Classification, country of origin, and country of origin marking determination for a women’s garment with a PVC belt; Products of the West Bank, the Gaza Strip or a Qualifying Industrial Zone; General Note 3(a) (v); 19 CFR 102.21(c)(2); tariff shift

N084955 November 30, 2009 CLA2-OT:RR:NC:TAB:359 CATEGORY: Classification Ms. Kay Morrell Customs Analyst JC Penney Purchasing Corporation 6501 Legacy Drive, MS 2316 Plano, TX 75024 RE: Classification, country of origin, and country of origin marking determination for a women’s garment with a PVC belt; Products of the West Bank, the Gaza Strip or a Qualifying Industrial Zone; General Note 3(a) (v); 19 CFR 102.21(c)(2); tariff shift Dear Ms. Morell: This is in reply to your letter dated November 17, 2009, requesting a classification and eligibility for preferential duty treatment as well as country of origin marking determination for a garment that may be produced in a Qualifying Industrial Zone (QIZ), in accordance with the United States-Israel Free Trade Implementation Act for a women’s vest with two PVC belts which will be imported into the United States. FACTS: Style PPK #12271 consists of a women’s sleeveless vest that is composed of knit and woven fabrics. The two front panels are made from 52% nylon 48% rayon jersey knit fabric and the back panel is made of a 93% polyester 7% spandex woven fabric. The knit fabric has more than nine stitches per two centimeters counted in the direction in which the stitches were formed. The garment has a v-shaped front neckline with a four button full front opening, full fashion marks along side the front panel armhole area, front panels with curved bottom edges, ribbed knit front neckline trim that extends to form the front panel placket, and jersey fabric capping on the front panel armhole opening. The rear woven panel features a modified racer back, a curved hemmed garment bottom, and woven capping on the back panel armhole opening. Two belt loops are sewn into either side seam at the waist area through which two thin belts, which you state are made of PVC, are inserted. The garment has oversized armholes. You have indicated that the front panel yarn is of foreign origin, and that the woven fabric and belts are of China origin. You also submitted the knitted components and the woven components from which the vest is constructed. These consist of: Front Panels (Knit) - self-start bottom - self-finished sides - neckline contoured to shape during the knitting process - armholes contoured to shape during the knitting process Strips of ribbed knit for the neckline and placket; and jersey capping for armholes. Woven fabric rear panel and woven capping for the armholes. Two PVC belts measuring approximately ½ inch in width. The manufacturing operations for the vest and belts are as follows: Scenario 1 – Production: the front panels are knit to shape in Jordan QIZ from foreign yarn. The back panel is cut in Jordan. Components are assembled in Jordan QIZ. All linking and finishing operations, attachment of Chinese origin belts, and packing occur in Jordan. The finished article will be shipped directly to the U.S. from Jordan. Scenario 2 - Production: the front panels are knit to shape in Jordan QIZ from foreign yarn. The back panel is cut in Israel . Components are assembled in Jordan QIZ. All linking and finishing operations, attachment of Chinese origin belts, and packing occur in Jordan. The finished article will be shipped directly to the U.S. from Jordan. For the purpose of determining the country of origin of the vest, the front panels are considered knit to shape because of their self-start bottoms, their self-finished sides, their armholes which are contoured to shape during the knitting process and the neck which is contoured to shape during the knitting process. Further, the front panels, constitute 50 percent of the total surface area of the pullover. ISSUE: What are the classification and country of origin of the subject merchandise? Will the garment and belt qualify for duty-free treatment under General Note 3 (a)(v), HTSUS, when imported into the U.S. What is the proper Country of Origin Marking for the vest and belt set. CLASSIFICATION: Since the vest consists of two different fabrics, its classification is governed by the General Rules of Interpretation (GRI ), Harmonized Tariff Schedule of the United States Annotated. According to the GRIs, classification of apparel made from more than one fabric is dependent on the fabric which provides the garment with its essential character. In the case of this vest, the essential character is rendered by the knit fabric that comprise the entire front panels, GRI 3 (b), noted. The vest and PVC belts fall within the description of "sets" as provided in the Explanatory Notes. The vest and belts consist of at least two different articles which are, prima facie, classifiable in different headings; consist of products or articles put up together to meet a particular need or carry out a specific activity; and are put up in a manner suitable for sale directly to users without re-packing. As the belts are accessories to the vest, the essential character of the set is imparted by the vest. The applicable subheading for the vest and belt set will be 6110.30.3035 , Harmonized Tariff Schedule of the United States (HTSUS), which provides for Sweaters, pullovers, sweatshirts, waistcoats (vests) and similar articles, knitted or crocheted: Of man-made fibers: Other: Other: Other . . . Other: Vests, other than sweater vests: Women’s or girls’. The general rate of duty will be 32 percent ad valorem. Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at http://www.usitc.gov/tata/hts/. COUNTRY OF ORIGIN - LAW AND ANALYSIS: Section 334 of the Uruguay Round Agreements Act (codified at 19 U.S.C. 3592), enacted on December 8, 1994, provided rules of origin for textiles and apparel entered, or withdrawn from warehouse for consumption, on and after July 1, 1996. Section 102.21, Customs Regulations (19 C.F.R. 102.21), published September 5, 1995 in the Federal Register, implements Section 334 (60 FR 46188). Section 334 of the URAA was amended by section 405 of the Trade and Development Act of 2000, enacted on May 18, 2000, and accordingly, section 102.21 was amended (68 Fed. Reg. 8711). Thus, the country of origin of a textile or apparel product shall be determined by the sequential application of the general rules set forth in paragraphs (c)(1) through (5) of Section 102.21. Section 102.21(d) addresses the treatment of sets for country of origin purposes. Section 102(d) provides the following:Treatment of sets. Where a good classifiable in the HTSUS as a set includes one or more components that are textile or apparel products and a single country of origin for all of the components of the set cannot be determined under paragraph (c) of this section, the country of origin of each component of the set that is a textile or apparel product shall be determined separately under paragraph (c) of this section.A single country of origin cannot be determined for both the vest and the belt. Pursuant to Section 102.21(d), the country of origin of both the vest and the belts must be determined separately.The subject belt is made out of plastic and as such, it is outside the scope of the terms of Section 102.21. However, as the belt is wholly obtained and produced in a single country, that is, China, there is no issue of its origin. Paragraph (c)(1) states, “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. Paragraph (c)(2) states, “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 of the foreign materials 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) in pertinent part states, 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: HTSUS Tariff shift and/or other requirements 6001-6117 If the good is knit to shape, except for goods of 6117.10 provided for in paragraph (e)(2) of this section, a change to 6101 through 6117 from any heading outside that group, provided that the knit to shape components are knit in a single country, territory, or insular possession. The vest is knit to shape in Jordan, and there is a change from HTSUS heading 5509 to HTSUS heading 6110. Since this tariff shift (yarn of 5509 to a vest of 6110) occurring in Jordan meets the requirements of the rule, Section 102.21(c)(2) is applicable. The country of origin of the vest in both Scenarios 1 and 2 is conferred in Jordan. STATUS UNDER THE UNITED STATES-ISRAEL FREE TRADE AGREEMENT.     Pursuant to the authority conferred by section 9 of the U.S. - Israel Free Trade Area Implementation Act of 1985 (19 U.S.C § 2112 note), the President issued Proclamation No. 6955 dated November 13, 1996 (published in the Federal Register on November 18, 1996 (61 Fed. Reg. 58761)), which modified the Harmonized Tariff Schedule of the United States (HTSUS) by creating a new General Note 3 (a)(v)) to provide duty-free treatment to articles which are the product of the West Bank, Gaza Strip or a qualifying industrial zone (QIZ), provided certain requirements are met. Such treatment was effective for products of the West Bank, Gaza Strip or a qualifying industrial zone entered or withdrawn from warehouse for consumption on or after November 21, 1996.You state that the processing operations will be performed in a QIZ in Jordan for Scenarios 1 and 2. General Note 3(a)(v)(G), HTSUS, defines a "qualifying industrial zone" as any area that: "(1) encompasses portions of the territory of Israel and Jordan or Israel and Egypt; (2) has been designated by local authorities as an enclave where merchandise may enter without payment of duty or excise taxes; and (3) has been designated by the U.S. Trade representative in a notice published in the Federal Register as a qualifying industrial zone." Presidential Proclamation 6955 delegated to the United States Trade Representative the authority to designate qualifying industrial zones. See GN 3(a)(v)(G)(3), supra. The governments of Israel and Egypt jointly requested the designation as a qualifying industrial zone of areas comprising a Greater Cairo zone, Alexandria zone, Suez Canal zone and Central Delta zone. The names and locations of the factories comprising these four zones were specified on maps and materials submitted by Egypt and Israel and on file with the Office of the U.S. Trade Representative. For the purposes of this letter, we will assume that the QIZ you are using will meet the requirements of General Note 3(a)(v)(G), HTSUS.Under General Note 3 (a)(v), HTSUS, articles the products of the West Bank, Gaza Strip or a QIZ which are imported directly to the United States from the West Bank, Gaza Strip, a QIZ or Israel, qualify for duty-free treatment, provided the sum of (1) the cost or value of materials produced in the West Bank, Gaza Strip, or QIZ or Israel, plus (2) the direct costs of processing operations performed in the West Bank, Gaza Strip, a QIZ or Israel, is not less than 35% of the appraised value of such articles when imported into the United States. An article is considered to be a product of the West Bank, Gaza Strip, or a QIZ if it is either wholly the growth, product or manufacture of one of those areas or a new and different article of commerce that has been grown, produced or manufactured in one of those areas.     With respect to the requirement that the articles be imported directly, General Note 3(a)(v) (B)(1) provides that:     Articles are "imported directly" for purposes of this paragraph if:(1) they are shipped directly from the West Bank, the Gaza Strip, a qualifying industrial zone or Israel into the United States without passing through the territory of any intermediate country; As noted in the discussion of QIZ eligibility, under Scenarios 1 and 2, the entity made up of the vest and PVC belts is not a "product of the QIZ." Since all components of the entity do not meet the "products of" requirement, the set or composite is ineligible for consideration as a product of the QIZ. Treasury Decision (TD) 91-7, which is an interpretive rule concerning, among other things, the applicability of special tariff treatment programs to collections of articles classified under a single tariff provision such as sets, mixtures, and composite goods, addresses the origin result for the imported vest with PVC belts. In addition to recognizing that there may be multiple countries of origin for these type articles, TD 91-7 specifically states that where an entire imported entity (set or composite good) is not the "product of" the beneficiary country, neither the entity nor any part thereof is entitled to preferential rates of duty. Additionally, you have also inquired regarding the proper country of origin marking for vest and belts which have different countries of origin. Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article.Congressional intent in enacting 19 U.S.C. 1304 was that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. "The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will." United States v. Friedlaender & Co., 27 C.C.P.A. 297 at 302 (1940).Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.41(b), Customs Regulations (19 CFR 134.41(b)), mandates that the ultimate purchaser in the U.S. must be able to find the marking easily and read it without strain. As aforementioned, the classification of vest sold with the belts is determined by General Rules Interpretation 3(b) (GRI 3(b)) of the Harmonized Tariff Schedule of the United States, (HTSUS) which governs the classification of mixtures, composite good consisting of different material or components, and goods put up in sets for retail sale. In T.D. 91-7, January 16, 1991, Customs indicated that the tariff treatment of an article under the HTSUS generally has no effect on the country of origin marking requirements under 19 U.S.C. 1304. GRI 3(b) specifies only that sets, mixtures, and composite goods are classified as if they consisted of the material or component that imparts the essential character to the goods but does not specify that sets, mixture, and composite goods are to be marked according this standard. Accordingly, the classification of a set of goods, such as a vest with two belts, is not determinative of the country of origin marking requirements of the materials or components which comprise the article. For purposes of 19 U.S.C. 1304, the relevant inquiry regarding the marking of the material or components in such a collection is whether such items have been substantially transformed as result of their inclusion in the set, mixture, or composite good.In this case, the belts are not substantially transformed when they are attached and sold together with the vest because the belts remain a distinct article. Because the belts and vest are made of different materials, have a separate design, can be worn with other articles of clothing, they do not lose their separate identity. In essence because the belts are separate articles from the vest, they must be marked with their own country of origin.HOLDING: Based on the information provided, the vest and PVC belts produced under Scenarios 1 and 2 indicated above are considered neither products of the QIZ, nor products under the U.S. - Israel Free Trade Area Implementation Act. The country of origin of the submitted vest is Jordan and the country of origin of the PVC belts is China. The vest and belts are separate articles for country of origin marking purposes and must be individually marked with their country of origin. 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 CFR 177.9(b)(1). This section states that a ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177). Should it be subsequently determined that the information furnished is not complete and does not comply with 19 CFR 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 CFR 177.2. A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Francine Vivona-Brock at (646) 733-3049. Sincerely, Robert B. Swierupski Director National Commodity Specialist Division