CLA-2 CO:R:C:S 557726 WAS
INDUSTRIAS YIDI LTDA.
Carrera 67B No. 48-07
Apartado Aereo 392
Barranquilla, Colombia
RE: Eligibility of zippers from Colombia for duty-free treatment
under the Andean Trade Preference Act; 9802.00.80
Dear Sir:
This is in reference to your letter dated November 3, 1993,
addressed to the Area Director of Customs, New York Seaport,
concerning the eligibility of zippers from Colombia for duty-free
treatment under the Andean Trade Preference Act (ATPA) (19 U.S.C.
3201 and 3203), or the applicability of the partial duty
exemption under subheading 9802.00.80, Harmonized Tariff Schedule
of the United States (HTSUS), to garments into which are
incorporated zippers of Colombian origin.
FACTS:
You state that zippers will be produced in Colombia. These
zippers will be sold to U.S. companies and used in the assembly
abroad of garments. The finished garments will be imported into
the U.S. You also state that the value of the zippers represents
approximately 0.5% of the total cost of the garment.
ISSUE:
(1) Whether the zippers are entitled to duty-free treatment
under the ATPA when imported into the U.S.
(2) Whether the assembled garments are entitled to a partial
duty exemption under subheading 9802.00.80, HTSUS, when returned
to the U.S. with Colombian zippers incorporated therein.
LAW AND ANALYSIS:
On December 4, 1991, the President of the United States
signed into law the ATPA, which provides the basic authority for
the President to grant duty-free treatment to imports of eligible
articles from countries designated as beneficiaries according to
criteria set forth in the Act. The ATPA was implemented by
Presidential Proclamations 6455 and 6456, both dated July 2,
1992. In Presidential Proclamation 6455, the President
designated Colombia as a beneficiary country for purposes of the
ATPA and modified the HTSUS to incorporate the substance of the
relevant provisions of the ATPA.
The relevant provisions of the ATPA provide that any article
which is the growth, product, or manufacture of a beneficiary
country (BC) will receive duty-free treatment provided that (1)
the article is imported directly from a BC into the customs
territory of the U.S.; and (2) the sum of (i) the cost or value
of the materials produced in a BC or two or more BC's under this
Act, or a BC under the Caribbean Basin Economic Recovery Act of
1983, as amended (CBERA) (19 U.S.C. 2701 et seq.), or two or more
such countries, plus (ii) the direct costs of processing
operations performed in a BC or countries (under this Act or the
CBERA, as amended) is not less than 35% of the appraised value of
such article at the time it is entered. The cost or value of any
U.S. materials may be counted toward the 35% value-content
requirement in an amount not to exceed 15% of the appraised value
of the article at the time it is entered into the U.S. The ATPA
is effective with respect to articles entered, or withdrawn from
warehouse for consumption, on or after July 22, 1992.
Additionally, articles provided for in a provision for which
a rate of duty of "Free" appears in the "Special" subcolumn
followed by the symbol "J" or "J*" in parentheses are eligible
articles for purposes of the ATPA pursuant to section 204 of that
Act. You state that the subject merchandise which consists of
zippers will be classified under subheading 9607.11.00 or
9607.19.00, HTSUS. Articles classified under these subheadings
are deemed eligible for duty-free treatment under the ATPA,
provided that all of the requirements are met. Provided that the
zippers are imported separately into the U.S., they would receive
duty-free treatment if they are considered to be "products of"
Colombia, the 35% value-content requirement is satisfied, and the
merchandise is "imported directly" into the customs territory of
the U.S. from Colombia. However, if the article being imported
into the U.S. is the assembled garment (with the zipper attached
thereto), then the garment would have to be considered an
eligible article under the ATPA in order for it to be entitled to
duty-free treatment under this provision. Pursuant to 19 U.S.C.
3203(3)(b), textile and apparel articles which are subject to
textile agreements are precluded from receiving duty-free
treatment under the ATPA. Therefore, if the garment is
classified under a HTSUS provision which includes a textile
category number, it will not be eligible under the ATPA. Without
a more complete description of the composition of the
merchandise, we cannot make this determination.
Next, you state that you propose to sell these zippers to
U.S. firms who will use them in the assembly of garments abroad.
Once the garments are assembled, they will be imported into the
U.S. and the importer will claim a partial duty exemption under
subheading 9802.00.80, HTSUS, for the value of any U.S.
components. You have asked us whether the presence of the
Colombian-origin zippers in the assembled garments will affect
the garments' eligibility for 9802.00.80, HTSUS, treatment.
HTSUS subheading 9802.00.80 provides a partial duty
exemption for:
[a]rticles assembled abroad in whole or in part of
fabricated components, the product of the United States,
which (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 such
as cleaning, lubrication, and painting . . .
All three requirements of HTSUS subheading 9802.00.80 must be
satisfied before a component may receive a duty allowance. An
article entered under this tariff provision is subject to duty
upon the full value of the imported assembled article, less the
cost or value of such U.S. components, upon compliance with the
documentary requirements of section 10.24, Customs Regulations
(19 CFR 10.24).
In the instant case, the zippers of Colombian-origin will be
assembled with other garment components. Pursuant to the
regulations, an allowance in duty may be made under subheading
9802.00.80, HTSUS, for fabricated components which are a "product
of" the U.S. Since the zippers will be produced in Colombia, no
allowance in duty may be made under this tariff provision for the
cost or value of the zippers when the garments are returned to
the U.S. However, duty allowances may be made for the cost or
value of any U.S. fabricated components which meet the
requirements of subheading 9802.00.80, HTSUS, assuming compliance
with the documentation requirements of 19 CFR 10.24.
HOLDING:
The zippers which are produced in Colombia and imported
separately into the U.S. will receive duty-free treatment under
the ATPA, provided that they are considered "products of"
Colombia, the 35% value-content and "imported directly"
requirements are satisfied. With respect to garments assembled
abroad with various components, including the Colombian-origin
zippers, allowances in duty may be made under subheading
9802.00.80, HTSUS, for the cost of value of any U.S. fabricated
components which meet the requirements of the statute, provided
the documentation requirements of 19 CFR 10.24 are met. No
allowance may be made for the cost or value of the Colombian-origin zipper.
Sincerely,
John Durant, Director
Commercial Rulings Division