Classification of stunt kites and eligibility for duty-free treatment under U.S. Note 2(b), subchapter II, Chapter 98, HTSUSA

HQ 556250 January 7, 1992 CLA-2 CO:R:C:S 556250 SER CATEGORY: Classification TARIFF NO.: 9503.90.20 Timothy D. Richards, Esq. Grand Bay Office Plaza 2665 South Bayshore Drive Penthouse 1-A Miami, FL 33133 RE: Classification of stunt kites and eligibility for duty-free treatment under U.S. Note 2(b), subchapter II, Chapter 98, HTSUSA Dear Mr. Richards: This is in reference to your letter of August 23, 1991, on behalf of Arthur Baker, requesting a ruling concerning the dutiable status of recreational kites from Jamaica. FACTS: The kites will be manufactured in Jamaica using components wholly of U.S. origin. The U.S. materials used will be fiberglass, carbonite graphite, nylon and polyethylene. ISSUES: 1) What is the proper classification of the kites? 2) Whether the kites are eligible for duty-free treatment under U.S. Note 2(b), subchapter II, Chapter 98, Harmonized Tariff Schedule of the United States Annotated (HTSUSA). LAW AND ANALYSIS: Classification of goods under the HTSUSA, is governed by the General Rules of Interpretation (GRIs), taken in order. GRI 1 provides that classification shall be determined according to the terms of the headings and any relative section or chapter notes. Subheading 9503.90.20, HTSUSA, provides for "other toys; ... kites." This subheading clearly is the proper classification of the articles at issue. The rate of duty for articles classified in this subheading is 6.8% ad valorem. n -2- However, based on the facts presented, the kites at issue may be eligible for duty-free treatment under U.S. Note 2(b), subchapter II, Chapter 98, HTSUSA ("Note 2(b)"). This duty-free provision was effective with respect to goods entered on or after October 1, 1990. Note 2(b) provides as follows: (b) 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. As used in this paragraph, the term "beneficiary country" means a country listed in General Note 3(c)(v)(A), HTSUSA. Jamaica is a designated BC. As stated above, Note 2(b) specifies four categories of products which are excluded from duty-free treatment under this provision: textile articles; apparel articles; petroleum; and certain petroleum products. The kites at issue would not fall within any of the precluded categories. Note 2(b)(i) specifies that an eligible article will be entitled to duty-free treatment if it is assembled or processed in whole of components or ingredients that are a product of the U.S., in a BC. Though no description of the operations to be performed in the production of the kites in Jamaica was provided, an examination of the brochures would indicate that the operations of creating the kites would be encompassed by Note 2(b)(i). n -3- Therefore, based on the facts presented, the recreational kites are entitled to duty-free treatment under Note 2(b), provided that the U.S. materials are shipped directly from the U.S. to Jamaica, and the kites are shipped directly to the U.S., without entering into the commerce of any foreign country other than a BC, and the applicable documentation requirements are satisfied. We have enclosed a copy of a telex to Customs field offices dated September 28, 1990, which outlines these requirements. HOLDING: On the basis of the information submitted, the recreational kites, classified in subheading 9503.90.20, HTSUSA, which are manufactured in Jamaica wholly of U.S.-origin materials, are entitled to duty-free treatment under Note 2(b), upon compliance with the "direct shipment" and applicable documentation requirements. If all requirements of Note 2(b) are not met the applicable rate of duty is 6.8% ad valorem. Sincerely, John Durant, Director Commercial Rulings Division