NY F86333

July 13, 2000

CLA‑2-61:RR:NC:TA:356 F86333

CATEGORY: Classification

Mr. Michael T. Shor

Arnold & Porter

555 Twelfth Street, N.W.

Washington, D.C. 20004-1202

RE: Classification and country of origin determination for men's and
boys' knit wearing apparel; United States - Israel Free Trade Agreement;
19 CFR Section 12.130; 19 C.F.R. Section 102.21; and General Note 8,
HTS.

Dear Mr. Shor:

This is in reply to your letter dated April 26, 2000, submitted on
behalf of your client, TAC International, Hacienda Heights and Commerce,
California and TAC International, Taipei, Taiwan, concerning the
classification and country of origin determination for five styles of
men's and boys' knit garments which will be imported into the United
States. You have provided a sample of the finished garments and samples
of the garment parts prior to assembly. As requested, your samples will
be returned.

FACTS:

The first garment is polo shirt constructed from either 100% cotton or
65% polyester, 35% cotton, finely knit fabric that measures 14 stitches
per linear centimeter counted in the horizontal direction and 15
stitches per linear centimeter counted in the vertical direction. The
garment has a rib knit spread collar; a partial front opening with three
button closures; short sleeves with rib knit cuffs; and a hemmed bottom.

The second garment is a T-shirt constructed from either 100% cotton or
65% polyester, 35% cotton, finely knit, light weight jersey fabric. The
garment has a rib knit crew neckline; short, hemmed sleeves, and a
hemmed bottom.

The third garment is a pullover garment constructed from either 100%
cotton or 80% cotton, 20% polyester, finely knit fabric that measures 30
stitches per 2 centimeters counted in the horizontal direction. The
garment has a rib knit crew neckline; long sleeves with rib knit cuffs,
and a rib knit bottom.

The fourth garment is a sleeveless pullover garment constructed from
either 100% cotton or 65% polyester, 35% cotton, finely knit fabric that
measures 30 stitches per 2 centimeters counted in the horizontal
direction. The garment has oversized armholes; a rib knit crew neckline;
and a hemmed bottom.

The fifth garment is sweatshirt constructed from either100% cotton or
80% cotton, 20% polyester, finely knit fabric that is napped on the
inside surface. The garment has a self-fabric hood with a drawstring;
long sleeves with rib knit cuffs; a pouch pocket on the lower front
panel; and a rib knit bottom.

The manufacturing operations for the garments will be as follows:

**CHINA OR ANOTHER THIRD COUNTRY:**

-   Yarn is knit into rolls of fabric and exported to Israel

**ISRAEL:**

-   The component parts for each style are cut to shape, sorted and
    bundled by pattern and color, and exported to China or another third
    country

**CHINA OR ANOTHER THIRD COUNTRY:**

-   The cut parts are assembled into completed garments. You state that
    the assembly process consists of simple sewing operations which do
    not require highly skilled workers or a substantial amount of time.
    After the assembly process, the garments will be trimmed, pressed
    and packed for export to the United States.

ISSUE:

What are the classification and country of origin of the shirts?

CLASSIFICATION:

The applicable subheading for the men's polo shirt in 100% cotton will
be 6105.10.0010, Harmonized Tariff Schedule of the United States
Annotated (HTSUSA), which provides for men's or boys' shirts, knitted or
crocheted: of cotton: men's. The rate of duty will be 20.2 % ad valorem.

The applicable subheading for the boys' polo shirt in 100% cotton will
be 6105.10.0030, Harmonized Tariff Schedule of the United States
Annotated (HTSUSA), which provides for men's or boys' shirts, knitted or
crocheted: of cotton: boys'. The rate of duty will be 20.2 % ad valorem.

The applicable subheading for the men's polo shirt in 65% polyester, 35%
cotton will be 6105.20.2010, Harmonized Tariff Schedule of the United
States Annotated (HTSUSA), which provides for men's or boys' shirts,
knitted or crocheted: of man-made fibers: men's. The rate of duty will
be 33% ad valorem.

The applicable subheading for the boys' polo shirt in 65% polyester, 35%
cotton will be 6105.20.2030, Harmonized Tariff Schedule of the United
States Annotated (HTSUSA), which provides for men's or boys' shirts,
knitted or crocheted: of man-made fibers: boys'. The rate of duty will
be 33% ad valorem.

The applicable subheading for the men's colored T-shirt in 100% cotton
will be 6109.10.0012, Harmonized Tariff Schedule of the United States
Annotated (HTSUSA), which provides for men's or boys' T-shirts, knitted
or crocheted: of cotton: other T-shirts: men's. The rate of duty will be
18.3 % ad valorem.

The applicable subheading for the boys' colored T-shirt in 100% cotton
will be 6109.10.0014, Harmonized Tariff Schedule of the United States
Annotated (HTSUSA), which provides for men's or boys' T-shirts, knitted
or crocheted: of cotton: other T-shirts: boys'. The rate of duty will be
18.3 % ad valorem.

The applicable subheading for the men's colored T-shirt in 65%
polyester, 35% cotton will be 6109.90.1007, Harmonized Tariff Schedule
of the United States Annotated (HTSUSA), which provides for men's or
boys' T-shirts, knitted or crocheted: of man-made fibers: men's or
boys': T-shirts: men's. The rate of duty will be 32.8 % ad valorem.

The applicable subheading for the boys' colored T-shirt in 65%
polyester, 35% cotton will be 6109.90.1009, Harmonized Tariff Schedule
of the United States Annotated (HTSUSA), which provides for men's or
boys' T-shirts, knitted or crocheted: of man-made fibers: men's or
boys': T-shirts: boys'. The rate of duty will be 32.8 % ad valorem.

The applicable subheading for the men's and boys' 100% cotton or 80%
cotton, 20% polyester long sleeve crew neck pullover will be
6110.20.2065, Harmonized Tariff Schedule of the United States Annotated
(HTSUSA), which provides for pullovers ...: knitted or crocheted: of
cotton: other: men's or boys'. The rate of duty will be 18.2 % ad
valorem.

The applicable subheading for the men's and boys' 100% cotton sleeveless
pullover will be 6110.20.2065, Harmonized Tariff Schedule of the United
States Annotated (HTSUSA), which provides for pullovers ...: knitted or
crocheted: of cotton: other: men's or boys'. The rate of duty will be
32.9 % ad valorem.

The applicable subheading for the men's and boys' 65% polyester, 35%
cotton sleeveless pullover will be 6110.30.3050, Harmonized Tariff
Schedule of the United States Annotated (HTSUSA), which provides for
pullovers ...: knitted or crocheted: of man-made fibers: other: men's or
boys'. The rate of duty will be 32.9 % ad valorem.

The applicable subheading for the men's and boys' 100% cotton or 80%
cotton, 20% polyester sweatshirt will be 6110.20.2040, Harmonized Tariff
Schedule of the United States Annotated (HTSUSA), which provides for
sweatshirts... and similar articles, knitted or crocheted: of cotton:
other: sweatshirts: men's or boys'. The rate of duty will be 18.2 % ad
valorem.

The garments in chief weight of cotton fall within textile category
designation 338. The garments in chief weight of man-made fibers fall
within textile category designation 638. The designated textile and
apparel categories and their quota and visa status are the result of
international agreements that are subject to frequent renegotiations and
changes. To obtain the most current information, we suggest that you
check, close to the time of shipment, the [U.S. Customs Service Textile
Status Report]{.underline}, an internal issuance of the U.S. Customs
Service, which is available at the Customs Web site at www.customs.gov.
In addition, the designated textile and apparel categories may be
subdivided into parts. If so, visa and quota requirements applicable to
the subject merchandise may be affected and should also be verified at
the time of shipment.

COUNTRY OF ORIGIN - LAW AND ANALYSIS:

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.

EXCEPTION FOR UNITED STATES-ISRAEL FREE TRADE AGREEMENT:

You have stated that the knit fabric is cut into garment parts in
Israel. Section 334(b)(5) of the Uruguay Round Agreements Act provides
that:

This section shall not affect, for purposes of the customs laws and
administration of quantitative restrictions, the status of goods that,
under rulings and administrative practices in effect immediately before
the enactment of this Act, would have originated in, or been the growth,
product or manufacture of, a country that is a party to an agreement
with the United States establishing a free trade area, which entered
into force before January 1, 1987. For such purposes, such rulings and
administrative practices that were applied, immediately before the
enactment of this Act, to determine the origin of textile and apparel
products covered by such agreement shall continue to apply after the
enactment of this Act, and on and after the effective date described in
subsection (c), unless such rulings and practices are modified by the
mutual consent of the parties to the agreement.

Israel is the only country that qualifies under the terms of Section
334(b)(5). As the Section 334 rules of origin for textiles and apparel
products do not apply to Israel, we refer to the 19 C.F.R. 12.130 rules
of origin, the rules of origin applicable to textiles and textile
products before the enactment of Section 334. Section 334(b)(5) makes
clear that if country of origin was conferred in Israel under Section
12.130, Israel will now be accorded the same treatment. This
interpretation of Section 334(b)(5) was confirmed in a general statement
of policy, Treasury Decision 96-58, appearing in the [Federal
Register,]{.underline} Vol. 61, No. 148, dated July 31, 1996.

Accordingly, applying Section 12.130(b), the standard of substantial
transformation governs the country of origin determination where
textiles and textile products are processed in more than one country.
The country of origin of textile products is deemed to be that foreign
territory or country where the articles last underwent a substantial
transformation. Substantial transformation is said to occur when the
article has been transformed into a new and different article of
commerce by means of substantial manufacturing or processing.

Section 12.130(d) sets forth criteria for determining whether a
substantial transformation of a textile product has taken place. These
criteria are not exhaustive; one or any combination of criteria may be
determinative, and additional factors may be considered.

Section 12.130(d)(1) states that a new and different article of commerce
will usually result from a manufacturing or processing operation if
there is a change in:

\(i\) Commercial designation or identity,

\(ii\) Fundamental character, or

\(iii\) Commercial use.

Section 12.130(d)(2) states that for determining whether the merchandise
has been subjected to substantial manufacturing or processing
operations, the following is considered:

\(i\) The physical change in the material or article;

\(ii\) The time involved in the manufacturing or processing;

\(iii\) The complexity of the manufacturing or processing;

\(iv\) The level or degree of skill and/or technology required in the
manufacturing or processing operations;

\(v\) The value added to the article or material.

Section 12.130(e)(1) states, in pertinent part, that an article will
usually be a product of a particular country when it has undergone in
that country:

\(iv\) Cutting of the fabric into parts and the assembly of these parts
into the completed article; or

\(v\) Substantial assembly by sewing and/or tailoring of all cut pieces
of apparel articles that were cut from the fabric in another country
into a component garment. (e.g., the complete assembly and tailoring of
all cut pieces of a suit-type jacket, suit or shirt).

Customs has consistently held that the cutting of fabric into garment
parts is a substantial transformation of the fabric and that those
garment parts become the product of the country in which they are cut.
It is also the consistently held position of Customs that when garment
parts are cut in one country but the garment in assembled in another
country, unless the assembly operation is a substantial assembly such as
that referred to in Section 12.130(e)(1)(v), the country or origin
remains the country in which the garment parts are cut. See, for
example, HRL 088235 dated March 15, 1991, and the rulings which are
cited therein.

In this case, since the fabric is cut into component garment parts in
Israel, then Israel is the country of origin of the shirts. This is
because, in Israel, the knit fabric is substantially transformed into
garment parts that are designated for particular articles of apparel,
thereby creating a new and different article of commerce. The mere
assembly of goods, on the other hand, is not sufficient to substantially
transform the components of an article into a new and different article
of commerce.

\"IMPORTED DIRECTLY\" FROM ISRAEL:

Under General Note 8, Harmonized Tariff Schedule of the United States
(HTS), products of Israel are eligible, when imported into the United
States, for the \"special\" duty rate set forth in the tariff schedule
only if each article is imported directly from Israel into the customs
territory of the United States (General Note 8(b)(ii)). Since the
garments which are the subject of this ruling are shipped from Israel to
China for final assembly of their component parts into the finished
garments and the garments are exported to the United States from China,
these styles do not qualify for the \"special\" duty rate.

HOLDING:

The country of origin for the polo shirt, T-shirt, long sleeve crew neck
pullover, sleeveless pullover and sweatshirt is Israel. Based upon
international textile trade agreements, products of Israel are not
subject to quota or the requirement of a visa. The shirts are not
eligible for the \"special\" duty rate because they are not imported
directly from Israel.

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
sections 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 Mary Ryan at 212-637-7081.

Sincerely,

Robert B. Swierupski

Director,

National Commodity

Specialist Division