CLA-2-64:RR:NC:TP:347 E88834
Ms. Sandra Tovar
CST, Inc.
120 B Commerce Circle
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 October 26, 1999, written on behalf of your client, Margarita International Trading, you requested a revision to NY E87140, issued to you in September, 1999, which discussed the application of U.S. Note 2(b) for footwear imported from Dominican Republic and produced according to four scenarios. Based upon your clarification of scenario #4, we are issuing this ruling as a revision to this scenario.
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.
We have consistently held that 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. Therefore, if the shoe uppers consist of foreign material that is cut-to-shape in the U.S., they will become products of the U.S.
In this scenario, both the soles and uppers are considered to be products of the U.S. since the soles are made from U.S. origin pellets and the uppers are cut-to-shape in the U.S. before being sent to Dominican Republic to be assembled to the soles. Providing that all other components used to make the footwear in Dominican Republic are of U.S. origin and all other requirements for U.S. Note 2(b), Subchapter II of Chapter 98, HTSUS are met, footwear in this scenario could be eligible for duty-free treatment. Since both “processing” and “assembly” procedures take place in Dominican Republic to make the footwear, classification at 9802.00.5010, HTS, free of duty would apply.
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