CLA-2 R:C:T 958103 CMR
Ms. Bren Hamilton
Fritzi California
199 First Street
San Francisco, CA 94105-9990
RE: Modification of New York Ruling Letter (NYRL) 805791 of March
13, 1995; Eligibility for duty preference under NAFTA;
Article 509
Dear Ms. Hamilton:
On March 13, 1995, Customs issued NYRL 805791 to you in which we ruled on the classification of three women's woven garments. Customs also ruled on the eligibility of the garments
for duty preference treatment under the North American Free Trade Agreement (NAFTA). Customs has reviewed our decision in NYRL 805791 and determined we erred in regard to NAFTA eligibility for one of the garments, specifically, the ivory tank top. Our reasons are set forth below.
Pursuant to section 625, Tariff Act of 1930 (19 U.S.C. 1625), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act, Pub. L. 103-182, 107 Stat. 2057, 2186 (1993) (hereinafter section 625), notice of the proposed modification of NYRL 805791 was published July 26, 1995, in the Customs Bulletin, Volume 29, Number 30.
FACTS:
The garment in question, an ivory tank top, is made from 52 percent acetate and 48 percent rayon woven fabric with 100 percent rayon woven fabric trim. The garment is a sleeveless, pullover with 2-½ inch wide straps and a curved hemmed bottom.
The tank top is made of fabric indicated to be "yarn forward-USA", that is, of fabric which was woven in the United States from yarn produced in the United States. The fabric for the trim, however, is of Korean origin.
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The tank top is manufactured in Mexico from the U.S. fabric and Korean trim fabric.
ISSUE:
Does the ivory tank top qualify for preferential duty treatment under NAFTA?
LAW AND ANALYSIS:
Chapter 4 of the NAFTA sets forth rules for determining whether an imported good qualifies as an originating good of a NAFTA country. A good that qualifies as an originating good is eligible for preferential tariff treatment as provided for under Article 302(2) and Annex 302.2 of the NAFTA. The basic rules of origin in Chapter 4 of the NAFTA, as well as the specific rules of origin found in Annex 401 of the NAFTA, are set forth in General Note 12, Harmonized Tariff Schedule of the United States Annotated (HTSUSA). (See 58 Fed. Reg. 69, 460, December 30, 1993).
Subdivision (b) of General Note 12, HTSUSA, provides, in pertinent part:
For the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as "goods originating in the territory of a NAFTA party" only if--
(i) they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; or
(ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that--
(A) except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein, or,
(B) the goods otherwise satisfy the applicable requirements of subdivisions (r), (s) and (t) where no change in tariff classification is required, and the goods satisfy all other requirements of this note; or
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(iii) they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials.
As state above, the ivory tank top is manufactured in Mexico from United States fabric which is made from United States yarn. Korean fabric is used as trim on the garment. The garment does not qualify under Note 12(b)(i) or (iii). Therefore, we must determine if the garment qualifies under Note 12(b)(ii)(A).
Note 12(t) sets out the specific tariff shift rules for qualifying as an originating good.
Customs classified the ivory tank top in NYRL 805791 in subheading 6211.43.0060, HTSUSA. Goods classified in this provision are subject to the tariff shift rule set out in Note 12(t)/62.35. That rule states:
A change to subheadings 6211.31 through 6211.49 from any other chapter, except from headings 5106 through 5113, 5204 through 5212, 5307 through 5308 or 5310 through 5311, chapter 54, or headings 5508 through 5516, 5801 through 5802 or 6001 through 6002, provided that the good is both cut and sewn or otherwise assembled in the territory of one or more of the NAFTA parties.
In applying the above cited rule, Note 12(t)/62, Chapter rule 3, must also be applied. That rule states:
For purposes of determining the origin of a good of this chapter, 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. If the rule requires that the good must also satisfy the tariff change requirements for visible lining fabrics listed in chapter rule 1 for this chapter, such requirement shall only apply to the visible lining fabric in the main body of the garment, excluding sleeves, which covers the largest surface area, and shall not apply to removable linings.
It was in applying this rule, that Customs erred in NYRL 805791. It was correctly stated that the de minimis rule does not apply to the Korean trim fabric. The reason that the de minimis rule does not apply, is the same reason that the presence of the Korean trim does not preclude the ivory tank top from meeting the tariff shift rule set out in Note 12(t)/62.35, i.e, the rule applies only to the component that determines the tariff classification of the good.
In determining the classification of the ivory tank top, the trim fabric is disregarded. For this reason, in applying Note -4-
12(t)/62.35, the trim fabric is again disregarded and therefore does not have to meet the tariff shift rule because it is not the component that determines the classification of the garment.
As the materials used in the production of the ivory tank top, excluding the trim, meet the tariff shift rule for garments classified in subheading 6211.43, Harmonized Tariff Schedule of the United States, the ivory tank top qualifies for preferential duty treatment under the NAFTA.
HOLDING:
The ivory tank top is classified in subheading 6211.43.0060, HTSUSA. The garment qualifies for preferential duty treatment under the NAFTA and is therefore dutiable at 11.2 percent ad valorem as a product of Mexico.
NYRL 805791 is modified to reflect the above analysis regarding the ivory tank top at issue. In accordance with section 625, this ruling will become effective 60 days after its publication in the Customs Bulletin. Publication of rulings or decisions pursuant to section 625 does not constitute a change of practice or position in accordance with section 177.10(c)(1), Customs Regulations (19 CFR 177.10(c)(1)).
The designated textile and apparel category may be subdivided into parts. If so, the visa and quota requirements applicable to the subject merchandise may be affected. Since part categories are the result of international bilateral agreements which are subject to frequent renegotiations and changes, to obtain the most current information available, we suggest you check, close to the time of shipment, the Status Report On Current Import Quotas (Restraint Levels), an internal issuance of the U.S. Customs Service which is updated weekly and is available for inspection at your local Customs office.
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.
Sincerely,
John Durant, Director
Commercial Rulings Division