of Textile Agreement ("CITA") is primarily responsible for the administration and interpretation of textile quota programs, such as the Special Access Program ("SAP"). Therefore, this ruling will address only the status of the elastic rubber tape under subheading 9802.00.90 of the Harmonized Tariff Schedule of the United States ("HTSUS").
In 1988, the U.S. created a program known as the Special Regime to provide quotas which distinguished between Mexican products produced from foreign fabric and Mexican products assembled from U.S. formed and cut fabric. In 1994, as part of the North American Free Trade Agreement ("NAFTA"), the U.S. eliminated all duties and quotas for certain textile goods assembled from U.S. formed and cut fabric. See Appendix 2-4 of Annex 300-B of NAFTA. The NAFTA provision was implemented in the HTSUS by subheading 9802.00.90.
Subheading 9802.00.90, HTSUS, provides for the duty-free treatment of:
Textile and apparel goods, assembled in Mexico in which all fabric components were wholly formed and cut in the United States, provided that such fabric components, in whole or in part, (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; provided that goods classifiable in chapters 61, 62, or 63 may have been subject to bleaching, garment dyeing, stone-washing, acid-washing or perma-pressing after assembly as provided for herein.
Since subheading 9802.00.90 was created to provide for goods that were previously eligible for entry under the Special Regime Program administered under subheading 9802.00.8010, HTSUS, it is Customs view that the policy directives implementing this program should be considered applicable for the administration of subheading 9802.00.90, HTSUS. See Headquarters Ruling Letter ("HRL") 558954, dated June 30, 1995, and HRL 559794, dated June 3, 1996.
One such policy under the Special Regime Program permitted limited use of foreign origin "findings, trimmings and elastic strips" in assembly operations, provided that such findings, trimmings and elastic strips of less than one inch in width did not exceed 25 percent of the cost of the components of the assembled product. Examples of findings and trimmings are sewing thread, hooks and eyes, snaps, buttons, "bow buds," lace trim, zippers, including zipper tapes, and labels. The exception for foreign origin elastic strips was limited to those elastic strips of less than one inch in width used in the manufacture of brassieres. See CITA notice published in the Federal Register on May 3, 1988, 53 Fed. Reg. 15724, at 15726.
In a CITA directive, published in 52 Fed Reg 26057, July 10, 1987, the requirements for participation in the SAP are set forth. It is instructive to examine what CITA stated concerning the use of foreign elastic strips in the SAP as the basic eligibility criteria for the SAP and the Special Regime Program (including the scope of the exception for findings, trimmings and elastic strips) are the same. The meaning of the language involving elastic strips was described as follows:
Elastic strips were included in recognition of the existing operations producing brassieres in Caribbean Basin countries. Because the foreign origin exception for elastic strips was intended by CITA to be limited to elastic strips for use as brassiere straps and not to include elastic fabrics such as those used in waistbands, effective October 1, 1987, the foreign origin exception for elastic strips is clarified as limited to narrow elastic fabric less than one inch in width used in the production of brassieres only.
(Emphasis added.)
In short, CITA indicated that its’ intention was to limit the use of foreign-origin (not produced in the U.S. or a qualifying Caribbean country) elastic fabric in the manufacture of goods entering the U.S. under the SAP.
In this case, the submitted rubber tape sample, which is classified in subheading 4008.21, HTSUS, clearly is not elastic fabric. As previously indicated, the "elastic strip" exception and the language limiting the scope of that exception to strips less than one inch in width used in the manufacture of brassieres concerned only elastic fabric. Therefore, we believe that the fact that the rubber tape at issue here does not fall within the "elastic strip" exception does not preclude consideration of whether it qualifies as a finding or trimming.
While "findings and trimmings" for purposes of the Special Regime Program were not specifically defined, the examples set forth above, such as thread, lace trim and labels are indicative of the types of components which may be considered exceptions to the requirement that all fabric components be formed and cut in the U.S. The exception for findings, trimmings and certain elastic strips under the Special Regime Program was necessarily intended to be of a restrictive nature, as the intent of the statute was to ensure that all fabric components be formed and cut in the U.S. In this regard, Customs has previously held that fabric items such as shoulder pads, sleeve headers, and velveteen collars are not "findings and trimmings." See HRL 559552, dated February 14, 1996, and HRL 558954, dated June 30, 1995.
Customs held in HRL 559552, dated February 14, 1996, that reinforcing tape "which purpose is to add strength to the armhole seam," is considered a "finding" under the subheading 9802.00.90 provision as "it is analogous to zipper tape, and is more of a necessity in constructing the garment such as the use of buttons, hooks, etc." In HRL 560458, dated March 6, 1998, Customs held that embroidery thread, cotton bias tape and button tacks are considered "findings" under subheading 9802.00.90, HTSUS, because those items are analogous to the listed examples and do not hinder the intent of the statute to ensure that all fabric components are formed and cut in the U.S.
The foreign origin rubber tape is analogous to the reinforcement tape which was held to be a "finding" in HRL 559552 and the zipper tape listed in the examples of "findings and trimmings" set forth in the May 3, 1988, CITA notice, which, like other findings, are generally necessary in constructing a garment. Accordingly, it is our opinion that the foreign origin rubber tape is considered a "finding" under subheading 9802.00.90, HTSUS.
Assuming the value of the findings and trimmings do not exceed 25% of the cost of the components, garments made with foreign-origin rubber tape, would not be excluded from duty-free treatment under subheading 9802.00.90, HTSUS.
HOLDING:
The foreign-origin rubber tape involved in this case is considered a "finding" under subheading 9802.00.90, HTSUS. Using the foreign-origin rubber tape at issue to manufacture garments would not render the garments ineligible for classification in subheading 9802.00.90, HTSUS, assuming that the value of the rubber tape and any other findings and trimmings does not exceed 25% of the cost of the components of the garments and the garments satisfy the other conditions and requirements of this provision.
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
Commercial Rulings Division