CLA-2 RR:CR:TE 964949 mbg
Ms. Linda Moyer
Customs Manager
Associated Merchandising Corporation
500 Fashion Avenue
New York, NY 10018
RE: U.S.-Caribbean Basin Trade Partnership Act; luggage; subheading 9820.11.21; heading 4202, HTSUS
Dear Ms. Moyer:
This is in response to your letter of February 6, 2001, on behalf of your client, Airway Industries, requesting a binding ruling on the eligibility of certain luggage for duty-free treatment under the United States-Caribbean Basin Trade Partnership Act (“CBTPA”). You submitted two samples for our examination.
FACTS:
The subject merchandise is made of 100 percent polyester textile material and is said to be wholly assembled in Guatemala of fabric manufactured in the United States from yarns manufactured in the United States. You have stated that the bags will be sold to the consumer either as a set or separately.
Style #52492-93F is an upright Pullman suitcase with retractable handles and wheels. The sample measures approximately 20 ½ inches x 12 inches x 7 inches. The sample features one large zippered compartment with a zippered pocket on the exterior. The wheels and a frame are said to be of Korean origin. The suitcase features an elastic strap in the interior to securely hold clothing, a strip of decorative trim on the front of the bag which measures approximately 1 ½ inches by 14 inches as well as a metal “Airway” logo. The suitcase is classified in subheading 4202.12.8070 of the Harmonized Tariff Schedule of the United States Annotated (“HTSUSA”).
Style #52492-14F is a travelling shoulder bag. The bag measures approximately 12 ½ inches x 5 inches x 11 inches. The sample features one large zippered compartment with a smaller zippered pocket on the outside. The bag has an adjustable textile shoulder strap measuring approximately 1 ½ inches in width. In addition the bag features a strip of decorative trim on the front of the bag which measures approximately 1 ½ inches by 14 inches as well as a metal “Airway” logo. The travel bag is classified in subheading 4202.92.3031, HTSUSA.
Both of these tariff numbers are designated eligible for preferential tariff treatment within subheading 9820.11.21, HTSUSA, as provided for in Subchapter XX, U.S. Note 2(a) HTSUSA, which provides:
Except as provided in this note, textile and apparel articles described in subheading 9820.11.03 through 9820.11.30, inclusive, of this subchapter that are imported directly into the custom territory of the United States from a designated beneficiary CBTPA country enumerated in general note 17(a) to the tariff schedule shall be eligible to enter free of duty and free of any quantitative limitations, except as provided in this subchapter, under the terms of the provisions set forth in such subheadings and applicable legal notes, as indicated by the rate of duty of “Free” in the Special rates of duty subcolumn for such provisions.
ISSUE:
Whether the suitcase and travel bag are eligible for preferential tariff treatment under the CBTPA?
LAW AND ANALYSIS:
Title II of the Trade and Development Act of 2000, (Pub. L. 106-200, 114 Stat. 251), concerns trade benefits for the Caribbean Basin and is referred to as the United States-Caribbean Basin Trade Partnership Act ("CBTPA"). Section 211 of the CBTPA amended section 213 (b) of the Caribbean Basin Economic Recovery Act (CBERA) (19 U.S.C. 2703(b)) to provide expanded trade benefits during a “transition period” to designated countries in the Caribbean Basin.
Section 211 of the CBTPA eliminates tariffs and quantitative restrictions on specific textile and apparel articles and extends North American Free Trade Agreement duty treatment standards to non-textile articles that previously were ineligible for preferential treatment under the CBERA. “Transition period” is defined in 19 U.S.C. 2703(b)(5)(D) as meaning, with respect to a designated CBTPA country, the period that begins on October 1, 2000, and ends on the earlier of September 30, 2008, or the date on which a free trade agreement enters into force with respect to the U.S. and the CBTPA country.
Presidential Proclamation 7351, dated October 2, 2000, published in the Federal Register on October 4, 2000 (65 Fed. Reg. 59329), implemented the CBTPA by designating the eligible CBTPA countries and amending Chapter 98, HTSUS (including the creation of new subchapter XX) to facilitate the entry of the specific textile and apparel articles eligible for preferential treatment under the CBTPA.
The enhanced trade benefits provided by the CBTPA are available to eligible articles imported directly from a country (1) that is designated as a CBTPA beneficiary country and (2) which the U.S. Trade Representative (“USTR”) has determined has implemented and follows, or is making substantial progress toward implementing and following certain customs procedures that allow U.S. Customs to verify the origin of the articles. Guatemala is designated as a CBTPA beneficiary country (see Presidential Proclamation 7351, dated October 2, 2000, 65 Fed. Reg. 59329) and has satisfied the second criterion (see 65 Fed. Reg. 60236, dated October 10, 2000).
I. Luggage Provisions under the CBTPA
Interim Customs Regulations to implement the trade benefit provisions of section 211 of the CBTPA were published in the Federal Register as T.D. 00-68 on October 5, 2000 (65 Fed. Reg. 59650). The T.D. invited public comments to be submitted on the Interim Regulations by December 4, 2000.
The relevant provision, is set forth in 19 U.S.C. 2703(b)(2)(A)(viii), which provides that preferential treatment shall apply to:
Textile Luggage:
(I) assembled in a CBTPA beneficiary country from fabric wholly formed and cut in the United States, from yarns wholly formed in the United States, that is entered under subheading 9802.00.80 of the HTS; or is
(II) assembled from fabric cut in a CBTPA beneficiary country from fabric wholly formed in the United States from yarns wholly formed in the United States.
Subheading 9802.00.8046, HTSUSA, provides for “Articles, except goods of heading 9802.00.90 and goods imported under provisions of subchapter XIX of this chapter and goods imported under provisions of subchapter XX, 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: Articles for which duty free treatment is claimed under U.S. note 7(b)(ii) to this subchapter.”
Furthermore, Subchapter II, U.S. Note 7(b) provides:
For purposes of heading 9802.00.80, duty free treatment shall be accorded to the following articles imported directly from a beneficiary United States--Caribbean Basin Trade Partnership Act (CBTPA) country previously designated by the President in a proclamation issued pursuant to such Act and enumerated in general note 17 (a) to the tariff schedule—
(ii) textile luggage assembled in a designated beneficiary country from fabric wholly formed and cut in the United States, from yarns wholly formed in the United States.
Subheading 9820.11.21, HTSUS, provides for the duty-free entry of:
Articles imported from a designated beneficiary Caribbean Basin Trade Partnership country enumerated in general note 17(a) to the tariff schedule: Textile luggage assembled in such a country from fabric cut in a beneficiary country from fabric wholly formed in the United States from yarns wholly formed in the United States.
II. Findings and Trimmings Provisions under the CBTPA
Subchapter XX, U.S. Note 3(a), HTSUSA, provides:
An article otherwise eligible for preferential treatment under any provision of this subchapter shall not be ineligible for such treatment because the article contains—
(i) findings and trimmings of foreign origin, if the value of such findings and trimmings does not exceed 25 percent of the cost of the components of the assembled article[.]
The Interim Regulations, regarding findings and trimmings further provide:
An article otherwise described under paragraph (a) of this section will not be ineligible for the preferential treatment referred to in [19 C.F.R.] § 10.221 because the article contains:
(A) Findings and trimmings of foreign origin, if the value of those findings and trimmings does not exceed 25 percent of the cost of the components of the assembled article. For the purposes of this section “findings and trimmings” include, but are not limited to, hooks and eyes, snaps, buttons, “bow buds”, decorative lace trim, elastic strips (but only if they are each less than 1 inch in width and are used in the production of brassieres), zippers (including zipper tapes), labels, and sewing thread except in the case of an article described in paragraph (a)(3) or (a)(12) of this section.
See 19 C.F.R. §10.223(b)(1)(i)(A).
Therefore, in regard to the facts of this case, the subject textile suitcase classified in subheading 4202.12.8070, HTSUSA, is said to be cut and assembled in Guatemala from fabrics produced in the U.S. The frame and wheels are of Korean origin in Style # 52492-93F, but are not considered to be findings and trimmings. For non-fabric components such as plastic, metal or wood which are not considered findings or trimmings, there is no requirement that these components be of a specified origin. In the subject suitcase, these non-fabric components include metal frames, wheels, metal rivets, plastic webbing, vinyl washers, and plastic bases.
It is unclear from your submission the extent of the findings and trimmings used in Style 52492-93F that are of foreign origin. However, the imported article will be eligible for preferential treatment under subheading 9820.11.21, HTSUSA, provided the cost of such components do not exceed 25 percent of the cost of the components of the assembled luggage and the bag is assembled in Guatemala from fabric wholly formed in the US from yarns wholly formed in the US.
In regards to the shoulder travel bag, you have subsequently requested classification based on different factual scenarios regarding the origin of the luggage components. Before addressing the different scenarios presented in your submission, Customs must determine whether the adjustable textile shoulder strap is considered a finding or trimming. “Findings” are generally accepted to be sewing essentials used in textile goods while “trimmings” are decorative or ornamental parts. See, for example, Headquarters Ruling Letter (“HQ”) 559552, dated February 14, 1996; HQ 560398, dated July 29, 1997; HQ 560458, dated March 6, 1998; HQ 559780, dated May 19, 1997 and HQ 560520, dated September 22, 1997, for examples of what qualifies as a finding or trimming. See also, HQ 558954, dated June 30, 1995; HQ 559522, dated February 14, 1996; HQ 559738, dated July 2, 1996; HQ 559794, dated June 3, 1996; and HQ 559738, dated July 2, 1996, for examples of what does not qualify as a finding or trimming.
Since the adjustable textile shoulder strap serves a functional role in utilizing the travel bag and, in fact, is essential for carrying the bag since no other carrying handle is provided, it cannot be considered a finding or a trimming. Therefore, in all instances, the textile shoulder strap must be constructed from fabric wholly formed in the US from yarns wholly formed in the US to meet the requirements for CBTPA eligibility pursuant to either 19 U.S.C. 2703(b)(2)(A)(viii) (I) or 19 U.S.C. 2703(b)(2)(A)(viii)(II).
The subject travel bag classified in subheading 4202.92.3031, HTSUSA, is said to be cut and assembled in Guatemala from fabric wholly formed in the US from yarns wholly formed in the US. However, in your subsequent submission of December 14, 2001, you have requested that Customs provide information on the preferential treatment for the shoulder bag with the shoulder strap of various origins. For both of the scenarios below, you claim that the shoulder bag itself is constructed of fabric wholly formed in the US from yarns wholly formed in the US with cutting and assembly occurring in a CBTPA beneficiary country. As stated above, the strap which functions as the carrying mechanism is not considered either a finding or a trimming and therefore, would have to be constructed of fabric wholly formed in the US from yarn wholly formed in the US. However, a piece of textile fabric is sewn on the front of the bag for a decorative purpose and the scenarios below address this fabric which serves as decorative trim.
Scenario A- The decorative trim is constructed in the US of US fabric made of US yarn and then is attached to the shoulder travel bag in Guatemala. In this instance, the total cost of any trimmings in Style # 52492-14F, the travel bag, is less than 25 percent of the cost of the assembled article as required by Subchapter XX, U.S. Note 3(a)(i) and assembly is in accordance with the requirements set forth in 19 U.S.C. 2703(b)(2)(A)(viii)(I).
Scenario B- The decorative trim is constructed in China of Chinese fabric made of Chinese yarn and then attached to the shoulder travel bag in Guatemala. In this instance, the total cost of any trimmings in Style # 52492-14F, the travel bag, is less than 25 percent of the cost of the assembled article as required by Subchapter XX, U.S. Note 3(a)(i), and furthermore, the assembly will satisfy the requirements set forth in 19 U.S.C. 2703(b)(2)(A)(viii)(I).
HOLDING:
Provided the cost of the foreign findings and trimmings is less than 25 percent of the cost of the components of the assembled Pullman suitcase and if constructed of fabrics wholly formed in the US from yarns wholly formed in the US, the subject Pullman suitcase, Style 52492-93F, as described above, is eligible for duty free/quota free treatment under subheading 9820.11.21, HTSUSA, provided it is imported directly into the customs territory of the U.S. from a CBTPA beneficiary country.
Provided the cost of the foreign findings and trimmings is less than 25 percent of the cost of the components of the assembled travel bag and if constructed of fabrics wholly formed in the US from yarns wholly formed in the US, the subject travel bag with adjustable textile shoulder strap, Style 52492-14F, as described above, is eligible for duty free/quota free treatment under subheading 9820.11.21, HTSUSA, provided it is imported directly into the customs territory of the U.S. from a CBTPA beneficiary country.
A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is 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