OT:RR:CTF:VS H211485 CMR
Mr. Won Tag Lee
Sam Sol, S.A.
KM 37.5 Carretera Interamericana
Santiago Sacatepequez
Guatemala, C.A.
RE: Revocation of New York Ruling Letter N198822, dated February 2, 2012; 19 U.S.C. § 1625(c); men’s wool suit-type jackets; DR-CAFTA; U.S. Note 21(c)
Dear Mr. Lee:
On February 2, 2012, Customs and Border Protection issued New York Ruling Letter (NY) N198822 to you in response to your submission of September 5, 2011, supplemented by letter dated December 20, 2011, requesting a ruling on the eligibility of certain men’s suit type jackets of wool for preferential tariff treatment under the Dominican Republic – Central America – United States Free Trade Agreement (DR-CAFTA). We have reviewed NY N198822 and have determined that an error was made in concluding that the wool jackets were not eligible for preferential tariff treatment under the DR-CAFTA. This decision revokes NY N198822 and sets forth the reasons the wool jackets do qualify.
FACTS:
You submitted a sample jacket with your ruling request. The jacket was described in NY N198822 as:
. . . a men’s suit-type jacket constructed from 100% worsted wool woven fabric. You state that the average fiber diameter of the wool yarn is 21.5 microns. The garment is constructed from six panels sewn together lengthwise and features a notched collar with lapels; a full front opening with two button closures; long sleeves with four buttons at the vented cuff; a full lining of 100% filament polyester woven twill fabric; a button hole on the lapel; a welt pocket on the left chest; two inset pockets with flaps below the waist; inner welt pockets on the right and left front panels; an inner welt pocket on the lower left front panel; two rear vents; and a straight bottom with curved front panels.
You indicated in your request that the suit-type jacket is classified in subheading 6203.31 of the Harmonized Tariff Schedule. NY N198822 confirmed that the garment is classified in subheading 6203.31.9020, Harmonized Tariff Schedule of the United States (HTSUS), which provides for men’s or boys’ suits, ensembles, suit-type jackets, blazers, . . .: suit-type jackets and blazers: of wool or fine animal hair: other: other.
With regard to the fabrics from which the jacket is made, you indicated that the outershell fabric is 100 percent worsted wool made in Mexico. The lining fabric is 100 percent polyester filament twill fabric. You indicate the filament yarn is extruded and formed in Korea. We assume the lining is also woven in Korea. The pocketing fabric is also 100 percent polyester filament, but is a tricot fabric. You indicate the filament yarn is extruded and formed in China. We assume the pocketing fabric is also knit in China. Finally, you indicate that the sewing thread used to assemble the jacket was formed and finished in Honduras.
In addition, you provided information regarding various subcomponents of the jacket and indicated their origin as outside of the territories of the DR-CAFTA parties. NY N198822 indicated that all fabric will be shipped to Guatemala where it will be cut and assembled into the finished jackets. The jackets will be shipped directly from Guatemala to the United States.
You specifically inquired about the eligibility of men’s suit-type jackets, represented by the sample, under the cumulation provision of the DR-CAFTA. In addition, you asked whether the visible lining, pocketing and sewing thread used in the garment may be from any country. In addition, you inquired about whether the garments would be subject to a quantitative limit.
ISSUES:
I. Whether the submitted sample wool jacket, consisting of an outershell of Mexican wool fabric, lining of Korean fabric, pocketing of Chinese fabric and sewing thread formed and finished in Honduras, qualifies for preferential tariff treatment under the DR-CAFTA cumulation provision?
II. Is the sample wool jacket subject to a quantitative limitation?
LAW AND ANALYSIS:
I. Preferential Tariff Treatment
The Dominican Republic--Central America--United States Free Trade Agreement (“DR-CAFTA”) was signed by the governments of Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States on August 5, 2004. The CAFTA-DR was approved by the U.S. Congress with the enactment on August 2, 2005, of the Dominican Republic-Central America-United States Free Trade
Agreement Implementation Act (the “Act”), Pub. L. 109-53, 119 Stat. 462 (19 U.S.C. 4001 et seq.).
GN 29 of the Harmonized Tariff Schedule of the United States (HTSUS) implements the DR-CAFTA. GN 29(b) sets forth the criteria for determining whether a good (other than agricultural goods provided for in GN 29(a)(ii)) is an originating good for purposes of the DR-CAFTA. GN 29(b) states:
For the purposes of this note, subject to the provisions of subdivisions (c), (d), (m) and (n) thereof, a good imported into the customs territory of the United States is eligible for treatment as an originating good under the terms of this note if –
(i) the good is a good wholly obtained or produced entirely in the territory of
one or more of the parties to the Agreement;
(ii) the good was produced entirely in the territory of one or more of the
parties to the Agreement, and –
each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (n) of this note; or
the good otherwise satisfies any applicable regional value content or other requirements specified in subdivision (n) of this note;
and the good satisfies all other applicable requirements of this note; or
(iii) the good was produced entirely in the territory of one or more of the
parties to the Agreement exclusively from originating materials.
GN 29(d)(vii) contains the “cumulation” provision of the DR-CAFTA and provides:
Notwithstanding other provisions of this note, for purposes of determining whether a good of chapter 62 of the tariff schedule is an originating good, materials used in the production of such a good that are produced in the territory of Canada or of Mexico and that would be originating under this note if produced in the territory of a party to the Agreement shall be considered as having been produced in the territory of a party to the Agreement, provided that the United States Trade Representative has determined in a notice published in the Federal Register that the requirements of Appendix 4.1-B of the Agreement specified in subdivision (a) of this note have been met with respect to Canada or Mexico, as the case may be, and has announced the effective date of U.S. note 21 to subchapter XXII of chapter 98 of the tariff schedule. Such goods shall be entered under subheading 9822.05.05 of the tariff schedule, subject to the terms of such U.S. note 21, on or after the effective date specified in such notice. [Compiler’s Note: effective with respect to materials from MX, 8/15/08; reference to subheading 9822.05.05 is obsolete and current provisions appear to be 9822.05.11 and 9822.05.13.]
“Notice of effective dates for CAFTA-DR amendment and rule of origin for woven apparel,” issued by the Office of the United States Trade Representative, appeared in the Federal Register on August 7, 2008 (73 Fed. Reg. 46057). The notice announced the effective date for the cumulation rule which allows, “subject to certain conditions, for Mexican or Canadian inputs to be treated as though they originated in a CAFTA-DR country for purposes of determining whether certain woven apparel imported into the United States qualifies for duty-free treatment under the agreement.” See 73 Fed. Reg. 46058. The notice announced that this cumulation rule would enter into force with respect to woven apparel containing materials produced in Mexico on August 15, 2008.
Therefore, in determining whether the men’s suit-type wool jackets at issue qualify for preferential tariff treatment under the DR-CAFTA, the worsted wool fabric produced in Mexico may be treated as if it were a fabric produced in the territory of a party to the DR-CAFTA in accordance with GN 29(d)(vii).
As the jackets at issue are not wholly obtained or produced entirely in the territory of one or more of the DR-CAFTA parties, the jackets cannot qualify for preferential tariff treatment under GN 29(b)(i). Therefore, we must look to the tariff shift rule provided in GN 29(n) for the wool jackets to determine whether the garments qualify for preferential tariff treatment under the DR-CAFTA.
Chapter 62 of GN 29(n) provides certain relevant chapter notes, as well as the rule specific to the jackets at issue. The tariff shift rule specific to the jackets at issue is Rule 12, Chapter 62, GN 29(n), which provides:
A change to subheadings 6203.31 through 6203.33 from any other chapter, except from headings 5111 through 5113, 5204 through 5212, 5310 through 5311, chapter 54, headings 5508 through 5516, 5801 through 5802 or 6001 through 6006, provided that:
(A) the good is cut or knit to shape, or both, and sewn or otherwise assembled in the territory of one or more of the parties to the Agreement, and
(B) any visible lining material contained in the apparel article must satisfy the requirements of chapter rule 1 to chapter 62.
The Chapter 62, GN 29(n), rules provide, in relevant part:
Chapter rule 1: Except for fabrics classified in tariff item 5408.22.10, 5408.23.11, 5408.23.21 or 5408.24.10, the fabrics identified in the following headings and subheadings, when used as visible lining material in certain men's and women's suits, suit-type jackets, skirts, overcoats, carcoats, anoraks, windbreakers and similar articles, other than men’s and boys’ . . . suit-type jackets and blazers, . . . of wool fabric, of subheadings 6203.11, 6203.31, . . ., provided that such goods are not made of carded wool fabric or made from wool yarn having an average fiber diameter of less than or equal to 18.5 microns, must be both formed from yarn and finished in the territory of one or more of the parties to the Agreement:
5111 through 5112, 5208.31 through 5208.59, 5209.31 through 5209.59, 5210.31 through 5210.59, 5211.31 through 5211.59, 5212.13 through 5212.15, 5212.23 through 5212.25, 5407.42 through 5407.44, 5407.52 through 5407.54, 5407.61, 5407.72 through 5407.74, 5407.82 through 5407.84, 5407.92 through 5407.94, 5408.22 through 5408.24, 5408.32 through 5408.34, 5512.19, 5512.29, 5512.99, 5513.21 through 5513.49, 5514.21 through 5515.99, 5516.12 through 5516.14, 5516.22 through 5516.24, 5516.32 through 5516.34, 5516.42 through 5516.44, 5516.92 through 5516.94, 6001.10, 6001.92, 6005.31 through 6005.44, or 6006.10 through 6006.44.
Chapter rule 2: For purposes of determining whether a good of this chapter is originating, the rule applicable to that good shall only apply to the component that determines the tariff classification of the good and such component must satisfy the tariff change requirements set out in the rule for that good. If the rule requires that the good must also satisfy the tariff change requirements for visible
lining fabrics listed in chapter rule 1, such requirement shall only apply to the visible lining fabric in the main body of the garment, excluding sleeves, which covers the largest surface area, and shall not apply to removable linings.
Chapter rule 3: Notwithstanding chapter rule 2 to this chapter, a good of this chapter, other than—
* * *
(b) men’s and boys’ . . . suit-type jackets and blazers, . . . of wool fabric, of subheadings 6203.11, 6203.31, . . ., provided that such goods are not made of carded wool fabric or made from wool yarn having an average fiber diameter of less than or equal to 18.5 microns, containing fabrics of heading 6002 or subheading 5806.20 shall be considered originating only if such fabrics are both formed from yarn and finished in the territory of one or more of the parties to the Agreement.
Chapter rule 4. Notwithstanding chapter rule 2, a good of this chapter, other than—
* * *
(b) men’s and boys’ . . . suit-type jackets and blazers, . . . of wool fabric, of subheadings 6203.11, 6203.31, . . ., provided that such goods are not made of carded wool fabric or made from wool yarn having an average fiber diameter of less than or equal to 18.5 microns,
containing sewing thread of heading 5204, 5401 or 5508 shall be considered originating only if such sewing thread is both formed and finished in the territory of one or more of the parties to the Agreement.
Chapter Rule 5. Notwithstanding chapter rule 2, a good of this chapter, other than—
* * *
(b) men’s and boys’ . . . suit-type jackets and blazers, . . ., of wool fabric, of subheadings 6203.11, 6203.31, . . ., provided that such goods are not made of carded wool fabric or made from wool yarn having an average fiber diameter of less than or equal to 18.5 microns,
that contains a pocket or pockets shall be considered originating only if the pocket bag fabric has been formed and finished in the territory of one or more of the parties to the Agreement from yarn wholly formed in the territory of one or more of the parties to the Agreement.
The wool jackets at issue are classified in subheading 6203.31, HTSUS. The wool fabric which forms the outershell of the jackets is made of worsted wool. This means that the jackets are not made of carded wool fabric. Worsted wool is further processed, i.e., carded and combed. Further, you indicated that the average fiber diameter of the wool yarn is 21.5 microns. Thus, since the wool jackets are classified in subheading 6203.31 and the wool outershell fabric of the jackets is not carded wool fabric and has an average fiber diameter greater than 18.5 microns, Chapter Rules 1, 3, 4, and 5 do not apply to the wool jackets at issue.
Therefore, in considering the applicable tariff shift rule, Rule 12, Chapter 62, GN 29(n), we only need to consider Chapter Rule 2 which limits the application of the tariff shift rule to the component that determines the tariff classification of the good. In this case, that component, i.e., the outershell, consists of the Mexican worsted wool fabric which is treated as originating, i.e., as if it were a fabric produced in the territory of a party to the DR-CAFTA, in accordance with GN 29(d)(vii). The jackets are cut and assembled in Guatemala, a party to the DR-CAFTA, and the visible lining rule (Chapter Rule 1) does not apply.
II. Quantitative Limitation
Based on the above analysis, the wool jackets at issue qualify for preferential tariff treatment under the DR-CAFTA. However, there may be a quantitative limit on the amount of merchandise eligible for this preferential tariff treatment.
U.S. Note 21, Subchapter XXII, Chapter 98, provides, in relevant part:
(a) For purposes of heading 9822.05.11 and 9822.05.13, the treatment provided for in general note 29(d)(vii) to the tariff schedule shall be limited to goods imported into the territory of the United States from a party to the Agreement as defined in general note 29(a) in aggregate quantities not to exceed the overall limit set forth in subdivisions (b) of this note, except as provided in subdivision (c) of this note. . . .
* * *
(c) The limit of subdivision (b) of this note shall not apply to the following goods made from wool fabric: men’s and boys’ . . . suit-type jackets and blazers . . ., provided that such goods are not make of carded wool fabric or made from wool yarn having an average fiber diameter of not over 18.5 microns.
U.S. Note 21(c) exempts the wool jackets at issue from the quantitative limits of U.S. Note 21(b) as the jackets are not of carded wool fabric nor are they made from wool yarn having an average fiber diameter of 18.5 microns or less.
HOLDING:
The submitted sample wool jacket, consisting of an outershell of Mexican wool fabric, lining of Korean fabric, pocketing of Chinese fabric and sewing thread formed and finished in Honduras, qualifies for preferential tariff treatment by application of the DR-CAFTA cumulation provision at GN 29(d)(vii). The visible lining, pocketing fabric and sewing thread used in the wool jackets at issue may be from any country. The subject wool jackets are not subject to any quantitative limitations.
The submitted wool jacket is classified in heading 9822.05.13, HTSUS, which provides for: “Apparel goods of chapter 62 for which the treatment provided in U.S. note 21 to this subchapter is appropriate: Goods specified in U.S. note 21(c) to this
subchapter.” The applicable duty rate is Free.
Pursuant to 19 U.S.C. § 1625(c), a proposed interpretive ruling or decision which would modify or revoke a prior interpretive ruling or decision which has been in effect for at least 60 days must be published in the Customs Bulletin. NY N198822 was issued on February 2, 2012. As we are revoking NY N198822 by issuance of our decision herein, and as NY N198822 has not been in effect for 60 days, we do not need to publish notice of our intent to revoke the prior decision. Our revocation of NY N198822 is effective on the date of this ruling.
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 filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division