OT:RR:CTF:VS H256780 CMR
Ms. Kay Morrell
Customs Manager
JCPenney Purchasing Corporation
6501 Legacy Drive, MS 2216
Plano, TX 75024
RE: Request for Reconsideration of New York Ruling Letter (NY) N251778, dated
April 16, 2014; eligibility of garments for preferential treatment under the DR-CAFTA
Dear Ms. Morrell:
This is in response to your request of July 23, 2014, wherein you requested this office reconsider the decision in New York Ruling Letter (NY) N251778, dated April 16, 2014, denying preferential tariff treatment to a garment, item PPK 101673, produced under two different scenarios through processing in the U.S. or beneficiary countries under the Dominican Republic – Central America – United States Free Trade Agreement (DR-CAFTA) or the United States – Peru Trade Promotion Agreement (PETPA). We have considered your request and agree the ruling should be modified with regard to the garment’s eligibility for preferential tariff treatment under the DR-CAFTA and the PETPA.
Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. §1625(c)(1)), as amended by section 623 of Title VI, notice of the proposed modification was published on December 17, 2014, in the Customs Bulletin, Volume 48, No. 50. CBP received no comments in response to this notice.
FACTS:
The garment at issue is, item PPK 101673 is a woman’s pullover garment constructed of 100% rayon jersey knit fabric with a woven polyester dobby insert in the center back extending from the neckline to the garment bottom. The knit fabric is constructed with more than nine stitches per two centimeters in the direction in which the stitches were formed. The garment features a capped round neckline, short capped sleeves, and a hemmed garment bottom. The garment extends from the shoulders to below the waist.
The garment was classified in NY N251778 in subheading 6110.30.3059, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Sweaters, pullovers, sweatshirts, waistcoats (vests) and similar articles, knitted or crocheted: Of man-made fibers: Other: Other: Other: Women’s or girls’: Other.
In your March 20, 2014, request for a ruling you described the two scenarios for manufacturing the garment as follows:
Option 1: Yarn, knit and woven body fabrics and sewing thread will be formed and finished in the U.S. or a beneficiary CAFTA country. Cut and sew will occur in Guatemala. Fibers for the rayon yarn and for the polyester yarn will be formed and/or finished in India or Asia.
Labels will be made and printed in China with ink from unknown sources.
Option 2: Yarn, knit and woven body fabrics and sewing thread will be formed and finished in the U.S. or Peru. Cut and sew will occur in Peru. Fibers for the rayon yarn and for the polyester yarn will be formed and/or finished in India or Asia.
Labels will be formed and finished in Peru or the U.S. and printed in the U.S. or Peru with ink from unknown sources.
The garments will be imported directly to the U.S. from the country of production, i.e., Guatemala or Peru.
NY N251778 determined that the garment did not qualify for preferential treatment under the DR-CAFTA nor the PEPTA. That determination was in error. Therefore, we are modifying NY N251778 regarding the eligibility of item PPK 101673 for preferential treatment under the DR-CAFTA and the PETPA.
ISSUE:
Whether item PPK 101673 qualifies for preferential tariff treatment under the DR-CAFTA and the PETPA.
LAW AND ANALYSIS:
The Dominican Republic – Central America – United States Free Trade Agreement (DR-CAFTA) and the United States – Peru Trade Promotion Agreement (PETPA) were approved by the U.S. Congress and enacted into law pursuant to the Dominican Republic-Central America-United States Free Trade Agreement Implementation Act, Public Law 109-53, 119 Stat. 462 (19 U.S.C. 4001 et seq.) and the U.S.-Peru Trade Promotion Agreement Implementation Act, Public Law 110-138, 121 Stat. 1455 (19 U.S.C. 3805 note). These laws are implemented in the Harmonized Tariff Schedule of the United States at General Notes (GNs) 29 and 32, respectively.
GN 29(b) provides in relevant part:
(b) For the purposes of this note, subject to the provisions of subdivisions (c), (d), (m) and (n) thereof, a good imported into the customs territory of the United States is eligible for treatment as an originating good under the terms of this note if –
* * *
(ii) the good was produced entirely in the territory of one or more of the parties to the Agreement, and –
each of the nonoriginating materials used in the production
of the good undergoes an applicable change in tariff classification specified in subdivision (n) of this note; or
* * *
and the good satisfies all other applicable requirements of this note. . . .
GN 32(b) provides in relevant part:
(b) For the purposes of this note, subject to the provisions of subdivisions (c),
(d), (m) and (n) thereof, a good imported into the customs territory of the United States is eligible for treatment as an originating good under the terms of this note if –
* * *
(ii) the good was produced entirely in the territory of Peru, the United States, or both, and –
(A) each of the nonoriginating materials used in the production
of the good undergoes an applicable change in tariff classification specified in subdivision (n) of this note; or
* * *
and the good satisfies all other applicable requirements of this note.
As the garment at issue contains non-originating material, it is appropriate to look to GN 29(b)(ii)(A) and GN 32(b)(ii)(A). As the garment is classified in subheading 6110.30, HTSUS, the applicable tariff shift rules in each GN are:
GN 29(n) –
25. A change to headings 6105 through 6111 from any other chapter, except from headings 5111 through 5113, 5204 through 5212, 5310 through 5311, chapter 54, headings 5508 through 5516 or 6001 through 6006, provided that the good is cut or knit to shape, or both, and sewn or otherwise assembled in the territory of one or more of the parties.
GN 32(n) –
20. A change to headings 6105 through 6111 from any other chapter, except from headings 5111 through 5113, 5204 through 5212, 5307 through 5308, 5310 through 5311, 5401 through 5402, subheading 5403.20, 5403.33 through 5403.39, 5403.42 through 5403.49, headings 5404 through 5408, 5508 through 5516 or 6001 through 6006, provided that the good is cut or knit to shape, or both and sewn or otherwise assembled in the territory of Peru, the United States, or both.
Additionally, Chapter Rule 4, Chapter 61, GN 29(n) and Chapter Rule 4, Chapter 61, GN 32(n), each require sewing thread of heading 5201 or 5401 contained in a good of the chapter to be both formed and finished in the territory of a Party or Parties to the Agreement for a good of the chapter to be considered an originating good.
The fibers in both scenarios will be formed and/or finished in India or Asia. As indicated in NY N251778, if not carded, combed or otherwise processed for spinning, the rayon staple fibers are classified under heading 5504 and the polyester staple fibers are classified under heading 5503. If carded, combed or otherwise processed for spinning, the rayon staple fibers are classified under heading 5507 and the polyester staple fibers are classified under heading 5506. The sewing thread is classified under heading 5401.
A review of the tariff shift rules cited above reveals that a change to heading 6110 from the non-originating rayon and polyester fibers, whether classifiable in headings 5503, 5504, 5506 or 5507, is allowed. Therefore, the garment meets the tariff shift rules for both GN 29 and GN 32. In addition, as the sewing thread was formed and finished in the U.S. or a beneficiary country, in option 1, and the U.S. or Peru, in option 2, Chapter Note 4, Chapter 61 in both GNs is met.
HOLDING:
The pullover garment at issue, item PPK 101673, qualifies for preferential tariff treatment under the DR-CAFTA and the PETPA. NY N251778, dated April 16, 2014, is hereby modified in accordance with the analysis set forth above. In accordance with 19 U.S.C. § 1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.
A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division