CLA 2-RR:NC:N3:351 J86878
Jason M. Waite
Alston & Bird LLP
601 Pennsylvania Avenue, N.W.
North Building, 10th Floor
Washington, D.C. 20004-2601
RE: Classification and country of origin determination for plied yarn; 19 CFR 102.21(c)(2); tariff shift; 9802.00.80; eligibility of garments made of fabric formed from this yarn under the AGOA.
Dear Mr. Waite:
This is in reply to your letter dated July 23, 2003, on behalf of your client, Buhler Quality Yarns Corp., requesting a determination of the classification and country of origin for plied yarn and its eligibility under subheading 9802.00.80, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), as well as the eligibility under the AGOA of certain garments made from fabric woven from the yarn.
FACTS:
The subject merchandise consists of 100% cotton two-ply 80/2 yarn and certain garments made from that yarn.
The manufacturing operations for the yarn are as follows: A single cotton yarn is spun in the United States in Jefferson, Georgia, from fibers of U.S. origin. It is ring spun and less than 83.33 decitex, measuring 135 metric number. This single yarn is shipped to Malaysia where two single yarns are plied together to form a plied yarn, which is rewound onto cones. You have submitted a cone of the single yarn and a cone of the plied yarn.
The garments in question are described as men’s or boys’ woven dress button down shirts which you state are classified under the HTS provision for men’s or boys’ woven cotton dress shirts, of fabric that does not contain two or more colors in the warp and/or the filling. For purposes of an AGOA determination, we will assume that this classification is accurate.
The shirts will be cut and assembled in an AGOA beneficiary country from fabric that is woven in an AGOA beneficiary country using the above-mentioned yarn. You state that either the yarn will be dyed in an AGOA beneficiary country before weaving, or that the fabric will be dyed in an AGOA beneficiary country after weaving. The garments will then be shipped directly to the United States. We assume, for purposes of classification, that these garments are sized in numeric fashion.
ISSUES:
What are the classification and country of origin of the two-ply yarn? Is the yarn eligible for a partial duty exemption under subheading 9802.00.80, HTS? Is the apparel, manufactured as described, eligible for preferential treatment under the AGOA?
CLASSIFICATION:
The applicable subheading for the ring spun, combed 100% cotton plied 80/2 yarn, with a decitex of less than 83.33 per single yarn and a metric number of 135 will be 5205.48.0020, HTS, which provides for Cotton yarn (other than sewing thread), containing 85% or more by weight of cotton, not put up for retail sale: Multiple (folded) or cabled yarn, of combed fibers: Measuring per single yarn less than 83.33 decitex (exceeding 120 metric number): Ring spun. The rate of duty will be 12 percent ad valorem.
Spinning the single yarns of U.S. origin into a two-ply yarn in Malaysia is an allowable assembly operation for purposes of subheading 9802.00.80, HTS. Thus, if the two-ply yarn is imported into the U.S., it would be eligible for a partial duty exemption under subheading 9802.00.80, HTS, which provides for articles assembled abroad in whole or in part of fabricated components that are the product of the United States. This provision allows for a partial duty exemption for American components assembled within an imported product.
The applicable subheading for the men’s shirts will be 6205.20.2025, HTS, which provides for Men’s or boys’ shirts: Of cotton: Other: Dress: Other: Men’s. The applicable subheading for the boys’ shirts will be 6205.20.2030, HTS, which provides for Men’s or boys’ shirts: Of cotton: Other: Dress: Other: Boys’. The general rate of duty will be 19.8 percent ad valorem.
COUNTRY OF ORIGIN - LAW AND ANALYSIS:
Section 334 of the Uruguay Round Agreements Act (codified at 19 U.S.C. 3592), enacted on December 8, 1994, provided rules of origin for textiles and apparel entered, or withdrawn from warehouse for consumption, on and after July 1, 1996. Section 102.21, Customs Regulations (19 C.F.R. 102.21), published September 5, 1995, in the Federal Register, implements Section 334 (60 FR 46188). Section 334 of the URAA was amended by section 405 of the Trade and Development Act of 2000, enacted on May 18, 2000, and accordingly, Section 102.21 was amended (68 Fed. Reg. 8711). Thus, the country of origin of a textile or apparel product shall be determined by the sequential application of the general rules set forth in paragraphs (c)(1) through (5) of Section 102.21.
Paragraph (c)(1) states that “The country of origin of a textile or apparel product is the single country, territory, or insular possession in which the good was wholly obtained or produced.” As the subject merchandise is not wholly obtained or produced in a single country, territory or insular possession, paragraph (c)(1) of Section 102.21 is inapplicable.
Paragraph (c)(2) states that “Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) of this Section, the country of origin of the good is the single country, territory, or insular possession in which each of the foreign materials incorporated in that good underwent an applicable change in tariff classification, and/or met any other requirement, specified for the good in paragraph (e) of this section:”
Paragraph (e) in pertinent part states that “The following rules shall apply for purposes of determining the country of origin of a textile or apparel product under paragraph (c)(2) of this section”:
HTSUS Tariff shift and/or other requirements
5204–5207 A change to heading 5204 through 5207 from any heading outside that group, provided that the change is the result of a spinning process.
As the single yarn from which the plied yarn is made is spun in a single country, that is, the U.S., from fibers which are classified outside the group (headings 5204-5207), as per the terms of the tariff shift requirement, country of origin for marking purposes is conferred in the United States.
However, there is an exception for textile products from the United States that are sent abroad for processing. Section 12.130(c), Customs Regulations, provides that any product of the United States that is returned after having been advanced in value or improved in condition abroad, or assembled abroad, shall be a foreign article.
Section 12.130, which remains in effect, was originally intended to be used to determine the country of origin of textiles and textile products for quota/visa requirements. In T.D. 90-17, issued February 23, 1990, Customs announced a change in practice and position. This change resulted in Customs using section 12.130 for quota, duty, and marking purposes when making country of origin determinations for textile goods. In accordance with T.D. 90-17 and section 12.130(c), the country of origin of the two-ply yarn, for quota, marking, and duty purposes, would be Malaysia. However, this position has been modified. On July 11, 2000, Customs published T.D. 00-44 in the Federal Register (65 FR 42634), stating that effective October 10, 2000, Customs will no longer apply 19 CFR 12.130(c) for purposes of country of origin marking. Therefore, in accordance with T.D. 00-44, section 12.130(c) and section 102.21(c)(2), the country of origin of the two-ply yarn will be the United States. Section 12.130(c) remains in effect for duty and quota purposes and the yarn is subject to the general rate of duty noted previously.
The two-ply cotton yarn falls within textile category designation 301. The designated textile and apparel categories and their quota and visa status are the result of international agreements that are subject to frequent renegotiations and changes. To obtain the most current information, we suggest that you check, close to the time of shipment, the Textile Status Report for Absolute Quotas, which is available at our Web site at www.cbp.gov. In addition, the designated textile and apparel categories may be subdivided into parts. If so, visa and quota requirements applicable to the subject merchandise may be affected and should also be verified at the time of shipment.
MARKING:
If a good is determined to be an article of U.S. origin, it is not subject to the country of origin marking requirements of 19 U.S.C. §1304. Whether an article may be marked with the phrase “Made in the USA” or similar words denoting U.S. origin, is an issue under the authority of the Federal Trade Commission (FTC). We suggest that you contact the FTC Division of Enforcement, 6th and Pennsylvania Avenue, N.W., Washington, D.C. 20508 on the propriety of proposed markings indicating that an article is made in the U.S.
AGOA ELIGIBILITY:
The United States agency responsible for initially interpreting and applying the Customs laws addressing the importation of goods, including the United States Code, the Code of Federal Regulations and the Harmonized Tariff Schedule of the United States Annotated (HTSUSA), is the Bureau of Customs and Border Protection. The federal law subject to interpretation and application in this ruling letter is the African Growth and Opportunity Act. See 19 U.S.C. 3701 et seq. The AGOA was initially enacted as Title I of the Trade and Development Act of 2000, Pub. L. 106-200, 114 Stat. 251 (May 18, 2000) to promote “increased trade and investment between the United States and sub-Saharan Africa.” 19 U.S.C. 3702 (1). The Act was amended in the Trade Act of 2002, Pub. L. 107-210, 116 Stat. 933 (Aug. 6, 2002).
The AGOA provides for the extension of the Generalized System of Preferences (GSP) duty-free treatment to non-textile articles normally excluded from GSP duty-free treatment and for preferential treatment of certain textile and apparel articles described in the Act. The textile and apparel provisions of the AGOA became effective on October 1, 2000, and remain in effect until September 30, 2008. The Customs Service issued Interim Regulations implementing the AGOA that became effective on October 1, 2001. See 19 C.F.R. 10.211 et seq.; See also T.D. 00-67; 65 Fed. Reg. 59668 (2000).
Preferential treatment of certain textile and apparel articles is available under the AGOA for articles imported directly from: (1) A country that has been designated by the President as a “beneficiary sub-Saharan African country;” and (2) That has satisfied the U.S. Trade Representative that it has met the requirements of 19 U.S.C. 3722 (a) and (b), having adopted protections against transshipment.
For purposes of this ruling we assume that the country in which the shirts are manufactured is a country that has met the above requirements.
Subheading 9819.11.09, HTSUS, provides as follows:
Apparel articles wholly assembled in one or more such countries from fabric wholly formed in one or more such countries from yarn originating in either the United States or one or more such countries (including fabrics not formed from yarns, if such fabrics are classifiable under heading 5602 or 5603 and are wholly formed and cut in one or more such countries), subject to the provisions of U.S. Note 2 to this subchapter.
In this case, the yarn originates in the United States, the fabric is wholly formed and cut in an AGOA beneficiary country, and the apparel is wholly assembled in an AGOA beneficiary country. Accordingly, the garments would be entitled to be classified in subheading 9819.11.09, HTS, subject to the quantitative limits set forth in U.S. Note 2, Subchapter XIX, Chapter 98, HTS. The garments are eligible for preferential treatment under the AGOA subject to the quantitative limitations and a valid visa.
HOLDING:
The two-ply yarn is classified in subheading 5205.48.0020, HTS, with a partial duty exemption under subheading 9802.00.80, HTS, if imported into the United States.
Pursuant to 19 CFR 102.21(c)(2), for purposes of subsequent eligibility under the AGOA of wearing apparel made from fabric woven in an AGOA beneficiary country from the two-ply yarn, the country of origin of the two-ply yarn will be the U.S. However, if the two-ply yarn is imported into the U.S., the country of origin for duty assessment and quota/visa purposes will be Malaysia. Based upon international textile trade agreements products of Malaysia are subject to quota and the requirement of a visa.
The country of origin of the twisted two-ply yarn for marking purposes is the United States. No marking will be required on the yarn, pursuant to 19 U.S.C. 1304. However, the Federal Trade Commission should be consulted for specific labeling requirements under its jurisdiction.
Based on the information provided, the men’s and boys’ shirts manufactured as described in this case are eligible for duty-free treatment under subheading 9819.11.09, HTS, provided they are imported directly into the Customs territory of the U.S. from a beneficiary country.
The holding set forth above applies only to the specific factual situation and merchandise identified in the ruling request. This position is clearly set forth in section 19 CFR 177.9(b)(1). This section states that a ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177). Should it be subsequently determined that the information furnished is not complete and does not comply with 19 CFR 177.9(b)(1), the ruling will be subject to modification or revocation. In the event there is a change in the facts previously furnished, this may affect the determination of country of origin. Accordingly, if there is any change in the facts submitted to Customs, it is recommended that a new ruling request be submitted in accordance with 19 CFR 177.2.
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 Mitchel Bayer at 646-733-3102.
Sincerely,
Robert B. Swierupski
Director,
National Commodity
Specialist Division