CLA-2 OT: RR:CTF:TCM H028164 KSH
Lynne W. Wendt, Esq.
Wendt & Temples, LLC
Westpark Pointe, Suite 200
401 Westpark Drive
Peachtree City, Georgia 303245
Re: Request for Reconsideration; Caribbean Basin Trade Partnership Act; scrub pants with narrow woven fabric belt; findings or trimmings of foreign origin
Dear Ms. Wendt:
This letter is in response to your request of March 25, 2008, on behalf of your client Encompass Group, LLC, for reconsideration of Headquarters Ruling Letter (HQ) HQ H004679, dated November 7, 2007, as it pertains to the eligibility of scrub pants containing narrow woven fabric belts of Canadian-origin for preferential treatment under the Caribbean Basin Trade Partnership Act (CBTPA). We have also considered arguments you made in a telephone conference with a member of my staff on December 3, 2009 and your supplemental submission dated December 21, 2009.
FACTS:
The merchandise at issue consists of reversible scrub pants made of woven fabric that features two back pockets; one on the inside of the garment and one on the outside. The garments feature hemmed leg bottoms and tunnel waistbands through which a narrow woven fabric is threaded. The narrow woven fabric is approximately 5/8 of an inch wide and is sewn to the pants at the back. It serves to tighten the pants by pulling the narrow fabric and tying it. The narrow woven fabric is a 100 percent polyester woven twill tape that is manufactured in Canada of U.S. origin yarns.
The twill tape is shipped to Jamaica, where the pants are manufactured, in boxes containing 500 yards to a box. In Jamaica, the twill tape is spooled out, cut to length and tipped (by the application of heat to the cutting rod), inserted into the waistband of the pants during the pant manufacturing operation and secured thereto.
ISSUE:
Whether the scrub pants with the narrow woven fabric belt threaded through the waistband eligible for preferential treatment under the CBTPA?
LAW AND ANALYSIS:
The CBTPA provides certain specified trade benefits for countries of the Caribbean region. The Act extends North American Free Trade Agreement (NAFTA) duty treatment standards to non-textile articles that previously were ineligible for preferential treatment under the Caribbean Basin Economic Recovery Act (CBERA) and provides for duty- and quota-free treatment for certain textile and apparel articles which meet the requirements set forth in Section 211 of the CBTPA (amended 213(b) of the CBERA, codified at 19 U.S.C. 2703(b)).
Beneficiary countries are designated by the President of the United States after having met eligibility requirements set forth in the CBPTA. Eligibility for benefits under the CBTPA is contingent on designation as a beneficiary country by the President of the United States and a determination 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 implement and follow, or is making substantial progress toward implementing and following, certain customs procedures, drawn from Chapter 5 of the NAFTA, that allow the United States to verify the origin of products. Once both these designations have occurred, a beneficiary country is entitled to preferential treatment provided for by the CBTPA.
Jamaica was designated a beneficiary country by Presidential Proclamation 7351 of October 2, 2000, published in the Federal Register on October 4, 2000 (65 Federal Register 59329). It was determined to have met the second criteria concerning customs procedures by the USTR and thus eligible for benefits under the CBTPA effective October 2, 2000, 65 Federal Register 60236 (October 10, 2000).
The provisions implementing the textile provisions of the CBTPA in the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) are contained, for the most part, in subchapter XX, Chapter 98, HTSUS (two provisions may be found in subheading 9802.00.80, HTSUS). The regulations pertinent to the textile provisions of the CBTPA may be found at §§ 10.221 through 10.228 of the Customs and Border Protection (CBP) Regulations (19 CFR 10.221 through 10.228).
Note 3, Subchapter XX, Chapter 98, provides, in pertinent part: (a) 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 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; or
* * *
(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, zippers (including zipper tapes) and labels and other similar products. 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 9820.11.06, 9820.11.18, and 9820.11.33, sewing thread shall not be considered to be findings or trimmings.
In your request for reconsideration, you argue that the tape in the subject merchandise should be distinguished from accessory belts or drawstrings that do not provide the only means of fastening and closure; the tape may be considered a trimming and; the tape and scrub pants should be considered a retail set and not a composite good.
In support of your argument that the tape should be considered a finding, you contend that the tape provides the only means of fastening and is similar to the named findings listed in Note 3, Subchapter XX, Chapter 98 insofar as it provides the same kind of closure at the waist as does a button or a snap and provides the sole means of closure. Consequently, you state that it is distinguishable from HQ 559794, dated June 3, 1996 (textile drawstring cord was not a finding and jackets incorporating the textile drawstring cord (a fabric component) would be excluded from subheading 9802.00.90, HTSUSA, treatment upon return to the United States); HQ 562349, dated September 12, 2003 (finding that a braided fabric belt was a fabric component and not a finding or trimming under the AGOA); HQ 966585, dated September 24, 2003 (fabric drawstrings are fabric components under the AGOA) and; HQ 966897, dated March 29, 2004 (polyurethane belt or self-fabric belt not finding or trimmings under AGOA).
If the tape is determined not to be a finding, you argue it must be considered a trimming because it performs a decorative function analogous to ornamental labels, patches and ribbon tapes.
At the outset, we note the exception for findings and trimmings was 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 CBTPA beneficiary countries. 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).
The tape provides a minimal styling element serving more than just a decorative purpose and whose principal purpose is functional rather than decorative. CBP's position with regard to fabric drawstrings and whether such drawstrings are findings or trimmings dates back to at least June 1996. See HQ 559794, dated June 3, 1996. In light of the substantial precedent, the tape is neither a finding nor a trimming.
Irrespective of our decision regarding whether the tape is a finding or trimming, you believe that the tape with the scrub pants constitute a set put up for retail sale and are not composite goods.
GRI 3 states, in pertinent part, the following: (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable. The Harmonized Commodity Description and Coding System Explanatory
Notes (EN), constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the EN provide a commentary on the scope of each heading of the HTSUSA and are generally indicative of the proper interpretation of the headings. It is CBP’s practice to follow, whenever possible, the terms of the ENs when interpreting the HTSUSA. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
Explanatory Notes (IX) to GRI 3(b) define composite goods made up of different components as:
not only those in which the components are attached to each other to form a practically inseparable whole but also those with separable components, provided these components are adapted one to the other and are mutually
complementary and that together they form a whole which would not normally be offered for sale in separate parts.
For goods put up in sets for retail sale, the ENs define sets as goods
which:
consist of at least two different articles which are, prima facie, classifiable in different headings; (b) consist of products or articles put up together to meet a particular need or carry out a specific activity; and (c) are put up in a manner suitable for sale directly to users without repacking.
In this instance, the subject scrub pants and belt are separable components that will be made in different colors and different styles of cotton fabric. However, the belt is oversized in relation to the circumference of the waist of the scrub pants and could not easily be sold separately to match an indeterminable number of clothing articles. Though the tape may be used in other applications (i.e, industrial, fashion or medical applications), the finished belt, that has been sized to fit the pants, when sewn into the pants, are adapted to one another, are mutually complimentary and form a whole that would not normally be offered for sale in separate parts. As such, the scrub pants and belt are a composite good.
HOLDING:
The submitted scrub pants which are otherwise eligible for preferential treatment under the CBTPA are ineligible for such preferential treatment due to the presence of the Canadian origin fabric drawstring belt.
EFFECT ON OTHER RULINGS:
HQ H004679, dated November 7, 2007, is affirmed.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division