Application for Further Review of Protest No. 5201-98-100179; 19 CFR §10.191(b)(2)(i); CBERA; General Note 7(d)(iii), HTSUS; silk and linen textiles

HQ 561273 July 6, 1999 CLA2 RR:CR:SM 561273 MFC CATEGORY: Classification Port Director U.S. Customs Service 6601 NW 25th Street Room 132 Miami, Florida 33159 RE: Application for Further Review of Protest No. 5201-98-100179; 19 CFR §10.191(b)(2)(i); CBERA; General Note 7(d)(iii), HTSUS; silk and linen textiles Dear Sir: This is in reference to the above-referenced Protest and Application for Further Review, which you forwarded to us. The Application for Further Review was timely filed by counsel for St. Verda Ltd. (“St. Verda”), and concerns the eligibility of ladies 100% linen woven shorts for duty-free entry pursuant to the Caribbean Basin Economic Recovery Act (“CBERA”). FACTS: St. Verda imported 100% linen ladies woven shorts from Guatemala on April 16, 1997, and classified the subject merchandise in subheading 6204.69.9046, Harmonized Tariff Schedule of the United States (“HTSUS”), as duty-free under the CBERA. Customs classified the subject merchandise in the same subheading but determined that the merchandise was subject to the General subcolumn duty rate of 2.9%. The entry was liquidated on February 27, 1998, and St. Verda filed a protest and application for further review on May 13, 1998. Protestant asserts that according to General Note (“GN”) 7(d)(iii), linen and silk textile and apparel articles are not subject to textile agreements. They reason, therefore, that the subject merchandise is eligible for duty-free treatment pursuant to the CBERA. ISSUE: Whether the linen shorts are eligible for duty-free treatment pursuant to the CBERA.  LAW AND ANALYSIS: The CBERA, 19 U.S.C. §2701, et seq.,states that the duty-free treatment provided under this chapter shall apply to any article which is the growth, product or manufacture of a beneficiary country if -- (A) that article is imported directly from a beneficiary country into the customs territory of the United States; and (B) the sum of (i) the cost or value of the materials produced in a beneficiary country or two or more beneficiary countries, plus (ii) the direct costs of processing operations performed in a beneficiary country or countries is not less than 35 per centum of the appraised value of such article at the time it is entered. 19 U.S.C. §2703(a)(1). The CBERA states that “textile and apparel articles which are subject to textile agreements” are not eligible for the duty-free treatment provided by the CBERA. 19 U.S.C. §2703(b)(1). The Customs Regulations repeat this prohibition against textile and apparel articles subject to textile agreements receiving duty-free CBERA treatment at 19 CFR §10.191(b)(2)(i). Pursuant to GN 7(a), Guatemala is an eligible beneficiary developing country. GN 7(c) states: Articles provided for in a provision for which a rate of duty of “Free” appears in the “Special” subcolumn followed by the symbols “E” or “E*” in parentheses are eligible articles for purposes of the CBERA pursuant to section 213 of that Act.... The symbol “E*” indicates that some articles provided for in the designated provision are not eligible for preferential treatment, as further described in subdivision (d) of this note. General Note 7(d), HTSUS, states: Articles provided for in a provision for which a rate of duty of “Free” appears in the “Special” subcolumn followed by the symbol “E*” in parentheses shall be eligible for the duty-free treatment provided for in this note, except -- (iii) ...textile and apparel articles-- (A) of cotton, wool or fine animal hair, man-made fibers, or blends thereof in which those fibers, in the aggregate, exceed in weight each other single component of fiber thereof; or (B) in which either the cotton content or the man-made fiber content equals or exceeds 50 percent by weight of all component fibers thereof; or (C) in which the wool or fine animal hair content exceeds 17 percent by weight of all component fibers thereof; or (D) containing blends of cotton, wool or fine animal hair, or man-made fibers, which fibers, in the aggregate, amount to 50 percent of more by weight of all component fibers thereof; provided, that the beneficiary country exports of handloom fabrics of the cottage industry, or handmade cottage industry products made of such handloom fabrics, or traditional folklore handicraft textile products, if such products are properly certified under an arrangement established between the United States and such beneficiary country, are eligible for the duty-free treatment provided for in this note. The subject merchandise is classified in subheading 6204.69.9046, HTSUS, for which an “E*” appears in the Special subcolumn. Articles classified in this provision are subject to textile agreements (textile category #847). Protestant argues that pursuant to GN 7(d)(iii), HTSUS, linen and silk are not subject to textile agreements. GN 7(d)(iii) omits any reference to linen and silk textile or apparel articles and therefore, does not specifically exclude those articles from CBERA eligibility. However, the wording in GN 7(d)(iii) was designed to encompass those textile and apparel articles which were subject to textile agreements as of the date of enactment of the CBERA (1983). It is noted in this regard that 19 U.S.C. §2703(b)(1) does not exclude from CBERA treatment textile and apparel articles which were subject to textile agreements as of a specific date, but rather excludes “textile and apparel articles which are subject to textile agreements” (emphasis added). As indicated above, articles (including linen articles) classified in subheading 6204.69.9046, HTSUS, are subject to textile agreements. Therefore, by the clear wording of the CBERA (19 U.S.C. §2703 (b)(1)), such articles are ineligible for duty-free treatment under this program. HOLDING: The merchandise subject to this protest is classified in subheading 6204.69.9046, HTSUS, which contains a textile category number (847). Therefore, as the articles are subject to textile agreements, they are ineligible for duty-free treatment under the CBERA pursuant to 19 U.S.C. §2703(b)(1) and 19 CFR §10.191(b)(2)(i). Accordingly, this protest should be denied. In accordance with Section 3A(11)(b) of Customs Directive 099 3550065, dated August 4, 1993, Subject: Revised Protest Directive, this decision together with the Customs Form 19, should be mailed by your office to the Protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Services, Freedom of Information Act and other public access channels. Sixty days from the date of this decision, the Office of Regulations and Rulings will take steps to make this decision available to Customs personnel and to the public via the Customs Home Page on the World Wide Web, the Freedom of Information Act, and other public distribution channels. Sincerely, John Durant, Director Commercial Rulings Division