RR:CR:SM 560932 RSD
TARIFF No. 9802.00.80
Mr. John S. Haskell
Kufner Textile Corporation
212 West 35th Street
New York, New York 10001
RE: Applicability of HTSUS subheading 9802.00.80 to shirts made
in the Caribbean using interlining fabric from Mexico for the
cuffs and collars; Special Access Program
Dear Mr. Haskell:
This is in response to your letter dated March 25, 1998,
addressed to the Customs Information Exchange in New York,
requesting a ruling regarding the applicability of subheading
9802.00.80, Harmonized Tariff Schedule of the United States
(HTSUS), to shirts manufactured in the Caribbean using Mexican
interlining fabric for the shirt cuffs and collars. Your letter
indicates that you are specifically interested in the
applicability of the Special Access Program (subheading
9802.00.8015, HTSUS) to the imported shirts. The National
Commodity Specialist Division forwarded your letter to our office
for a determination. A sample of the interlining fabric that
will be used in `making the shirts accompanied your request.
FACTS:
Kufner Textile Corporation (Kufner) is an international
manufacturer of interlining products which are distributed to
men's and women's wear manufacturers throughout the world. In
this case, the interlining fabric will be spun, woven, finished,
and coated in Mexico. In the past, Kufner has been supplying the
U.S. market from its Hong Kong factory. Many of Kufner's
customers are apparel manufacturers who import merchandise under
subheading 9802.00.80, HTSUS and specifically 9802.00.8015,
HTSUS (the Special Access Program).
Kufner wishes to furnish Mexican produced interlining fabric
to its U.S. customers. The Mexican produced cotton interlining
fabric will be imported into the U.S. and sold to shirt
manufacturers who will die cut it into shirt collars and cuffs.
The collars, cuffs and the other shirt components will be sent to
a Caribbean country where they will be assembled into a finished
shirt. You ask whether if the imported shirts will be eligible
for the Special Access Program. In their transmitted memorandum,
the National Commodity Specialist Division advised that the
assembled shirts under consideration were when imported into the
U.S. would be classified under heading 6205 or 6206, HTSUS.
ISSUE:
Whether shirts assembled in the Caribbean with collars and
cuffs die cut in the U.S. from Mexican formed interlining fabric
will qualify for the Special Access Program under subheading
9802.00.8015, HTSUS.
LAW AND ANALYSIS:
To qualify for the Special Access Program, products must be
eligible for entry under subheading 9802.00.80, HTSUS. In
addition, all fabric components, with the exception of findings,
trimmings and certain elastic strips not exceeding 25 percent of
the cost of the components of the assembled product, must be
formed in the U.S. Such U.S. formed fabric must also be cut to
pattern or shape in the U.S. Customs Directive Number 3500-12
dated September 2, 1986 provides, as follows:
[f]indings trimmings, and elastic components of the
finished assembled products need not be of United
States origin. Products assembled in participating
Caribbean countries and made of U.S. formed and cut
fabric plus findings, trimmings, and elastic of foreign
origin may enter the United States under the program.
However, the total value of such foreign findings,
trimmings, and elastic components shall not exceed 25
percent of the cost of the components of the assembled
product. Products whose foreign findings, etc., exceed
25 percent do not qualify for the Program. Examples of
findings and trimmings are sewing thread, hooks and
eyes, snaps, buttons, "bow buds", lace trim, zippers,
including zipper tapes, and labels.
Subheading 9802.00.80, HTSUS, 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,
lubricating and painting.
All three requirements of subheading 9802.00.80, HTSUS, 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 cost or value of the imported assembled article,
less the cost or value of the U.S. components assembled therein,
upon compliance with the documentary requirements of section
10.24, Customs Regulations (19 CFR 10.24).
The issue presented in this case is whether the imported
shirts are eligible for the Special Access Program when the
collar and cuff of the shirts are die cut in the U.S. from
interlining fabric formed in Mexico. As already noted, to be
eligible for the Special Access Program all fabric components,
with the exception of findings, trimming and certain elastic
strips not exceeding 25 percent of the cost of the components of
the assembled product, must be formed and cut in the U.S.
However, on September 20, 1996, the Committee for the
Implementation of Textile Agreements published a notice in the
Federal Register, 61 FR 49439, which identified a temporary
amendment to the foreign origin exception for finding and
trimmings under the Special Access Program. Effective on
September 23, 1996, by date of export, the foreign origin
exception for findings and trimmings, including elastic strips of
less than one inch in width, under the Special Access program was
temporarily amended to include non-U.S. formed, U.S. cut
interlinings for men's and boy's and women's and girl's suit-type
jackets in Categories 433, 435, 443, 444, 633, 635, 643, and 644.
The amendment still required that in the aggregate the
interlinings findings and trimmings not exceed 25 percent of the
cost of the components for the assembled article.
The Federal Register notice made clear that the exception
for interlinings was limited to suit jackets and suit-type
jackets. In this instance, the merchandise imported from the
Caribbean would be shirts, not suit jackets or suit-type jackets.
Accordingly, the exception for foreign fabric
interlinings would not be applicable in this case. Therefore,
because all fabric components of the shirts are not formed in the
United States, the shirts are not eligible for the Special Access
Program.
Furthermore, according to the National Commodity Division
memorandum, the imported assembled shirts are classified in HTSUS
headings which include textile category numbers. Therefore, in
accordance with Treasury Decision 91-88 (T.D. 91-88), the
imported merchandise are considered textile and apparel articles
for purposes of U.S. Note (2b), subchapter II Chapter 98 HTSUS,
and thus, they would be precluded from receiving duty-free
treatment under that provision.
HOLDING:
Because the interlining fabric used in making the shirts,
was not formed in the United States, the imported shirts are
ineligible for the Special Access Program under subheading
9802.00.80.15, HTSUS.
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 file without a copy, this ruling should be
brought to the attention to the Customs officer handling the
transaction.
Sincerely,
John Durant, Director
Commercial Rulings Division