Applicability of duty exemption under U.S. Note 2(b), subchapter II, Chapter 98, HTSUS, to boot uppers produced in the Dominican Republic; 555788, 556448

HQ 556488 February 10, 1992 CLA-2 CO:R:C:S 556488 SER CATEGORY: Classification Mr. Michael F. Watson A.W. Fenton P.O. Box 360614 Columbus, OH 43236-0614 RE: Applicability of duty exemption under U.S. Note 2(b), subchapter II, Chapter 98, HTSUS, to boot uppers produced in the Dominican Republic; 555788, 556448 Dear Mr. Watson: This is in reference to your letter of December 11, 1991, on behalf of William Brooks Shoe Company ("William Brooks"), requesting a ruling on the eligibility for duty-free treatment under U.S. Note 2(b), subchapter II, Chapter 98 of the Harmonized Tariff Schedule of the United States Annotated (HTSUSA), of boot uppers produced in the Dominican Republic. FACTS: William Brooks assembles footwear uppers in the Dominican Republic from U.S.-origin materials. The sample provided is an over the ankle upper for boots which the inquirer states is made of man-made materials with leather trim. In the Dominican Republic the materials will be cut to shape and then assembled. ISSUE: Whether the boot uppers are entitled to duty-free treatment under U.S. Note 2(b), subchapter II, Chapter 98, HTSUSA. LAW AND ANALYSIS: Section 222 of the Customs and Trade Act of 1990 (P.L. 101- 382) amended U.S. Note 2, subchapter II, Chapter 98, HTSUSA, ("Note 2(b)") to provide for duty-free treatment of articles, other than certain specified products, which are assembled or processed in a Caribbean Basin Initiative beneficiary country (BC) wholly of fabricated components or ingredients (except water) of U.S. origin. -2- Specifically, 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 in the United States, enters the commerce of any foreign country other than a beneficiary country. As used in this paragraph, the term "beneficiary country" (BC) means a country listed in General Note 3(c)(v)(A), HTSUSA. 1. Eligibility of Boot Uppers 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 issue presented here concerns whether the footwear uppers are included in the "textile and apparel article" exclusion for purposes of Note 2(b). In HRL 555788 we held that footwear uppers, which encompass uppers for boots, are not considered a textile or apparel article, and, therefore, are eligible for duty-free treatment under Note 2(b). 2. Assembly and Processing in the Dominican Republic Note 2(b)(i) specifies that an eligible article will be entitled to duty-free treatment if it is: (A) assembled or processed in whole of fabricated components that are a product of the U.S., or (B) processed in whole of ingredients (other than water) that are a product of the U.S., in a BC. -3- Although a detailed description of the assembly operations to be performed in the Dominican Republic was not provided, it would appear in examining the samples that the operations entail cutting to shape and then sewing the cut-to-shape materials together to form the final article. These operations are encompassed by the operations specified in Note 2(b)(i). Therefore, if, in fact, all materials are of U.S. origin and have been shipped directly to the Dominican Republic, and the uppers are shipped directly to the U.S. without entering into the commerce of any foreign country other than a BC, the boot uppers will be entitled to duty-free treatment under Note 2(b), provided all documentation requirements are met. HOLDING: On the basis of the information submitted, we conclude that the boot uppers made in the Dominican Republic wholly from materials of U.S. origin are entitled to duty-free treatment under Note 2(b), upon compliance with the documentation requirements set forth in Headquarters telex 9264071 dated September 28, 1990 (copy enclosed). Sincerely, John Durant, Director Commercial Rulings Division Enclosure