OT:RR:CTF:VS H141201 CMR
Ms. Annette Diamond
Liz Claiborne Inc.
2 Claiborne Avenue
HQ2 7/S
North Bergen, NJ 07047
RE: Modification of New York Ruling Letter N118184; eligibility of composite good consisting of pants with a belt for preferential tariff treatment under General Note 3(a)(v) of the Harmonized Tariff Schedule of the United States (HTSUS)
Dear Ms. Diamond:
Customs and Border Protection (CBP) issued New York Ruling Letter (NY) N118184, dated August 24, 2010, to you in response to your request for a ruling on the classification and eligibility for preferential tariff treatment of a certain garment produced, in part, in a Qualifying Industrial Zone (QIZ). We have had occasion to review the decision in NY N118184. With respect to our denial of the composite good, consisting of the pants and a textile belt, for preferential tariff treatment as a product of a QIZ, we erred. Accordingly, NY N118184 is modified as set forth below.
Pursuant to section 625(c), Tariff Act of 1930 (19 U.S. C. 1625(c)), 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), notice of the proposed modification of NY K80820 was published in the Customs Bulletin, Volume 45, Number 22, on May 25, 2011. Two comments were received during the notice and comment period. One comment supported CBP’s action while the other comment sought a broader modification.
FACTS:
As set forth in NY N118184 states in relevant part:
The submitted sample, Axcess style AQMU6755, is a pair of women’s pants with a textile belt. The pants are constructed from 98 percent cotton and 2 percent spandex woven fabric. The capri length pants have a flat waistband with five belt loops; a left over right fly opening with a zipper and button closure; two front pockets; one coin pocket; two back patch pockets with embroidery; and hemmed leg openings with a turned up cuff. As this garment has a left over right closure, the presumption is that the garment will be for men. However, it is clear based on the cut of the garment that it was designed for women. Therefore, the pants will be classified as a woman’s garment. A woven textile belt with a buckle has been threaded through the belt loops. The belt is constructed from 100 percent polyester fabric.
You state the manufacturing operations for the pants and belts are as follows:
The Chinese fabric for the pants is shipped in rolls to the QIZ facility. The fabric is cut and assembled in the Egypt QIZ into pants. The textile belt will be made in China and shipped to the Egypt QIZ where it will be looped into the garment. The pants and textile belt will be exported directly to the United States.
The pants and textile belt were classified in NY N118184 as a composite good in heading 6204, Harmonized Tariff Schedule of the United States, based upon the pants imparting the essential character, and thus determining the classification, of the combination.
ISSUE:
Is the composite good consisting of the woven pants with a textile belt eligible for preferential treatment under GN 3(a)(v), HTSUS, as a product of a QIZ?
LAW AND ANALYSIS:
Under GN 3(a)(v), HTSUS, articles which are the product of the West Bank, the Gaza Strip or a QIZ and which are imported directly to the United States from the West Bank, the Gaza Strip, a QIZ or Israel qualify for duty-free treatment, provided the sum of (1) the cost or value of materials produced in the West Bank, the Gaza Strip, QIZ, or Israel, plus (2) the direct costs of processing operations performed in the West Bank, the Gaza Strip, QIZ or Israel, is not less than 35% of the appraised value of such articles when imported into the U.S. An article is considered to be a "product of" the West Bank, the Gaza Strip, or a QIZ if it is either wholly the growth, product or
manufacture of one of those areas or a new or different article of commerce that has been grown, produced or manufactured in one of those areas.
With regard to the eligibility of the subject women’s pants with textile belt, we apply the rules of origin set forth in 19 CFR § 102.21 to determine whether this good qualifies as a product of a QIZ under GN 3(a)(v). The composite good at issue is classified in heading 6204, HTSUS, and is produced from processing occurring in more than one country. As such, under § 102.21(c)(2), we look to the rule set forth for goods of heading 6204 set forth in section (e) of § 102.21. The applicable rule requires that if the good consists of two or more component parts that it undergo a change to an assembled good of heading 6204 from unassembled components provided the change is the result of the good being wholly assembled in a single country, territory or possession. “Wholly assembled” is defined in § 102.21(b)(6) as meaning:
that all components, of which there must be at least two, preexisted in essentially the same condition as found in the finished good and were combined to form the finished good in a single country, territory or insular possession. Minor attachments and minor embellishments (for example, appliqués, beads, spangles, embroidery, buttons) not appreciably affecting the identity of the good, and minor subassemblies (for example, collars, cuffs, plackets, pockets), will not affect the status of a good as “wholly assembled” in a single country, territory, or insular possession.
Based on the information provided, the women’s pants are “wholly assembled” in the QIZ and therefore they are “products of” the QIZ.
In HQ 960033, dated January 30, 1997, the origin of a composite good consisting of a vest and belt was determined by the origin of the vest as it imparted the essential character of the good. (“Since the instant vest and belt are considered a composite good and the vest imparts the essential character of the composite good, the country of origin of the vest will determine the origin for the composite good and the country of origin of the belt will not be determined separately.”) See also, HQ 959342, dated July 18, 1996, wherein the origin of a dress and self-fabric belt was based on the origin of the dress as it imparted the essential character to the composite good. In HQ 563246, dated July 7, 2005, a composite good consisting of a pair of shorts and a matching belt was determined to be a product of Jordan for purposes of the JFTA. The shorts determined the classification of the composite good and thus, the origin of the shorts which were cut and sewn in Jordan, determined the origin of the composite good. Accordingly, with regard to the Chinese-origin textile belt, as the good at issue is classifiable as a composite good, the origin of the garment determines the origin of the composite good and thus whether the composite good is considered a “product of” the QIZ.
We note that the reason cited for denying preferential treatment to the composite good in NY K80820 was Treasury Decision (T.D.) 91-7. This was an error. T.D. 91-7 set forth the position of the Customs Service with regard to the tariff treatment and country of origin marking of sets, mixtures and composite goods prior to the enactment of section 334 of the Uruguay Round Agreements Act which is codified at 19 U.S.C.
§ 3592, the statutory basis for 19 CFR § 102.21.
In HQ 559983, dated August 22, 1996, the Customs Service (now CBP) considered the marking of a dress and belt composite good. The composite good had been the subject of HQ 959342, dated July 18, 1996, which applied § 102.21 to determine the origin of the dress and belt to be the country in which the dress components were fully assembled, country B. In the ruling, we stated:
Since 19 CFR 102.21 implements section 334 of the Uruguay Round Agreements Act which applies ‘for purposes of the customs laws,’ and 19 U.S.C. 1304 is a Customs law, the country of origin of the dress and self-fabric belt for marking purposes is Country B. Therefore, only a single country of origin marking on the dress will be needed for the dress and belt composite good.
We noted in HQ 559983 that the decision reached therein was consistent with the “common sense” approach of T.D. 91-7 and that the analysis presented in that T.D. need not be used.
HOLDING:
The country of origin of the subject composite good consisting of women’s pants with a textile belt is the QIZ, i.e., where the pants are wholly assembled. As such, the composite good is a “product of” the QIZ in which the pants are wholly assembled. Provided that the 35 percent value added requirement is met, the composite good would qualify for preferential treatment under GN 3(a)(v). NY N118184 is hereby modified. In accordance with 19 U.S.C. § 1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division