NY M87257

November 14, 2006

CLA‑2-RR:NC:TA:359 M87257

CATEGORY: Classification

Ms. Bernadette Purcell

QVC, Inc.

Studio Park

1200 Wilson Drive

West Chester, PA 19380

RE: Classification and country of origin determination for women's
knitwear; 19 CFR 102.21(c)(4); Commonwealth of the Northern Mariana
Islands (CNMI); General Note 3(a)(iv), HTSUS.

Dear Ms. Purcell:

This is in reply to your letter dated October 17, 2006, requesting a
classification and country of origin determination for women's knitwear
which will be imported into the United States. Your samples and
component parts are being returned as per your request.

FACTS:

The subject merchandise, Style A46136, consists of four women's matching
garments constructed of cut and sewn 100% cotton knitted fabric, the
outer surface of which measures more than 9 stitches per 2 centimeters
measured in the direction the stitches were formed.

Style "A46136 Striped" is a pullover featuring a capped v-shaped front
neckline, three-quarter length sleeves, side seams with bottom vents,
three embroidered and beaded lobster appliqués across the bust area, and
a hemmed garment bottom. You refer to the item as a T-shirt. However,
due to the presence of numerous conspicuous features the garment is more
properly classified as a pullover under heading 6110, HTSUS.

Style "A46136 Solid" is a pullover featuring lobster embroidery
appliqués throughout the garment, a three button partial front opening,
a ribbed knit collar, short sleeves, a half-moon sweat patch at the
inner rear neckline, side seams with bottom vents, and a hemmed garment
bottom. However, due to the presence of numerous conspicuous features
the garment is more properly classified as a pullover under heading
6110, HTSUS.

Style "A46136 Pants" are capri-length pants featuring lobster embroidery
appliqués across the lower leg area, an elasticized waistband, side seam
pockets, and hemmed legs with one-inch side slits.

Style "A46136 Skirt" is an ankle-length skirt with an elasticized
waistband and an 11-inch back kick slit.

The manufacturing operations for Style A46136 are as follows:

**Style "A46136 Striped"**

CHINA:

-   Cut fabric into component parts.

-   Embroider and add beading on front panel.

-   Hem the bottom and sleeve.

-   Sew the shoulder seam to join front and back panels.

-   Sew the neck binding around the neckline.

-   Attach the labels to back panel.

CNMI:

-   Attach the sleeve to the body.

-   Sew side seam.

-   Sew the side slit.

-   Trim the excess thread.

-   Inspection, ironing, and packing the garment.

**Style "A46136 Solid "**

[VERSION A]{.underline}

CHINA:

-   Cut fabric into component parts.

-   Embroider both sleeves, front and back panels.

-   Hem the bottom and sleeve.

-   Sew the placket, attach the buttons, and punch the button holes.

-   Sew the flat knit collar ad neck seam binding on the front panel.

-   Attach the half moon facing and neck seam binding.

CNMI:

-   Sew the shoulder seam to join front and back panels.

-   Attach the sleeve to the body.

-   Sew side seams and side slit.

-   Attach labels.

-   Trim the excessive thread.

-   Inspection, ironing and packing of the garment.

[VERSION B]{.underline}

CHINA:

-   Cut fabric into component parts.

-   Embroider both sleeves, front and back panels.

-   Hem the bottom and sleeve.

-   Sew the placket, attach the buttons, and punch the button holes.

-   Sew the shoulder seam to join front and back panels.

-   Sew collar and neck seam binding around neckline.

-   Attach the half moon facing and neck seam binding.

-   Attach labels.

CNMI:

-   Attach sleeve to the body.

-   Sew side seam and side slit.

-   Trim the excessive thread.

-   Inspection, ironing and packing of the garment.

**Style "A46136 Pants"**

CHINA:

-   Cut fabric into component parts.

-   Embroider each panel.

-   Attach pockets to front panels.

-   Sew outside seams, attaching front and back panels.

-   Hem the bottom, forming the side slits.

CNMI:

-   Sew the front and back rises.

-   Sew the inseams.

-   Attach the elastic and form the waistband.

-   Attach label.

-   Trimming, inspection, ironing and packing.

**Style "A46136 Skirt"**

CHINA:

-   Cut fabric into component parts.

-   Embroider each panel.

-   Sew the back panels together, forming the slit.

-   Hem the bottom of the back

CNMI:

-   Sew the side seams.

-   Attach the elastic and form the waistband.

-   Hem the balance of the bottom.

-   Attach label.

-   Trimming, inspection, ironing and packing.

ISSUE:

What are the classification and country of origin of the subject
merchandise?

CLASSIFICATION:

The applicable subheading for styles "A46136 Striped" and "A46136 Solid"
will be 6110.20.2079, Harmonized Tariff Schedule of the United States
(HTSUS), which provides for Sweaters, pullovers, sweatshirts, waistcoats
(vests) and similar articles, knitted or crocheted: Of cotton: Other . .
. Other: Other: Women's or girls': Other. The general rate of duty will
be 16.5% ad valorem.

The applicable subheading for style "A46136 Pants" will be 6104.62.2011,
HTSUS, which provides for Women's...trousers...knitted or crocheted: Of
cotton. The general rate of duty is 14.9% ad valorem.

The applicable subheading for style "A46136 Skirt" will be 6104.52.0010,
HTSUS, which provides for Women's...skirts...knitted or crocheted: Of
cotton. The general rate of duty is 8.3% 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/.

Styles "A46136 Striped" and "A46136 Solid" fall within textile category
339. Style "A46136 Pants" falls within textile category 348, and "A46136
Skirt" falls within textile category 342. With the exception of certain
products of China, quota/visa requirements are no longer applicable for
merchandise which is the product of World Trade Organization (WTO)
member countries. The textile category number above applies to
merchandise produced in non-WTO member-countries. Quota and visa
requirements are the result of international agreements that are subject
to frequent renegotiations and changes. To obtain the most current
information on quota and visa requirements applicable to this
merchandise, we suggest you check, close to the time of shipment, the
"Textile Status Report for Absolute Quotas" which is available on our
web site at www.cbp.gov. For current information regarding possible
textile safeguard actions on goods from China and related issues, we
refer you to the web site of the Office of Textiles and Apparel of the
Department of Commerce at otexa.ita.doc.gov.

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.

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.

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 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 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\":

HTSUS Tariff shift and/or other requirements

> 6101 - 6117 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.

Section 102.21(e) states that the good must be assembled in a single
country, territory or insular possession. Accordingly, as the garments
are assembled in more than one country, territory or insular possession,
it does not satisfy the conditions of the tariff shift and therefore,
Section 102.21(c)(2) is inapplicable.

Section 102.21(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 garments are neither knit to shape nor wholly assembled
in a single country, territory or insular possession in any of the
scenarios described above, Section 102.21 (c)(3) is inapplicable.

Section 102.21 (c)(4) states, \"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 "Style A46136 Striped", the most important assembly
processes are the attaching of the sleeves to the body, sewing the side
seams, and sewing the side slits.

In the case of "A46136 Solid" Version A, the most important assembly
processes are the sewing of the shoulder seams, attaching the sleeves to
the body, and the sewing of the side seams and side slits. For Version
B, the most important assembly processes are attaching the sleeves to
the body and sewing the side seams and side slits.

In the case of "A46136 Pants", the most important assembly processes are
the sewing the front and back rises, sewing the inseams, attaching the
elastic and forming the waistband.

In the case of "Style A46136 Skirt", the most important assembly
operations are sewing the side seams, attaching the elastic, and forming
the waistband.

Accordingly, the country of origin of all the garments is The
Commonwealth of Northern Mariana Islands, the country in which these
operations occurs.

General Note 3(a)(iv), HTSUS, permits products of insular possessions of
the United States, of which the CNMI is one, to be imported into the
United States free of duty obligations if certain requirements are met.
Duty free status is granted to those goods that

> -are the growth or product of the possession; or
>
> -are manufactured or produced in any such possession from materials
>
> which are the growth, product or manufacture of any such possession
>
> or of the customs territory of the Unites States, or, of both: and
>
> -do not contain foreign materials which represent more than 50% of
>
> the goods total value (for textile and apparel articles subject to
> textile
>
> agreements): and
>
> -are shipped directly to the customs territory of the United States
> from
>
> the insular possession.

Since the CNMI is an insular possession of the United States, and since
the goods, which are produced in the CNMI, are textile articles that are
subject to textile agreements, the "foreign materials" which make up the
garments must not represent more than 50% of the articles' value.

In order to meet the requirements of General Note 3(a)(iv), HTSUS, we
must determine whether the component panels which are imported into the
CNMI from China are substantially transformed by the processing in the
CNMI and therefore, become a product of that insular possession. A
substantial transformation occurs when an item emerges from a process
with a new name, character or use that is different from that possessed
by the item prior to processing.

In determining whether the cost or the value of the Chinese component
panels should be considered part of the cost of the "foreign materials"
or of the cost of the materials produced in the CNMI for the purpose of
applying the 50% foreign value limitation under General Note 3(a)(iv),
we must consider whether the component panels undergo a double
substantial transformation during the processing in the insular
possession. Treasury Decision (T.D.) 88-17, effective April 13, 1988,
determined that the concept of the double substantial transformation
should be used in deciding whether foreign material that does not
originate in the insular possession may, nevertheless, qualify as part
of the value of material produced in the insular possession. To do this
the foreign material must be substantially transformed in the insular
possession into a new and different product and then that product must
be transformed yet again into another new and different product that is
exported directly to the United States. If this happens to the foreign
material, then its cost can be considered part of the value of materials
produced in the insular possession.

For an example of the double substantial transformation principle as it
was applied to textile wearing apparel we look to Headquarters Ruling
Letter (HRL) 556214, dated March 20, 1992, in which Customs ruled that
the foreign rolled fabric that was imported into the CNMI where it was
cut to shape and then assembled into golf shirts and cardigans did
undergo a double substantial transformation. In contrast, the present
question involves component panels that are cut in China, not in the
CNMI. Further, those panels are partially assembled in China. Thus, the
component panels do not undergo a double substantial transformation in
the insular possession and their cost may not be included as part of the
value of materials produced in the CNMI.

Despite the fact that the Chinese knitted and cut component panels of
the subject garments are considered foreign materials when they are
shipped to the CNMI, and regardless of the determination that those
foreign panels do not undergo a double substantial transformation when
they are processed in the insular possession, the garments may still
qualify for duty free tariff status as long as it does not contain
foreign materials which represent more than 50% of the total value of
the good and it is shipped directly to the United States from the
insular possession. Section 7.3 of the Customs Regulations (C.R.) states
that such a determination must be based on a cost comparison between

> -the manufacturer's actual materials cost plus the cost of
> transporting those materials to the insular possession (excluding
> duties, taxes and charges after landing)

VERSUS

> -the final appraised value of the imported goods under Section 402a,
> Tariff Act of 1930, as amended.

We note that the final determination regarding whether the foreign value
limitation is satisfied for the above merchandise *can only be made at
the time of its importation* into the United States.

HOLDING:

The country of origin for all garments is the Commonwealth of the
Northern Mariana Islands.

When considering the status of the subject merchandise if the country or
origin is the CNMI the following must be considered: The component
panels that are cut and partly assembled in China are considered foreign
materials for the purpose of calculating the 50% foreign value
limitation under General Note 3(a)(iv), HTSUS. The knit garments may
still be entitled to duty free status under the same General Note to the
tariff schedule provided that they are imported directly from the CNMI
to the United States, and that the 50% foreign value limitation is
satisfied at the time of entry of the merchandise into the United
States. *That value determination cannot be made at this time.*

Since the CNMI is not a foreign country and therefore, the United States
has no quota or visa agreement with it, the knit merchandise is neither
subject to quota restraints nor to the requirement of a visa. However,
in the case of other countries, the merchandise may be subject to quota
restraints and the requirement of a visa.

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 Camille Ferraro at 646-733-3049.

Sincerely,

Robert B. Swierupski

Director,

National Commodity

Specialist Division