CLA-2-61 OT:RR:NC:N3:358
Ms. Emilia Macias
Jerry Leigh
7860 Nelson Road
Van Nuys, CA 91402
RE: The tariff classification and status under the Dominican Republic-Central America-United States Free Trade Agreement (DR-CAFTA) of a girl’s pullover from Guatemala.
Dear Ms. Macias:
In your letter dated December 30, 2013, you requested a ruling on the status of a girl’s short sleeve pullover under the DR-CAFTA.
You have submitted a girl’s pullover with short cap sleeves constructed of 100% cotton knitted fabric. The item has a round rib knit neckline and a hemmed bottom. The pullover body has a prominent screen print design. The garment’s waistband has an overlay of sequin covered 100% polyester mesh fabric.
The applicable subheading for the girl’s pullover will be 6110.20.2079, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Sweaters, pullovers and similar articles, knitted or crocheted, of cotton, other, other, other, women’s or girls’, other.” The rate of duty will be 16.5 percent ad valorem.
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/.
You propose two manufacturing scenarios.
In the first scenario, which you refer to as style ST14398B, the cotton knitted fabric and the rib knit capping fabric are produced in the United States from U.S. yarns. The sewing thread is wholly formed and finished in Guatemala. The sequined fabric is made in China. In Guatemala, the fabrics are cut, sewn and assembled into the finished garment and a screen print is applied to the front panel. The garments are exported directly from Guatemala to the U.S.
In the second scenario, which you refer to as style ST14398A, the cotton knitted fabric and the rib knit capping fabric are produced in the United States from imported yarns of Korea and Pakistan. The sewing thread is wholly formed and finished in the United States. The sequined fabric is made in China. In Guatemala, the fabrics are cut, sewn and assembled into the finished garment and a heat transfer print is applied to the front panel. The garments are exported directly from Guatemala to the U.S.
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.
In the first scenario, based on the aforementioned facts, style ST14398B does qualify for DR-CAFTA preferential treatment, because it will meet the requirements of HTSUS General Note 29(b)(ii)(A). General Note 29(n) Chapter 61, Chapter Rule 2 states, “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.” The component that determines the classification is the cotton knitted fabric which is an originating material. The goods will therefore be entitled to a free rate of duty under the DR-CAFTA upon compliance with all applicable laws, regulations, and agreements.
In the second scenario, based on the facts provided, style ST14398A 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)/61.24, 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.
You inquire whether the merchandise 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) 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 (b) 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 pullover is cut and assembled, as well as sewn in a DR-CAFTA country, using fabric that is wholly formed in the U.S., using thread that is wholly formed in the U.S., and the finished pullover is classified in chapter 61. In this regard, the pullover may be eligible under 9822.05.10, HTSUS.
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 Kimberly Praino at 646-733-3053.
Sincerely,
Gwenn Klein Kirschner
Acting Director
National Commodity Specialist Division