CLA-2-61:OT:RR:E:NC:TAB:354
Ms. Matilde Gutierrez
Vanity Fair Brands, LP
4600 W. Military Hwy.
Suite 700
McAllen, TX 78503
RE: The tariff classification and status under the Dominican Republic-Central America-United States Free Trade Agreement (DR-CAFTA), of a panty from Honduras.
Dear Ms. Gutierrez:
In your letter dated October 25, 2007, you requested a ruling on the status of an underwear panty from Honduras under the DR-CAFTA and applicability of subheading 9822.05.10.
Style #13196 is a woman’s panty that will be cut and assembled in Honduras with man-made fabric (s# 00457) knit in the U.S. using Mexican nylon (76%) and U.S. spandex yarns (24%) and is classified under heading 6004. You state that the Mexican nylon yarns used in fabric #00457 is classified under subheading 5402.41.90. Fabric #00457 is the fabric that makes up the base fabric used in the construction of the panty. You state that the panty will be sewn using U.S. origin thread; you have not stated its fiber content, however, for the purposes of this ruling we will assume the threads are extruded or spun in the U.S. Other U.S. components include a gusset crotch lining that you state is made of U.S. cotton and classified under subheading 6005.22; for the purposes of this ruling we will assume the lining is wholly formed in the U.S. Foreign materials used in this panty include the leg elastic (VF22010) that originates in Mexico made of 74% Mexican nylon and 26% U.S. spandex and classified under subheading 5806.20, and waist elastic (VF20199) that originates in China made of 88% nylon and 12% lycra and is also classified under subheading 5806.20.
The applicable tariff provision for the panty will be 6108.22.9020, Harmonized Tariff Schedule of the United States (HTSUS), which provides for women’s or girls’ slips, briefs, panties, nightdresses, pajamas, negligees, bathrobes, dressing gowns and similar articles, knitted or crocheted: briefs and panties: of man-made fibers: other, women’s. The general rate of duty will be 15.6% ad valorem.
The panty falls within textile category 652. With the exception of certain products of China, quota/visa requirements are no longer applicable for merchandise which is the product of World Trade Organization (WTO) member countries. Quota and visa requirements are the result of international agreements that are subject to frequent renegotiations and changes. To obtain the most current information on quota and visa requirements applicable to this merchandise, we suggest you check, close to the time of shipment, the “Textile Status Report for Absolute Quotas” which is available on our web site at www.cbp.gov. For current information regarding possible textile safeguard actions on goods from China and related issues, we refer you to the web site of the Office of Textiles and Apparel of the Department of Commerce at otexa.ita.doc.gov.
General Note 29, HTSUS, sets forth the criteria for determining whether a good is originating under the DR-CAFTA. General Note 29(b), HTSUS, (19 U.S.C. § 1202) states, in pertinent part, that
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—
(A) 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
(B) 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.
The merchandise does not qualify for preferential treatment under DR-CAFTA because (a) it will not be wholly obtained or produced entirely in the territory of one or more DR-CAFTA countries; (b) one or more of the non-originating materials used in the production of the goods will not undergo the change in tariff classification required by General Note 29(n)/61.29, HTSUS; and (c) it will not be produced entirely in the territory of one or more of the DR-CAFTA parties exclusively from originating materials.
In addition, General Note 29(n), Chapter 61, chapter rule 3 is not satisfied, which states that: Notwithstanding chapter rule 2 to this chapter, a good of this chapter containing fabrics of subheading 5806.20 or heading 6002 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 note 3 does not require that this fabric provide the essential character, but that the garment “contains” this fabric. Because the waist and leg elastic is classified in subheading 5806.20, it does not meet the tariff change requirements.
The panty, however, may be subject to a reduced rate of duty based upon the provisions of subheading 9822.05.10, subchapter XXII of the HTSUS. U.S. Note 22 to that chapter states:
For a textile or apparel good provided for in chapters 61 through 63 of the tariff schedule that is not an originating good under general note 29 and for which the duty treatment set forth in heading 9822.05.10 is claimed, the rate of duty set forth in the general subcolumn of rate of duty column 1 shall apply only on the value of the assembled good minus the value of fabrics formed in the United States, components knit-to-shape in the United States and any other materials of U.S. origin used in the production of such a good, provided that the good is sewn or otherwise assembled in the territory of a party to the Agreement (other than the United States) specified in general note 29(a) with thread wholly formed in the United States, from fabrics wholly formed in the United States and cut in one or more parties to the Agreement (other than the United States) as defined in general note 29(a) or from components knit-to-shape in the United States, or both. For purposes of this note-
a fabric is wholly formed in the United States if all the production processes and finishing operations, starting with the weaving, knitting, needling, tufting, felting, entangling or other process, and ending with a fabric ready for cutting or assembly without further processing, took place in the United States; and
a thread is wholly formed in the United States if all the production processes, starting with the extrusion of filaments, strips, film or sheet, and including slitting a film or sheet into strip, or the spinning of all fibers into thread, or both, and ending with thread, took place in the United States.
The panty is cut and assembled, as well as sewn in Honduras, using fabric for the main body of the panty and fabric for the gusset crotch that we assume are wholly formed in the U.S., using thread that we assume is wholly formed in the U.S, and the finished panty is classified in chapter 61. In this regard, the panty may be eligible under 9822.05.10, HTSUS.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at http://www.usitc.gov/tata/hts/.
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 Deborah Marinucci at 646-733-3054.
Sincerely,
Robert B. Swierupski
Director,
National Commodity
Specialist Division