CLA-2 RR:CR:TE 966584 TMF
Arthur W. Bodek, Esq.
Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, LLP
245 Park Avenue, 33rd Floor
New York, New York 10167-3397
RE: Eligibility of knitted sweatshirt and golf shirts containing foreign collars and cuffs under the African Growth and Opportunity Act (AGOA)
Dear Mr. Bodek:
This is in response to your letter dated June 24, 2003, on behalf of your client, Dominant Garments Fty. Ltd, located in Hong Kong, in which you requested a binding ruling on certain men’s knitted shirts which contain foreign collars and cuffs under the African Growth and Opportunity Act (AGOA). Your request, along with three sample garments (two golf shirts and a sweatshirt), collars and cuff samples and paper patterns were submitted to our office for our consideration. You also requested a conference on this matter which was held on September 22, 2003.
FACTS:
You submitted three garment samples: two golf shirts and a sweatshirt. You also submitted a roll of foreign origin collar fabric which is used to make the subject golf shirts; a roll of foreign origin cuff fabric that is used to make the subject golf shirt; and a panel of fabric that is used to make collars, cuffs and a waistband for the subject sweatshirt. Further, you submitted three neckband, cuff and waistband pieces that are used to make the subject sweatshirt.
You submitted various paper patterns that are used to accomplish the cutting of the collar, cuff and waistbands. The patterns consist of two cut cuff pieces that are used to make the subject golf shirts, and paper patterns of a golf shirt cuff, golf shirt collar, sweatshirt neckband, cuff and waistband.
You indicated that a rectangular piece of fabric cut from a roll along with a collar cut from a rectangular piece of fabric and the paper patterns are used in Madagascar to accomplish the cutting of the component from the collar fabric.
You also indicated that all three garments will be cut and wholly assembled in Madagascar from foreign origin fabric which will originate outside of the United States and sub-Saharan Africa.
Golf Shirt I: You described this merchandise as a short-sleeved fine gauge knitted pullover shirt with a partial front opening at the neck, a hemmed bottom, a flat knit collar and flat knit cuffs. The production process is described by you as follows:
-The foreign origin fabrics are imported into Madagascar for the body, the collar and the cuffs. The body fabric arrives in rolls of unmarked fabric and is subsequently cut to shape to form various body components (described as front, back, sleeves).
-The collar fabric is knitted as a roll with lines knitted in for separating the rectangular pieces of fabric that will be cut in Madagascar for collar formation. The fabric is not further shaped prior to arrival in Madagascar. We note that each of the collars used in Golf Shirts I and II have three finished edges and one unfinished edge.
-After the body components, the collar and the cuffs are cut to shape in Madagascar (described below), the garment is wholly assembled in Madagascar.
The Madagascar collar formation process for Golf Shirt I is described by you as follows:
A roll of fabric is spread on a table.
A pair of scissors is used to cut the fabric along the lines of demarcation in order to form individual rectangular pieces of fabric.
Each rectangular piece of fabric is placed on a table.
A paper pattern is laid on top of the rectangular piece of fabric. The paper pattern dictates the dimensions for the collar to be cut from the piece of fabric.
A blade is used to cut a collar from the piece of collar fabric according to the pattern (not according to any knitted in lines of demarcation).
You described the cuff formation of the Golf Shirt I cuffs as follows:
The cuff fabric is knitted as a roll with lines knit in for separating the roll into individual strips of fabric that will be cut in Madagascar in order to form the cuffs. The fabric is not further shaped prior to arrival in Madagascar. In Madagascar, the identical operations that are performed on the collar fabric are also performed on the cuff fabric except that additional cutting is performed in Madagascar with respect to the formation of the cuffs as they are cut to lengths which are significantly shorter than the width of the roll of fabric from which they are cut.
Golf Shirt II: It is identical in appearance to the Golf Shirt I and the production process is the same with the exception that the sleeves are hemmed.
Sweatshirt: It is a long sleeved, fine gauge knitted pullover that is napped on the inside and features foreign origin, flat knitted neckband, cuffs and waistband. This foreign origin, rectangular fabric panel contains minimally visible, horizontal lines of demarcation. Once the material is cut at the point of demarcation, we notice that the resulting edges are unfinished and susceptible to unraveling.
The Madagascar neckband, cuff and waistband formation process is described by you as follows:
A roll of fabric is spread on a table.
A pair of scissors is used to cut the fabric along the lines of demarcation in order to form individual strips of fabric (still maintaining the length from the roll).
Each strip of fabric is then cut (not along lines of demarcation) to the appropriate length required for the formation of a neckband, cuff or waistband.
Each resulting length of fabric is placed on a table.
A paper pattern is laid on top of the piece of fabric. The paper pattern dictates the dimensions of the neckband, cuff or waistband (as the case may be) to be cut from the length of fabric.
A blade is used to cut a neckband, cuff or waistband (as the case may be) from the piece of fabric according to the pattern (not according to any knitted in lines of demarcation).
ISSUE: Whether the foreign origin collars used in the Golf Shirts I and II are classifiable as garment parts or knitted fabric.
Whether the subject golf shirts that contain foreign origin collars are eligible for AGOA preference.
LAW AND ANALYSIS:
The African Growth and Opportunity Act (AGOA) provides certain specified trade benefits for countries of sub-Saharan Africa. These benefits include duty-free treatment for certain non-textile articles previously excluded from preferential treatment under the Generalized System of Preferences, and duty- and quota-free treatment for certain textile and apparel articles which meet the requirements set forth in Section 112 of the Act (codified at 19 U.S.C. 3721). Beneficiary countries are designated by the President of the United States after having met eligibility requirements set forth in the AGOA. Once designated, a beneficiary country is entitled to the duty-free treatment for the designated non-textile articles determined not to be import-sensitive in the context of imports from the beneficiary sub-Saharan African countries. A second designation by the United States Trade Representative (USTR), published in the Federal Register, that a beneficiary country has taken the measures required by the Act to prevent unlawful transshipment and has adopted an effective visa system, is necessary before a beneficiary country may enjoy the duty- and quota-free benefits extended to textile and apparel articles under the Act. Madagascar was designated a beneficiary country by Presidential Proclamation 7350, published in the Federal Register on October 4, 2000 (65 Fed. Reg. 59321). It was determined to be eligible for textile benefits under the AGOA by the USTR effective March 6, 2001 (66 Fed. Reg. 14242). Madagascar is also designated as a lesser developed beneficiary country as provided for in U.S. Note 2(d), Subchapter XIX, HTSUSA. See also, Presidential Proclamation 7350, supra.
The provisions implementing the textile provisions of the AGOA in the Harmonized Tariff Schedule of the United States (HTSUS) are contained, for the most part, in subchapter XIX, Chapter 98, HTSUS (one provision may be found in subheading 9802.00.80, HTSUS). The regulations pertinent to the textile provisions of the AGOA may be found at §§ 10.211 through 10.217 of the Customs Regulations (19 CFR 10.211 through 10.217).
At this time, this office is in the process of reviewing comments received in response to a solicitation of comments on Interim Regulations, published as T.D. 03-15, to implement section 3108 of the Trade Act of 2002. See Notice, Trade Benefits Under the African Growth and Opportunity Act, 68 Federal Register 13820, dated March 21, 2003. CBP has received comments in response to this notice which are directly related to two of the sample knit items that you have submitted, i.e., the cuff material used in the manufacture of Golf Shirt I, and the waistband, collar and cuff material used in the manufacture of the sweatshirt. As the Final Rule document will address these types of items in response to comments received, this office will not rule on the eligibility under AGOA of these garments incorporating cuffs, collars or waistbands from such material at this time. However, CBP will rule on the eligibility under the AGOA of the golf shirts containing the foreign origin collars.
Classification of Foreign Collars Used in Golf Shirts I and II:
The foreign origin collars are imported into Madagascar for use in the manufacturing of Golf Shirts I and II. The first issue we must consider is whether the foreign origin collars are knitted fabric of Chapter 60, HTSUSA, or made up articles under Chapter 61, HTSUSA.
The roll contains strips of pre-fabricated knit collars that are separate and identifiable by the use of noticeably visible, white colored, horizontal yarn-formed lines of demarcation which serve to provide facile collar formation on a roll, as well as to hold separate and clearly identifiable collars strips together on a roll.
With regard to whether the collars (used in Golf Shirts I and II) are knitted fabric of Chapter 61 or made up articles, we refer to Note 7(f) of Section XI, HTSUSA, which states that the term “Made Up” means, among other things, an article is “knitted or crocheted to shape, whether presented as separate items or in the form of a number of items in the length.” In this instance, the collars (used in Golf Shirts I and II) are presented in the form of a number of items in the length. Further, without application of a paper pattern (which aids in further sizing for use on Golf Shirts I and II), the subject collars, in their condition as imported into Madagascar, resemble a collar designed for further use in shirt formation. We note that although you state that the subject collar is “nothing more than a rectangle with no lines of demarcation whatsoever…until [ ] laid on a table…then cut to shape, it is not suitable as a garment component”, we disagree and do not believe that the cutting process involving the paper pattern confers the identity of the component .
We refer you to other rulings issued by CBP on substantially similar knitted shirt collars. In Headquarters Ruling 562572, dated June 16, 2003, CBP affirmed the classification in this partial reconsideration by determining that rolls of collar-sized rib knit strips were classifiable as garment parts within subheading 6117.90.9020, HTSUSA, and not entitled for duty allowance under subheading 9802.00.80, HTSUSA.
In HQ 966634, dated September 9, 2003, CBP determined that garments incorporating rib knit fabric with pre-marked lines of demarcation that indicate where to cut to separate the section which will be further cut using a template were not eligible for AGOA benefits under subheading 9819.11.12, HTSUSA, as the provision “does not sanction the use of textile components, [but] allows for the use of foreign fabric and yarn in the production of apparel articles.” See also HQ 965961, dated January 15, 2003, denying AGOA eligibility under subheading 9819.11.12, HTSUSA, for Taiwanese originating fabric, collar and cuffs that will be used in the assembly of men’s and boy’s knit shirts assembled in Lesotho; HQ 965871, dated September 25, 2002, denying AGOA eligibility under subheading 9819.11.12, HTSUSA, to men’s knit shirts using Asian-sourced collars, cuffs and accessories; and HQ 964312 dated June 30, 2000, classifying cotton knitted collars and cuffs in subheading 6117.90.9020, HTSUSA, which provides for parts of cotton shirts.
In each of the aforementioned rulings involving AGOA decisions, CBP determined that the use of foreign originating textile components would preclude apparel from eligibility for AGOA benefits within subheading 9819.11.12, HTSUSA.
Eligibility of Golf Shirts I and II Containing Foreign Origin Collars Under Subheading 9819.11.12, HTSUSA
You indicated that all references in your submission to foreign origin fabric indicate that the fabrics used in the subject garments will originate outside of the US and sub-Saharan Africa. You also state that the garments are eligible under subheading 9819.11.12, HTSUSA, for AGOA eligibility. Subheading 9819.11.12, HTSUSA, states:
Apparel articles wholly assembled, or knit-to-shape and wholly assembled, or both, in one or more such lesser developed countries enumerated in U.S. note 2(d) to this subchapter, subject to the provisions of U.S. Note 2 to this subchapter, regardless of the country of origin of the fabric or the yarn used to make such articles, if entered during the period beginning on the date announced in a Federal Register notice issued by the United States Trade Representative and continuing through September 30, 2004, inclusive.
See U.S. Note 2, Subchapter XIX, Chapter 98, HTSUS, which provides for a quantitative restriction for apparel articles classified in subheading 9819.11.12, HTSUSA.
The term "wholly assembled in", when used with reference to a textile or apparel article in the context of one or more beneficiary countries or one or more lesser developed beneficiary countries, means :
[A]ll of the components of the textile or apparel article (including thread, decorative embellishments, buttons, zippers, or similar components) were joined together in one or more beneficiary countries or one or more lesser developed beneficiary countries. See 19 C.F.R. 10.212.
The term "Knit-to-shape components”, when used with reference to textile components, means:
Components that are knitted or crocheted from a yarn directly to a specific shape containing a self-start edge. Minor cutting or trimming will not affect the determination of whether a component is "knit-to-shape." Id.
In the instant case, we find the subject roll of collars consists of knit-to-shape components as each collar is made by knitting or crocheting a yarn directly to a specific shape of a collar and each contains a self-start, finished edge.
At the conference, you raised the argument that the subject collars used in Golf Shirts I and II were not subject to minor trimming, but cutting to shape to allow for the sewing attachment to the body of the subject golf shirts. You also stated that prior to cutting, the collar materials are fabric. We find HQ 966634, dated September 9, 2003, to apply squarely to the case at bar. In HQ 966634, the issue was whether collars made of foreign formed textile components that required minor cutting to the shape of a collar template, were AGOA eligible.
In consideration of your argument, we find that the instant collars (in their incomplete, unfinished state), cannot overcome their essential character as collars, which are garment parts, not fabric. Although you state that the subject collars are fabric prior to their being cut, we disagree. In their condition as imported, the subject collars are incomplete, unfinished collars that will ultimately be used as collars in the subject golf shirts. The instant collars lack a fabric formation stage as they are not created from fabric, but are made directly from yarn into the shape of knit components. The cutting process subsequent to importation into the LDC does not preclude the application of GRI 2(a) to determine that these items are knit components at the time of importation into the LDC, as their essential character as collars remains. See HQ 966634, supra.
In concurrence with HQ 966634, we find that while subheading 9819.11.12, HTSUSA, allows for the use of foreign yarn or fabric in the production of apparel articles, it does not sanction the use of foreign originating textile components in the manufacture of apparel articles in lesser developed countries. Therefore, the subject Golf Shirts I and II are not accorded duty-free status as they incorporate foreign origin, knitted textile components.
Thus, Golf Shirt I and II, which contain foreign origin collar components do not qualify for AGOA eligibility.
HOLDING:
Golf Shirts I and II, which contain foreign origin collar components, do not qualify for AGOA preference due to the inclusion of foreign origin collars.
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,
Myles B. Harmon, Director
Commercial Rulings Division