CLA-2-64:RR:NC:TP:347 E87140
Ms. Sandra Tovar
CST, Inc.
P.O. Box 1197
Fayetteville, GA 30214
RE: The tariff classification of footwear from Dominican Republic for duty-free treatment under U.S. Note 2(b), Subchapter II, Chapter 98, HTSUS.
Dear Ms. Tovar:
In your letter dated August 27, 1999, written on behalf of your client, Margarita International Trading, Inc., you requested a tariff classification ruling for footwear imported from Dominican Republic produced according to four scenarios described below. You ask whether these scenarios would be eligible for U.S. Note 2(b).
Scenario #1: Foreign materials, imported into the U.S. with duties paid, cut in Hialeah, FL., or some other fabric made up of natural or manmade fibers. Other foreign materials may consist of polypropelene, PVC, EVA, TPR and PU. The foreign materials may be used in the upper, lining, sock/inner sole, or other component or combination of several of these. In some cases, the foreign materials will be laminated to foam, then cut-to-shape in the U.S. In all cases described above, the foreign material would be cut-to-shape in the U.S., exported to Dominican Republic for assembly, and shipped directly from DR to the U.S.
Scenario #2: Foreign fabric would be imported into the U.S. with duties being paid. The foreign fabric would be laminated to foam that was produced in the U.S. The rolls of laminated foam would be exported to Dominican Republic. In DR, the laminated fabric would be cut-to-shape and used as uppers, linings, sock/inner soles, or a combination of these parts.
Scenario #3: Foreign pigsplit and leather would be imported into the United States with duties being paid. The leather would be cut-to-shape in the U.S. and exported to DR. The leather may be used as an upper, lining, or sole. The cut pieces would be assembled in DR into slippers or other footwear and returned to the U.S.
Scenario #4: U.S. origin pellets of PVC or TPR would be shipped to Dominican Republic. In Dominican Republic, the pellets would be melted and used in an injection molding machine to produce soles. The shoe upper would be cut-to-shape in the U.S. and assembled to the sole in DR.
For purposes of receiving preferential tariff treatment under the Caribbean Basin Initiative, (HTS), Chapter 98, Subchapter II, U.S. Note 2(b) states that no article (except a textile article, apparel article, or petroleum, or any product derived from petroleum, provided for in heading 2709 or 2710) may be treated as a foreign article, or as subject to duty, if—
(i) the article is—
(A) assembled or processed in whole of fabricated components that are a product of the United States, or
(B) processed in whole of ingredients (other than water) that are a product of the United
States, in a beneficiary country, and
(ii) neither the fabricated components, materials or ingredients, after exportation from the United States, nor the article itself, before importation into the United States, enters the commerce of any foreign country other than a beneficiary country.
Customs has previously determined that footwear is not an article of apparel.
Based upon the information which you have provided for scenario #1, we have consistently held that such operations such as the “cutting-to-shape” of foreign materials in the United States, constitute a substantial transformation if the cutting creates defined patterns or shapes suitable for use as components in an assembly operation. In this regard, we find that the foreign fabric, which is cut-to-shape in the U.S., is substantially transformed into a “product of” the U.S. Providing that all the components used to make the footwear in DR are of U.S. origin and all other requirements for U.S. Note 2 (b), Subchapter II of Chapter 98, HTSUS are met, footwear discussed in this scenario could be eligible for duty-free treatment under U.S. note 2(b). You have not described what type of “assembly” operations will be performed to create the footwear in DR, but providing that these operations are, in fact, considered “assembly” procedures, the footwear would be classified at 9802.00.8040, Harmonized Tariff Schedule of the United States (HTS), free of duty. You did not provide us with enough information to assign a commodity-specific tariff number to your merchandise.
In scenario #2, the foreign fabric is laminated to foam of U.S. origin and sent to DR in rolls of laminated foam where it is then cut to shape. We do not consider the fabric in this scenario to be a “product of” the U.S. The foreign fabric will be substantially transformed in DR when it is cut to shape and processed there. Therefore, this merchandise is not eligible for duty-free treatment under U.S. Note 2(b), Subchapter II, of Chapter 98, HTS.
The foreign pigsplit and leather in scenario #3, once cut to shape in the U.S., will be “substantially transformed” into products of the U.S. Providing that all the other components used to make the footwear in DR are of U.S. origin, and all other requirements for U.S. note 2(b) are met, the completed footwear could be eligible for duty-free treatment. In addition, if the processes used to make the footwear in DR encompass “assembly” type procedures, the footwear would be classified at 9802.00.8040, HTS, free of duty. You did not provide us with enough information to assign a commodity-specific HTS classification number to your merchandise.
In scenario #4, the footwear would not be eligible for U.S. Note 2(b) since the U.S. origin pellets of PVC or TPR are “substantially transformed” into a product of DR once the pellets are melted and used in an injection molding machine there to produce soles.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Richard Foley at 212-637-7089.
Sincerely,
Robert B. Swierupski
Director,
National Commodity
Specialist Division