Country of origin determination for T-shirts; section 102.21(c)(4); most important assembly; Caribbean Basin Economic Recovery Act

HQ 961135 December 21, 1999 CLA2 RR:CR:TE 961135 SG CATEGORY: Classification: Country of Origin Mr. Steven S. L. Siu c/o Timeamerica Inc. 1458 W. 240th Street Harbour City, CA 90710 RE: Country of origin determination for T-shirts; section 102.21(c)(4); most important assembly; Caribbean Basin Economic Recovery Act Mr. Siu: This is in reply to your letter dated April 15, 1997, wherein you ask for the appropriate country of origin determination for a man’s T-shirt. You also request a determination regarding eligibility for this merchandise under the Caribbean Basin Economic Recovery Act (CBERA). A sample of the subject garment was submitted to the New York office for review. FACTS: The subject garment is a man’s t-shirt, composed of 100 percent cotton, lightweight, knit jersey fabric. The sample has a rib crew neckline; short, hemmed sleeves; and a hemmed bottom. The sample is constructed from tubular knit fabric, while the description of the assembly process includes sewing of the side seams in Panama. For purposes of this ruling letter, we have followed the assembly processes described in your letter. The submitted sample is classifiable in subheading 6109.10.0012, HTSUSA, which provides for “T-shirts, tank tops and similar garments, knitted or crocheted: Of cotton: Men’s or boys’: Other: Other T-shirts: Men’s.” The textile quota category is 338. The manufacturing operations for this garment are as follows: China The fabric for the body and the neckband is knit and bleached or dyed. Cutting of fabric to shape. The shoulder seams are joined. The collar is attached. The neck label is attached. 2 The sleeves are hemmed. The bottom is hemmed. The sleeves are attached. Panama The side seams are sewn. Inspection. Ironing. Silk screen printing. You have provided material and labor costs of the shirt in an effort to have the T-shirts qualify for duty free treatment under CBERA. ISSUE: What is the country of origin of the submitted merchandise? Is it eligible for duty-free treatment under CBERA? LAW AND ANALYSIS: I. Caribbean Basin Economic Recovery Act Section 222 of the Customs and Trade Act of 1990 (Public Law 101382) amended U.S. Note 2, Subchapter II, Chapter 98, HTSUS, to provide for the dutyfree treatment of articles, other than specified products, which are assembled or processed in a Caribbean Basin Economic Recovery Act (“CBERA”) beneficiary country (“BC”) in whole of fabricated components or ingredients (except water) of U.S. origin. 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 3 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), HTSUS. Pursuant to General Note 7(a), HTSUS, Panama has been designated as a BC for CBERA purposes. Although U.S. Note 2(b)(i)(A) and (B), Subchapter II, Chapter 98, HTSUS, are separated by the word “or,” it is our opinion that Congress did not intend to preclude dutyfree treatment under this provision to an article which is created in a BC both by assembling and processing U.S. fabricated components and by processing U.S. ingredients. U.S. Note 2(b), however, specifically excludes textiles and textile articles from dutyfree treatment under CBERA. In Treasury Decision (“T.D.”) 9188, 25 Cust. Bull. 45 (1991), Customs determined that only those articles classified in HTSUS provisions which include a textile category number should be considered “textile” and “apparel” articles for purposes of U.S. Note 2(b), Subchapter II, Chapter 98, HTSUS. As the classification of the T-shirt, subheading 6109.10.0012, HTSUSA, is a provision which includes a textile category number, the T-shirts are considered textile or apparel articles for purposes of Note 2(b). Accordingly, the subject T-shirt does not qualify for duty-free treatment. II. Country of Origin On December 8, 1994, the President signed into law the Uruguay Round Agreements Act. Section 334 of that Act (codified at 19 U.S.C. §3592) provides new rules of origin for textiles and apparel entered, or withdrawn from warehouse, for consumption, on and after July 1, 1996. On September 5, 1995, Customs published Section 102.21, Customs Regulations, in the Federal Register, implementing Section 334 (60 FR 46188). Thus, effective July 1, 1996, the country of origin of a textile or apparel product shall be determined by sequential application of the general rules set forth in paragraphs (c)(1) through (5) of Section 102.21. Paragraph (c)(1) states that “The country of origin of a textile or apparel product is the single country, territory, or insular possession in which the good was wholly obtained or produced.” As the subject merchandise is not wholly obtained or produced in a single country, territory or insular possession, paragraph (c)(1) of Section 102.21 is inapplicable. 4 Paragraph (c)(2) states that “Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) of this section, the country of origin of the good is the single country, territory, or insular possession in which each foreign material incorporated in that good underwent an applicable change in tariff classification, and/or met any other requirement, specified for the good in paragraph (e) of this section”. Paragraph (e) states that “The following rules shall apply for purposes of determining the country of origin of a textile or apparel product under paragraph (c)(2) of this section”: 61016117 If the good is not knit to shape and consists of two or more component parts, a change to an assembled good of heading 6101 through 6117 from unassembled components, provided that the change is the result of the good being wholly assembled in a single country, territory, or insular possession. The subject merchandise is classified as a T-shirt in heading 6109, HTSUS. As the subject merchandise is not wholly assembled in a single country, the terms of the tariff shift are not met and paragraph (c)(2) of Section 102.21 is inapplicable. Paragraph (c)(3) states that, “Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) or (2) of this section:” (i) If the good was knit to shape, the country of origin of the good is the single country, territory, or insular possession in which the good was knit; or (ii) Except for goods of heading 5609, 5807, 5811, 6213, 6214, 6301 through 6306, and 6308, and subheadings 6209.20.5040, 6307.10, 6307.90, and 9404.90, if the good was not knit to shape and the good was wholly assembled in a single country, territory, or insular possession, the country of origin of the good is the country, territory, or insular possession in which the good was wholly assembled. As the subject merchandise is neither knit to shape nor wholly assembled in a single country, paragraph (c)(3) is inapplicable. Paragraph (c)(4) states that, “Where the country of origin of a textile or apparel product cannot be determined under paragraph (c) (1), (2) or (3) of this section, the country of origin of the good is the single country, territory, or insular possession in which the most important assembly or manufacturing process occurred.” In the case of the subject merchandise, the most important assembly operations occur at the time of the sewing of the top shoulder parts of the front panel with the back panel, attachment of the collar and sleeves, in China. Accordingly, the country of origin for the subject merchandise is China. 5 HOLDING: Based on the above, we conclude that the country of origin for the subject merchandise is China, and that, for the reasons set forth above, that the subject T-shirt is not entitled to dutyfree treatment under CBERA. The holding set forth above applies only to the specific factual situation and merchandise identified in the ruling request. This position is clearly set forth in section 19 C.F.R. §177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. Should it be subsequently determined that the information furnished is not complete and does not comply with 19 C.F.R. §177.9(b)(1), the ruling will be subject to modification or revocation. In the event there is a change in the facts previously furnished, this may affect the determination of country of origin. Accordingly, if there is any change in the facts submitted to Customs, it is recommended that a new ruling request be submitted in accordance with 19 C.F.R. §177.2. Sincerely, John Durant, Director Commercial Rulings Division