CLA-02 RR:TC:SM 560458 KKV
Mr. Michael Roybal
Sandler, Travis & Rosenberg, P.A.
1341 G Street, N.W.
Washington, D.C. 20005-31-5
RE: Applicability of subheading 9802.00.90, HTSUS, to
"baseball style" hats; Special Regime Program;
findings; sewing; laminating; embroidering:
Article 509; NAFTA preferential tariff treatment;
19 CFR 102.21(c)(2); 19 CFR 102.21(c)(4); General
Note 12(b)(ii); non-originating materials undergo
applicable tariff shift; General Note 12(t)/65.1
Dear Mr. Roybal:
This is in response to your letter dated May 7, 1997
(and subsequent facsimiles dated February 20, 1998, February
23, 1998, February 24, 1998 and March 3, 1998), on behalf of
Paramount Headwear, Inc., which requests a ruling concerning
the applicability of subheading 9802.00.90, Harmonized
Tariff Schedule of the United States (HTSUS), to certain
"baseball style" hats imported from Mexico. Additionally,
you inquire whether the hats will be eligible for
preferential duty treatment under the North American Free
Trade Agreement (NAFTA). Samples of the hat at various
stages of the manufacturing process were submitted for our
examination.
FACTS:
We are informed that Paramount Headwear, Inc., intends
to import "baseball style" hats, classifiable under
subheading 6505.90.00, HTSUS, into the U.S. You state that
the hats will be assembled in Mexico from fabric components
which have been formed and cut in the United States. With
regard to the assembly processes completed in Mexico, our
advice is sought with regard to two separate proposed
production scenarios. We are informed that the complete
list of component materials of the finished hat and their
respective country of origin and tariff classification is as
follows:
Component Material Tariff classification Country of Origin
Cotton Bias Tape 5208.31.6040 Pakistan
Pre Cut .085 V-1 Texon Visor 6507.00 USA
" Poly Pro Webbing (Bkstrp) 5806.32 USA
" Space Buckle (Bkstrp) 3926.90 USA
Button Shell 9606.30 USA
Button Back 9606.30 USA
Button Tack 7317.00.5550 Germany
Sewing Thread 5401.10 USA
#2 Twill Premade Sweatband 6507.00 USA
OFSA Size Strip 4810.91 USA
Fusible #707 Cap Front Stay 5407.42 USA
MA Embroidery Thread 5403.31.0040 Germany
Embroidery Backing 5407.90 USA
Paramount Silky Label 5807.90 USA
White Alpine Twill 5208.33 USA
We are further informed that, with the exception of the
cotton bias tape, embroidery thread and button tacks, all
materials utilized in the assembly of the hats qualify as
NAFTA "originating materials."
You describe the production process for the subject
hats in the following manner:
STEP 01: CUT THE CAP PARTS.
Plan yardage requirements and
layout of pattern pieces. Roll
material(s) onto cutting table
using automated spreading
machines. Cut pattern pieces
(and holes for eyelets)
according to planned layout and
tie cut pieces into bundles.
STEP 02: LAMINATE THE FRONT PANELS TO THE
STAY MATERIAL.
Align stay material and front
pieces of cap and feed into a
fusing machine (conveyor driven
heat and rollers).
STEP 03: SEW AND TAPE (BY STITCHING) FRONT
PANELS FOR EMBROIDERY.
Sew center seam. Open sewn
panels and run through a taping
machine, covering sewn seam.
STEP 04: EMBROIDER FRONT PANELS.
Secure front panels to
embroidery machine. Lay backing
material on front panels.
Embroider front panels, securing
backing material to front panels
via embroidered design.
STEP 05: ASSEMBLE COVER.
Sew reinforcing seam around
eyelets with backing material.
Sew two back panels together.
Tape (by stitching) the seam
joining the back panels. Sew one
side panel to the front panels.
Sew the last seam joining the
fronts and one side to the backs
and one side (cover is
complete).
STEP 06: TAPE (BY STITCHING) THE TWO
REMAINING SEAMS OF THE COVER.
Run through a taping machine,
covering sewn seams.
STEP 07: LAP BACK BIND THE BACK OPENING.
Lap back bind the back opening
and cover with tape (by
stitching). Provides clean
finish for back opening.
STEP 08: SEW IN THE SIZE STRIP.
Sew in the size strip, making
sure that the circumference of
the cover matches the length of
the size strip.
STEP 09: MAKE THE BUTTONS.
Insert material into two round
metal parts of button using a
button machine, which forms the
button.
STEP 10: MAKE VISORS.
Align visor top piece and visor
bottom piece face to face. Sew
outside seam (front of visor).
Turn sewn pieces inside out (now
right side out). Insert visor
board in the "pocket" formed by
sewn visor pieces. Lock visor
board into
visor "pocket" by sewing behind
visor board. Secure visor
pieces to visor board stitching
multiple rows onto visor.
STEP 11: ATTACH THE BUTTON TO THE CAP.
Push tack through the inside
center of the cap cover. Insert
tack into formed button part
(from STEP 09).
STEP 12: SEW THE VISOR, LABELS AND SWEATBAND
ONTO THE CAP.
STEP 13: TACK THE BACK STRAP ONTO THE CAP.
Fold the sweatband into the cap
on one side of the back opening.
Insert one end of the back strap
between the sweatband and the
cover material. Sew the strap
into place. Repeat the same
process on the other side of the
back opening.
STEP 14: TRIM THE LOOSE THREADS OFF THE CAP.
STEP 15: BLOCK THE CAP.
Place the finished cap on a sand
cast block (created to shape).
Apply steam through cap,
smoothing wrinkles.
STEP 16: PACK THE CAPS INTO BOXES.
Paramount proposes to assemble the hats using two different
production scenarios. In the first production scenario,
steps 01-04 will be performed in the United States and the
remaining steps (05-16) will be performed in Mexico. In the
second proposed production scenario, step 01 will be
performed in the United States and the remaining steps (02-16) will be performed in Mexico. For purposes of this
ruling we will assume that the tariff classifications
provided are correct and that the fabric that is cut into
the cap parts in the U.S. is also formed in the United
States.
ISSUES:
1. Whether the baseball style hats will be eligible for
duty-free treatment under subheading 9802.00.90, HTSUS, upon
importation into the U.S.
2. Whether the baseball style hats will be eligible
for preferential duty treatment under NAFTA upon importation
into the U.S.
LAW AND ANALYSIS:
I. Applicability of subheading 9802.00.90, HTSUS
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.
The initial question we must address is whether the
subject hats are considered "textile and apparel goods"
under subheading 9802.00.90, HTSUS. Your letter indicates
that the article at issue is classified under subheading
6505.90, HTSUS, which provides for "Hats and other headgear,
knitted or crocheted, or made up from lace, felt or other
textile fabric, in the piece (but not in strips), whether or
not lined or trimmed; hair-nets of any material, whether or
not lined or trimmed: Other."
Specifically, "textile and apparel goods" eligible for
duty-free treatment under subheading 9802.00.90, HTSUS, are
listed in Appendix 1.1 of Annex 300-B of the NAFTA.
Appendix 1.1 specifically includes subheading 6505.90,
HTSUS. Thus, under the facts presented, the subject
baseball style hats qualify as "textile and apparel goods"
for purposes of subheading 9802.00.90, HTSUS.
The enactment of subheading 9802.00.90, HTSUS, was
specifically intended to extend duty-free and quota-free
status to all goods assembled in Mexico, which previously
were eligible for entry under the Special Regime Program
administered under subheading 9802.00.80.10, HTSUS. As a
result, it is Customs view that all of the policy
directives implementing this program should be considered
applicable for the administration of subheading 9802.00.90,
HTSUS.
One such policy under the Special Regime Program
permitted limited use of foreign origin "findings and
trimmings" in assembly operations, provided that such
findings and trimmings do 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. See 53 Fed. Reg. 15724, 15726
(May 3, 1988).
The exception for findings, trimmings and 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, it is noted, for
example, that the exception for foreign-origin elastic
strips was limited to strips of less than one inch in width.
This exception applied to brassiere straps only, and thus
could not be used for a more substantial component, such as
waistbands, which are in excess of one inch in width. Id.
The term "findings" has been defined as "threads,
tapes, buttons, bindings, hooks and eyes, slide fasteners,
featherbone, belting, braids, and other sewing essentials
used in garment making"and the term "trimming" is defined as
"decoration or ornamental parts." See M. Picken, The
Fashion Dictionary, (1973). "Findings" have also been
defined as "a term referring to supplementary fabrics
employed in making a garment such as zipper tapes, lining,
pocketing, and waistband." See I. Wingate, Fairchild's
Dictionary of Textiles (1970). While "findings and
trimmings" for purposes of the Special Regime Program are
not specifically defined, the examples set forth above, such
as thread, lace trim and labels (as well as elastic trim
less than one inch in width), 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.
You advise that the only foreign components which will
be used to make the baseball-style hats are embroidery
thread, cotton bias tape and button tacks. Although the
specific examples of "findings and trimmings" set forth by
the Committee for the Implementation of Textile Agreements
(CITA), in the Federal Register notice cited above include
"sewing thread" rather than "embroidery thread" which is
used upon the hats under consideration, the two are
substantially similar in nature and therefore, we find that
embroidery thread qualifies as a "finding or trimming" for
purposes of subheading 9802.00.90, HTSUS. Although the
button tack at issue, when covered with fabric and used in
conjunction with the button shell and button back, is
intended as a decorative, permanent joinder of the hat
panels, it is indistinguishable from a button designed for
repeated use, and therefore we find that the button tack
also qualifies as a "finding or trimming" for purposes of
9802.00.90, HTSUS. With regard to the cotton bias tape,
Customs has previously held that reinforcing tape is a
"finding or trimming" because it is analogous to zipper tape
(see HRL 559552, dated February 14, 1996 and HRL 560398,
dated July 29, 1997). Thus, the foreign origin embroidery
thread, cotton bias tape and button tacks are considered
"findings and trimmings" as those terms are defined in the
policy directives issued in connection with the Special
Regime Program, and their use will not disqualify the
article from eligibility for preferential duty treatment
under subheading 9802.00.90, HTSUS, provided that the cost
of these components does not exceed 25 percent of the cost
of the components of the assembled hats.
Because subheading 9802.00.90, HTSUS, was intended as a
successor provision to subheading 9802.00.80.10, HTSUS, with
respect to certain textile and apparel goods assembled in
Mexico, the regulations under subheading 9802.00.80, HTSUS,
may be instructive in determining whether an assembly
process would render an article eligible for the beneficial
duty treatment accorded by subheading 9802.00.90, HTSUS.
(In this regard, however, as distinguished from subheading
9802.00.80, HTSUS, it is noted that
subheading 9802.00.90 requires only that all fabric
components be formed and cut in the U.S., and that only such
components, in whole or in part, need be exported from the
U.S. in condition ready for assembly without further
fabrication.)
Section 10.14(a), Customs Regulations (19 CFR
10.14(a)), states in part that:
[t]he components must be in condition ready for assembly
without further fabrication at the time of their exportation
from the United States to qualify for the exemption.
Components will not lose their entitlement to the exemption
by being subjected to
operations incidental to the assembly either before, during,
or after their assembly with other components.
Section 10.16(a), Customs Regulations (19 CFR
10.16(a)), provides that the assembly operation performed
abroad may consist of any method used to join or fit
together solid components, such as welding, soldering,
riveting, force fitting, gluing, laminating, sewing, or the
use of fasteners.
Operations incidental to the assembly process are not
considered further fabrication operations, as they are of a
minor nature and cannot always be provided for in
advance of the assembly operations. However, any
significant process, operation or
treatment whose primary purpose is the fabrication,
completion, physical or chemical improvement of a component
precludes the application of the exemption under subheading
9802.00.80, HTSUS, to that component. See, 19 CFR 10.16(c).
Examples of operations incidental to the assembly process
include trimming, filing, or cutting off of small amounts of
excess materials, and cutting to length of wire, thread,
tape, foil and similar products exported in similar length
(19 CFR 10.16(b)(4) and (b)(6)).
With respect to the embroidery of the design on the
front panel of the hats, we need not determine whether this
operation constitutes an operation incidental to the
assembly process since subheading 9802.00.90, HTSUS,
requires only that the "fabric components, in whole or in
part " (emphasis added) satisfy the three conditions
identified in this provision under (a), (b), and (c). See
Presidential Proclamation 6821 dated September 13, 1995 (60
FR 47663). In the first proposed production scenario, none
of the fabric components exported to Mexico are subject to
embroidery operations. In the second proposed production
scenario, only three of the fabric components (two twill
panels and a backing panel) are subjected to the embroidery
process. Therefore, regardless of whether or not the
embroidery of the front panel of the hat constitutes an
operation incidental to the foreign assembly process, this
operation will not preclude the hat from receiving the
benefits of this tariff provision (see HRL 559780, dated May
19, 1997). With regard to the remainder of the operations
performed in Mexico, in the first proposed production
scenario, the sewing and force fitting of the button, and in
the second proposed production scenario, the sewing,
laminating and force-fitting of the button operations which
are used to join the fabric components, or to join fabric
components to other items, are acceptable assembly
operations for purposes of 19 CFR 10.16(a). Therefore,
under either proposed production scenario, the baseball-style hats assembled in Mexico from fabric components wholly
formed and cut in the U.S. will qualify for duty-free
treatment under subheading 9802.00.90, HTSUS, provided the
foreign-origin embroidery thread, reinforcing tape and
button tacks do not exceed 25% of the cost of the components
of the finished hat.
II. Eligibility for preferential tariff treatment under
NAFTA
The second issue concerns whether the imported
"baseball-style" hats are entitled to preferential tariff
treatment under NAFTA. Article 401 of NAFTA is incorporated
into General Note 12, HTSUS. In order to be eligible for
tariff preferences under the NAFTA, goods must be
"originating goods" pursuant to the rules of origin in
General Note 12(b), HTSUS, which provides, in pertinent
part, as follows:
For 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
material 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
(iii) they are goods produced entirely
in the territory of Canada,
Mexico and/or the United States
exclusively from originating
materials.
Inasmuch as the facts presented state that certain materials
utilized in the assembly of the finished "baseball-style"
hats are not NAFTA-originating materials (e.g., the
embroidery thread, the reinforcing tape and the button
tacks), General Note 12(b)(i) and (iii) are inapplicable.
Thus, we will consider whether the subject hats are
considered originating under General Note 12(b)(ii)(A),
which provides for the transformation of goods in the
territory of Canada, Mexico and/or the United States in
accordance with specific rules.
As previously indicated, the finished "baseball style"
hats are classifiable under subheading 6505.90, HTSUS. With
respect to General Note 12(b)(ii)(A), the applicable tariff
shift rule under General Note 12(t)/65.1 requires "[a] A
change to headings 6503 through 6507 from any heading
outside that group." Because the non-originating materials,
initially classified under subheading 5208.31, HTSUS (cotton
bias tape), subheading 5403.31, HTSUS (embroidery thread)
and subheading 7317.00, HTSUS (button tacks) are
subsequently classified under subheading 6505.90, HTSUS, as
a result of assembly operations in Mexico, the non-originating materials satisfy the tariff shift rule in
General Note 12(t)/65.1, HTSUS. Accordingly, assuming that
all other components used in the assembly of the hats are,
in fact, "originating materials," the finished baseball-style hats qualify as an "originating good" pursuant to
General Note 12(b)(ii), HTSUS, and are eligible for
preferential tariff treatment under the NAFTA.
General Note 12(a), HTSUS, provides, in pertinent part,
that:
(ii) Goods that originate in the
territory of a NAFTA party under
subdivision (b) of this note and that
qualify to be marked as goods of Mexico
under the terms of the marking rules
....and are entered under a subheading
for which a rate of duty appears in the
"Special" subcolumn followed by the
symbol "MX" in parentheses, are eligible
for such duty rate....
(Emphasis added). Thus, by operation of General Note 12,
the eligibility of a particular article for NAFTA duty
preference is predicated, in part, upon a determination that
the origin of the finished article is Mexico.
On December 8, 1994, the President signed into law the
Uruguay Round Agreements Act (URAA) (Pub.Law 103-465, 108
Stat. 4809). Subtitle D of Title III addresses textiles and
includes section 334 (codified at 19 U.S.C. 3592) which
provides rules of origin for textiles and apparel products.
Paragraph (a) of section 334 provides that the
Secretary of the Treasury shall prescribe rules implementing
the principles contained in paragraph (b) for determining
the origin of "textiles and apparel products." Accordingly,
on September 5, 1995, Customs published section 102.21,
Customs Regulations (19 CFR 102.21), in the Federal
Register, implementing Section 334 (60 FR 46188). Thus,
effective July 1, 1996, the country of origin for a textile
or apparel product is determined by a sequential application
of the origin rules set forth in paragraphs (c)(1) through
(5) of section 102.21.
The initial question to be addressed is whether the
baseball-style hats at issue qualify as a "textile and
apparel good" for purposes of 19 CFR 102.21. Section
102.21(b)(5,), Customs Regulations (19 CFR 102.21(b)(5)),
provides that a "textile or apparel product" is any good
classified in Chapters 50 through 63, HTSUS, and any good
classifiable under certain enumerated HTSUS headings or
subheadings, which includes subheading 6505.90, HTSUS.
Thus, under the facts presented, the baseball-style hats
qualify as a "textile and apparel good" for purposes of the
19 CFR 102.21 rules of origin.
Section 102.21(c)(1), Customs Regulations (19 CFR
102.21(c)(1)), states that "the country of origin of a
textile or apparel product is the single country, territory,
or insular possession in which the good was wholly obtained
or produced." Inasmuch as fabric components from the U.S.
and other non-fabric components (i.e., "findings and
trimmings") from Pakistan and Germany are processed into
hats in Mexico, the subject merchandise is not wholly
obtained or produced in a single country, territory, or
insular possession, paragraph (c)(1) of section 102.21 is
inapplicable.
Section 102.21(c)(2), Customs Regulations (19 CFR
102.21(c)(2)), provides:
[w]here the country of origin of a
textile or apparel product cannot be
determined under paragraph (c)(1) of this
section, the country of origin of the
good is the single country, territory, or
insular possession in which each foreign
material incorporated in that good
underwent an applicable change in tariff
classification, and/or met any other
requirement, specified for the good in
paragraph (e) of this section.
Section 102.21(e) states "[t]he following rules shall apply
for purposes of determining the country of origin of a
textile or apparel product under paragraph (c)(2) of this
section:"
6505.90 (1) If the good consists of two or
more components, a change to
subheading 6505.90 from any other
heading, provided that the change is
the result of the good being wholly
assembled in a single country,
territory, or insular possession....
You indicate that all components utilized in the
construction of the subject merchandise are either of
Pakistani, U.S. or German origin. Thus, all are foreign
materials, (i.e., non-Mexican), which must meet the specific
tariff shift rule for this item. Under the facts provided,
materials initially classified under subheading 3926.90,
HTSUS ( " space buckle), subheading 4810.91, HTSUS (OFSA
size strip), subheading 5208.31, HTSUS (cotton bias tape),
subheading 5208.33, HTSUS (white alpine twill), subheading
5401.10, HTSUS (sewing thread), subheading 5403.31, HTSUS
(MA embroidery thread), subheading 5407.42, HTSUS (fusible
#707 cap front stay), subheading 5407.90 (embroidery
backing), subheading 5806.32, HTSUS ( " Poly Pro Webbing),
subheading 5807.90, HTSUS (Paramount silky label),
subheading 6507.00, HTSUS (pre cut .085 V-1 Texon visor, #2
twill premade sweatband), subheading 7317.00, HTSUS (button
tacks) and subheading 9606.30, HTSUS (button shell, button
back) are subsequently classified under subheading 6505.90,
HTSUS, as a result of assembly operations in Mexico.
Additionally, the rule strictly requires that the change in
tariff classification result from being "wholly assembled"
in a single country, territory or insular possession. The
definition of the term "wholly assembled" is found in 19 CFR
102.21(b)(6), which states:
The term "wholly assembled" when used
with reference to a good means 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, appliques, 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.
In the second proposed production scenario, the hat
components are cut in the United States and exported to
Mexico for assembly. Because all assembly operations take
place in Mexico, the hats are "wholly assembled" in a single
country within the meaning of 19 CFR 102.21(b)(6). Inasmuch
as all foreign materials undergo the applicable tariff shift
as a result of assembly processes in Mexico, the country of
origin of the finished hats under the second proposed
manufacturing scenario is Mexico, pursuant to 19 CFR
102.21(c)(2). Accordingly, pursuant to General Note
12(a)(ii), the hat produced under the second scenario will
be eligible for NAFTA duty preference at the "MX" rate.
However, in the first proposed manufacturing scenario,
the hat components are cut, the front panels of the hat are
laminated to the stay material, the front panels are sewn
together for embroidery, reinforcing tape is sewn to the
resulting single front panel and the single front panel is
embroidered in the United States prior to exportation to
Mexico for further assembly. Because the subject
merchandise undergoes assembly operations in the United
States and Mexico, it is not wholly assembled in a single
country, territory, or insular possession, and the country
of origin of the hats may not be determined under section
102.21(c)(2), Customs Regulations (19 CFR 102.21(c)(2)).
Section 102.21(c)(3), Customs Regulations (19 CFR
102.21(c)(3)), determines origin for goods that have been
wholly assembled (with certain enumerated exceptions) in a
single country, insular possession, or territory, or which
are knit to shape. The term "knit to shape" is defined in
19 CFR 102.21(b)(3) in the following manner:
The term knit to shape applies to any
good of which 50 percent or more of the
exterior surface area is formed by major
parts that have been knitted or crocheted
directly to the shape used in the good,
with no consideration be given to patch
pockets, appliques, or the like. Minor
cutting, trimming, or sewing of those
major parts will not affect the
determination of whether a good is "knit
to shape."
Because the baseball-style hats are not wholly assembled in
a single country, insular possession, or territory, and are
not knit to shape, section 102.21(c)(3) is inapplicable, and
the country of origin of the hats may not be determined in
accordance with this section.
Section 102.21(c)(4), Customs Regulations (19 CFR
102.21(c)(4)), which provides the first multi-country rule,
provides:
Where the country of origin of a textile
or apparel product cannot be determined
under paragraph (c)(1), (2) or (3) of
this section, the country of origin of
the good is the single country,
territory, or insular possession in which
the most important assembly or
manufacturing process occurred.
With regard to the first proposed production scenario,
the most important assembly operation occurs in Mexico,
where the embroidered front panel is joined to the remaining
panels, the reinforcing tape is sewn to the seams, the back
opening is bound, the size strip is attached, the buttons
are made, the visors are made and the button, visor, labels,
sweatband, and backstrap with buckles are attached.
Although several components are joined together in the
United States, the hat is substantially constructed in
Mexico. Accordingly, the country of origin of the
"baseball-style" hats under the first proposed production
scenario is Mexico, the country where the most important
assembly operation occurs, pursuant to 19 CFR 102.21(c)(4).
Accordingly, pursuant to General Note 12(a)(ii), the hat
produced under the first scenario will be eligible for NAFTA
duty preference at the "MX" rate.
HOLDING:
1) Based on the information provided, a baseball-style
hat classifiable under subheading 6505.90, HTSUS, qualifies
as a "textile and apparel good" pursuant to Appendix 1.1 of
Annex 300-B of the North American Free Trade Agreement
(NAFTA) for purposes of determining its eligibility under
subheading 9802.00.90, HTSUS.
2) Based on the information submitted, the baseball-style hats assembled in Mexico, under both proposed
production scenarios, from fabric components wholly formed
and cut in the U.S. will qualify for duty-free treatment
under subheading
9802.00.90, HTSUS, provided the cost of all foreign findings
and trimmings do not exceed 25 percent of the cost of the
components of the assembled article.
3) Based on the information provided, the imported
baseball-style hats are considered to be a good of Mexico
under the textile rules of origin set forth at 19 CFR 102.21
and the non-originating materials used in the manufacture of
the hats satisfy the required change in tariff
classification under General Note 12(t), HTSUS.
Accordingly, the finished baseball-style hats are eligible
for the "MX" NAFTA duty rate pursuant to General Note
12(b)(ii)(A), HTSUS.
The holding set forth above applies only to the
specific factual situation and merchandise identified in the
ruling request. This position is clearly set forth in
section 19 CFR 177.9(b)(1), which states that a ruling
letter is issued on the assumption that all information
furnished in connection with the ruling request and
incorporated therein, either directly, by reference, or by
implication, is accurate and complete in every material
respect. Should it be subsequently determined that the
information furnished is not complete and does not comply
with 19 CFR 177.9(b)(1), the ruling will be subject to
modification or revocation. In the event there is a change
in the facts previously furnished, this may affect the
determination of eligibility for preferential duty
treatment.
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 Customs officer
handling the transaction.
Sincerely,
John Durant
Director
Commercial Rulings Division