CLA-2 RR:CR:TE 966640 TMF
Muhammad Q. Khan
International Sourcing Group, Inc.
63 West 38th Street, Suite 200
New York, New York 10018
RE: Eligibility of men’s knit pullover shirts under the African Growth and Opportunity Act (AGOA)
Dear Mr. Khan:
This is in response to your letter dated May 1, 2003, from your company, International Sourcing Group, Inc., in which you requested a binding ruling on the eligibility of certain men’s knit pullover shirts under the African Growth and Opportunity Act (AGOA). Your request along with one sample was sent to our office.
FACTS:
You indicated that the sample men’s pullover, identified as style #UK-01, is made of 100 percent cotton varied rib knit fabric that measures 34 stitches per two centimeters counted in the horizontal direction. The garment has a rib knit crew neckline; narrow twill tape binding covering the rear neck seam; short sleeves with rib knit cuffs; and a straight, hemmed bottom.
You indicated that the pullover will be cut and assembled in Kenya. You also stated the shirt will consists of the following:
-varied rib fabric that will form the front and back panels and sleeves;
-1x1 rib knit fabric for the neckband and sleeve cuffs that is made in China;
-narrow twill tape binding for the neckband that will be made in China ;
-hangtags made in either China or Hong Kong;
-sewing thread from Oman and labels that will be made in the United Arab Emirates.
You stated that the entire cutting to shape process, assembly and packing will take place in Kenya. We presume that the product will be imported directly to the United States from Kenya. You did not provide the value of the twill tape binding for the neck, thread and labels.
ISSUE: Whether the subject garment is eligible for preference under the African Growth and Opportunity Act?
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. Kenya 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 January 18, 2001 (66 Fed. Reg. 7836).
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).
Classification of the Knitted Pullover
The instant pullover is classifiable in subheading 6110.20.2065, HTSUSA, which provides for sweaters, pullovers, waistcoats (vests) and similar articles, knitted or crocheted: of cotton: other: other: other: men’s or boys’. The duty rate is 16.9 percent ad valorem.
Eligibility under Subheading 9819.11.12, HTSUSA
Apparel articles wholly assembled in a sub-Saharan African lesser-developed beneficiary country (LDBC) and directly imported into the U.S. are entitled to duty free status, subject to certain restrictions. Such articles are entered under subheading 9819.11.12, HTSUS, which provides as follows:
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.
U.S. Note 2(d) lists Kenya as qualifying for designation as a lesser-developed beneficiary country. U.S. Note 2, Subchapter XIX, Chapter 98, HTSUS, provides for a quantitative restriction for apparel articles classified in subheading 9819.11.12, HTSUSA.
The specific issue Customs Border and Protection must resolve is whether the subject men’s knitted pullover which contains foreign-origin fabric, binding tape, sewing thread and labels is “wholly assembled, or knit to shape and wholly assembled” pursuant to subheading 9819.11.12, HTSUSA, in Kenya in order to qualify for AGOA treatment.
The varied rib knit fabric, the foreign-origin label, binding tape and the 1x1 rib knit fabric will be cut, sewn and assembled together with foreign-origin sewing thread to make the pullover in Kenya. AGOA eligibility requires that the apparel articles be "[w]holly assembled in" the lesser developed beneficiary sub-Saharan African country to be eligible for lesser-developed country benefits.
"Wholly assembled in," for the purpose of textile and apparel articles under the AGOA, "means that all 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 assembly process of the subject pullover meets the regulatory definition of "[w]holly assembled in." Subheading 9819.11.12, HTSUS, specifically provides that the country of origin of the fabric is not a consideration. Since the country of origin of the fabric is not relevant to the receipt of AGOA lesser developed beneficiary country preferential tariff and quota treatment, provided the other requirements of the Act are met, the fact that the fabric originates in China is not relevant.
Finding and Trimming
With regard to the label, the sewing thread, and narrow twill binding tape, we refer to Note 3, Subchapter XIX, Chapter 98, which provides, in relevant part, that:
[a]n article otherwise eligible for preferential treatment under any provision of [subchapter XIX] shall not be ineligible for such treatment because the article contains—
(i) findings or 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;
* * *
(b) For purposes of subdivision (a)(i) above, findings or trimmings eligible under such subdivision include sewing thread, hooks and eyes, snaps, buttons, "bow buds", decorative lace trim, elastic strips, and zippers (including zipper tapes) and label. Elastic strips are considered findings or trimmings only if they are each less than 2.54 cm in width and used in the production of brassieres. For purposes of articles described in subheading 9819.11.06 and 9819.11.30, sewing thread shall not be considered to be findings or trimmings.
While "findings and trimmings" for purposes of the AGOA was not specifically defined, the examples set forth above, such as zippers, buttons, decorative lace trim and label are indicative of the types of components which are considered to be within the purview of this provision. The exception for findings and trimmings 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. and sub-Saharan African beneficiary countries. "Findings" are generally accepted to be sewing essentials used in textile goods while "trimmings" have been defined as "decoration or ornamental parts." See M. Picken, The Fashion Dictionary (1973). For a foreign textile to fall within the terms of the exception, it must be either named in the examples of finding or trimmings, or be substantially similar to those articles. See HQ 562349 dated September 12, 2003.
With regard to what items constitute "findings" or "trimmings," Customs has previously held under subheading 9802.00.90, HTSUSA, that fabric items such as shoulder pads, sleeve headers, and velveteen collars are not "findings and trimmings." See Headquarters Ruling Letter (HQ) 559552, dated February 14, 1996, and HQ 558954, dated June 30, 1995. In HQ 559738, dated July 2, 1996, Customs held that a synthetic suede yoke and elbow patches are not "findings and trimmings" because they comprise a large surface area of the garment and serve more than decorative purposes. However, embroidered patch labels which indicate or symbolize the brand name and provide ornamentation have been held to be "findings and trimmings" for purposes of subheading 9802.00.90, HTSUSA (formerly known as the “Special Regime Program”) and the Special Access Program. See HQ 560520, dated September 22, 1997, and HQ 560726, dated December 12, 1997. Moreover, in HQ 956426, dated April 23, 2002, Customs held that a woven decorative patch sewn to the chest area of a sleeveless knit is a "trimming" for purposes of the CBTPA.
Upon examination of the submitted sample containing the foreign-origin label, the narrow twill binding tape and sewing thread, we find them to have an essential function in the formation of the subject pullover. The label serves to identify the manufacturer and list the care instructions of the article. The narrow twill binding tape provides comfort to the back of the wearer’s neck by covering the unfinished edges of the rear neck seam which may protrude as a result of the attachment between the back panel and the 1x1 rib knit neckband fabric. Although you did not provide the values for the label, the narrow twill binding tape and the sewing thread, we find them used in the subject pullover in the manner previously described to constitute “findings” for purposes of the AGOA and provided that their value does not exceed the 25 percent limitation of the “findings and trimmings” exception, they will not preclude the pullover from preferential treatment under the AGOA. See HQ 562349, supra. With regard to the sewing thread, it also qualifies as a finding (subject to the 25 percent valuation limit) because it is specifically provided for as such within Note 3(b), Subchapter XIX, Chapter 98, HTSUSA. Thus, it is our opinion that the subject garment which contains foreign-origin findings and fabric is eligible for AGOA preference under subheading 9819.11.12, HTSUSA.
HOLDING:
The subject men’s knitted pullover is eligible for AGOA preference under subheading 9819.11.12, HTSUSA. The use of the foreign origin labels, twill binding tape and thread will not render the pullover ineligible for preferential treatment under the AGOA provided the pullover otherwise meets the requirements for classification within an AGOA provision and provided the value of the foreign-origin labels, binding tape and thread used in the pullover combined does not exceed 25 percent of the total cost of the components of the garment.
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