Applicability of U.S. Note 2(b), Subchapter II, Chapter 98, HTSUS, to footwear from the Dominican Republic

HQ 561230 June 14, 1999 CLA2 RR:CR:SM 561230 MFC CATEGORY: Classification Lisa Peterman, Esq. A.W. Fenton Columbus Office 1157 Rarig Avenue Columbus, Ohio 43219-2357 RE: Applicability of U.S. Note 2(b), Subchapter II, Chapter 98, HTSUS, to footwear from the Dominican Republic Dear Ms. Peterman: This is in reference to your letter dated November 16, 1998, requesting a ruling on the classification and country of origin of certain footwear, and the applicability of U.S. Note 2(b), Subchapter II, Chapter 98, Harmonized Tariff Schedule of the United States (HTSUS) ("Note 2(b)"), to textile footwear from the Dominican Republic imported into the United States by your client, Rocky Shoes & Boots Company (“Rocky Shoes”). You submitted four sample pairs of boots, of the styles at issue. FACTS: Your client manufactures four styles of boots which are the subject of this ruling. Style #RB1950 is a men’s insulated boot extending over the ankle. The boot features a PVC outsole, a black waterproof full grain leather upper, and a shank of TF-21 fiberglass material for support. Style #724 is a men’s mini-print plain weave breakup sport boot which extends over the ankle. The boot features a PVC lug sole, a waterproof upper made of leather and nylon print, and a shank of TF-21 fiberglass material for support. The upper consists of 54% leather and 46% nylon excluding accessories. Style #944 is a men’s break-up wildcat 500g (GTX) Gore-tex boot which extends over the ankle. The boot features a PVC sole, a waterproof upper made of nylon with leather trim, and a shank of TF-21 fiberglass material for support. The upper consists of 75% nylon and 25% leather excluding accessories. Style #RB7774 is described as a men’s jungle boot which extends over the ankle. The boot features a PVC sole, a waterproof upper made of leather and nylon, and a shank of TF-21 fiberglass material for support. The upper consists of 56% leather and 44% nylon excluding accessories. You assert that all the materials used in the production of the uppers are manufactured in the United States including the hardware and laces. The uppers will be cut and stitched in the Dominican Republic. The sole pellets will be manufactured in the U.S. and imported into the Dominican Republic for processing through a molding machine into a sole. The sole and upper will be attached in the Dominican Republic. The completed boots will be imported by Rocky Shoes, which will maintain ownership of the materials from the point of export to the point of import of the completed boot. ISSUES: 1) Whether the subject merchandise produced in the Dominican Republic from U.S. materials as described above, is eligible for dutyfree treatment under Note 2(b). 2) What is the classification of the subject merchandise? 3) What is the country of origin of the subject merchandise? LAW AND ANALYSIS: 1. Eligibility for Note 2(b) treatment Section 222 of the Customs and Trade Act of 1990 (P.L. 101382) amended U.S. Note 2, Subchapter II, Chapter 98, HTSUS, to provide for the dutyfree treatment of articles (other than textile and apparel articles, and petroleum and petroleum products) which are assembled or processed in a Caribbean Basin Economic Recovery Act (CBERA) beneficiary country (BC) wholly of fabricated components or ingredients (except water) of U.S. origin. This amendment 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 7(a). Pursuant to General Note 7(a), HTSUS, the Dominican Republic has been designated as a BC for CBERA purposes. Although Note 2(b) excludes textile and apparel articles from duty-free treatment, it is well established in Customs decisions that footwear and parts of footwear are not considered textile and apparel articles for purposes of the Note, and are eligible under Note 2(b). See T.D. 9188, 25 Cust. Bull. 45 (1991); Headquarters Ruling Letter (“HRL”) 558658 (June 27, 1995); HRL 558754 (November 15, 1994); HRL 555788 (September 9, 1991); and HRL 555742 (November 5, 1990). With regard to the operations performed in the Dominican Republic, we believe that the assembly and processing of the U.S. materials and ingredients, which consist of cutting and stitching the uppers, molding the soles, and attaching the uppers and soles are encompassed by the operations specified in Note 2(b). 2. Classification Subheading 9802.00.8040, HTSUS, is the proper classification for these articles for purposes of making a claim for duty-free treatment under U.S. Note 2(b) to Subchapter II, Chapter 98, HTSUS. As to the Chapter 1-97 tariff classification which would ordinarily be applicable, we note that although you state that these are men’s shoes, there is no indication in your submission that you offer a comparable type of shoe for women. We consider this type of footwear to be commonly worn by both sexes. If a woman’s alternative is not offered to compliment the submitted men’s models, we consider the submitted samples to be worn by either sex and therefore classify the footwear in American men’s sizes 8.5 and larger as men’s and footwear sizes up to and including American men’s size 8 as “for other persons”. The classification for style #RB1950, #724, and #RB7774 in American men’s sizes 8.5 and larger, appears to be subheading 6403.91.60, HTSUS, which provides for footwear with outer soles of rubber, plastics, leather or composition leather and uppers of leather: other footwear: covering the ankle: other: for men, youths and boys. The applicable subheading for these styles up to and including American men’s size 8 appears to be subheading 6403.91.90, HTSUS, which provides for footwear with outer soles of rubber, plastics, leather or composition leather and uppers of leather: other footwear: covering the ankle: other: for other persons. Style #944 appears to be classified in subheading 6404.19.20, HTSUS, which provides for footwear with outer soles of rubber, plastics, leather or composition leather and uppers of textile materials: footwear with outer soles of rubber or plastics: other: footwear designed to be worn over, or in lieu of, other footwear as a protection against water, oil, grease or chemicals or cold or inclement weather. This subheading does not differentiate between men’s and women’s shoes until the 10-digit statistical suffix, which does not effect the duty rate. We note that the statistical suffix used would follow the rationale discussed above. 3. Country of Origin With regard to the country of origin marking requirements for the articles which are eligible for duty-free treatment under Note 2(b), Customs Headquarters issued instructions to Customs field offices in Headquarters telex 9264071 dated September 28, 1990. The telex stated the following with regard to country of origin marking: Since the language of this provision prohibits us from treating these articles as foreign, there appears to be no basis for requiring that the articles be marked with the Caribbean country of processing or assembly.... Whether or not the articles can be marked as products of the United States must be decided by the Federal Trade Commission (FTC). Therefore, based on the conclusion set forth above in telex 9264071, the footwear which you intend to import from the Dominican Republic which qualifies for duty-free treatment under Note 2(b) is not required to be marked as a product of the Dominican Republic. HOLDING: Based on the information and samples provided, we are of the opinion that the styles of footwear are eligible for duty free treatment under Note 2(b), provided they are made wholly from U.S. origin materials, the materials and finished footwear are shipped directly between the U.S. and the Dominican Republic, and the documentary requirements set forth in Headquarters telex 9264071 dated September 28, 1990 (copy enclosed) are satisfied. The proper classification for the subject merchandise is subheading 9802.00.8040, HTSUS. Finally, articles which qualify for duty-free treatment under Note 2(b) are not required to be marked as a product of the Dominican Republic. If you wish to make arrangement for the return of your samples, please contact this office. A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction. Sincerely, John Durant, Director Commercial Rulings Division Enclosure