HQ 558896

March 10, 1995

CLA-2 CO:R:C:S 558896 MLR

CATEGORY: Classification

TARIFF NO.: 9802.00.90

Mr. Philip Freeman

Cain Customs Brokers

Progreso International Bridge

P.O. Box 10

Progreso, TX 78579

RE: Applicability of subheading 9802.00.90, HTSUS, to boys\'

athletic shirts; sewing; assembly; NAFTA; Article 509;

polyester; country of origin marking

Dear Mr. Freeman:

This is in reference to your letter of October 28, 1994,

requesting a ruling on behalf of Indiana Knitwear Corporation

(\"Indiana\"), regarding the applicability of subheading

9802.00.90, Harmonized Tariff Schedule of the United States

(HTSUS), to certain boys\' athletic shirts which will be assembled

in Mexico. You also inquire whether these shirts may be

considered originating goods under the North American Free Trade

Agreement (NAFTA), and how the shirts should be marked. Samples

of a complete shirt and the components of a shirt were submitted

with your request.

FACTS:

The garment under consideration is a boy\'s 100 percent

polyester mesh (#18 cloth) woven Shimmel length shirt with a

polyester rib knit collar and serged short sleeves. The shirt

may have a number screen printed on the front, which is performed

in the U.S. Two styles are proposed for assembly in Mexico: (1)

\"Sears style #4-3472\" will have a serged bottom; and (2) \"Sears

style #3-3396\" will have a hemmed bottom.

The record contains manufacturer\'s affidavits which state

that the sewing thread, and labels are made in the U.S., and that

the 100 percent polyester material is \"made in the U.S. of USA

materials.\" The material will be cut into shirt components in

the U.S. and sent to Mexico. The operations in Mexico include

serging the edges of the sleeves, sewing the front and back

pieces together at the shoulders, pre-stitching the crew neck

collar and sewing it and labels to the neckline, sewing the

sleeves to the shirt armholes, sewing the side seams, and either

hemming or serging the bottom of the shirt. Serging is an over-edge
stitch formation using a 3-thread serge format that is used

to sew 2 plies together.

One label contains the fiber content information and the

marking \"Assembled in Mexico From Material of U.S. Origin.\" The

other label states \"Max Active Worldwide.\" You state that New

York Ruling Letter (NYRL) 803926 dated December 6, 1994,

classified the shirts under subheading 6110.30.3050, HTSUS. In

that ruling, reference is made to a telephone conversation in

which you stated that the polyester yarn and fabric used to make

the shirts originated in the U.S.

ISSUES:

I. Whether the boys\' athletic shirts will qualify for the duty

exemption available under subheading 9802.00.90, HTSUS, when

returned to the U.S. from Mexico.

II\. Whether the boys\' athletic shirts are considered originating

goods under the NAFTA.

III\. Whether the boys\' athletic shirts may be marked \"Assembled

in Mexico From Material of U.S. Origin.\"

LAW AND ANALYSIS:

I. Subheading 9802.00.90, HTSUS

Appendix 2.4 of Annex 300-B of the NAFTA, provides that:

\[o\]n January 1, 1994, the U.S. shall eliminate customs

duties on textile and apparel goods that are assembled

in Mexico from fabrics wholly formed and cut in the

United States and exported from and reimported into the

United States under:

\(a\) U.S. tariff item 9802.00.80.10; or

\(b\) Chapter 61, 62, or 63 if, after such assembly,

those goods that would have qualified for

treatment under 9802.00.80.10 have been subject to

bleaching, garment dyeing, stone-washing, acid-washing or
perma-pressing.

Thereafter, the U.S. shall not adopt or maintain any

customs duty on textile and apparel goods of Mexico

that satisfy the requirements of subparagraph (a) or

\(b\) or the requirements of any successor provision to

U.S. tariff item 9802.00.80.10.

Consequently, subheading 9802.00.90, HTSUS, was created to

provide for the duty-free entry of:

Textile and apparel goods, assembled in Mexico in which

all fabric components were wholly formed and cut in the

United States, which (a) were exported in condition

ready for assembly without further fabrication, (b)

have not lost their physical identity in such articles

by change in form, shape or otherwise, and have not

been advanced in value or improved in condition abroad

except by being assembled and except by operations

incidental to the assembly process; provided that goods

classifiable in chapters 61, 62, or 63 may have been

subject to bleaching, garment dyeing, stone-washing,

acid-washing or perma-pressing after assembly as

provided for herein.

In view of the fact that the enactment of subheading

9802.00.90, HTSUS, specifically was intended to extend duty-free

and quota-free status to all goods assembled in Mexico, which

previously were eligible for entry under the Special Regime

Program administered under U.S. tariff item 9802.00.8010, HTSUS,

it is Customs view that all of the policy directives implementing

this program should be considered applicable in the

administration of subheading 9802.00.90, HTSUS. Therefore, the

shirts assembled in Mexico may be entered free of duty, as long

as, with the exception of findings, trimmings, and elastic strips

not exceeding 25 percent of the total cost of all components, all

fabric components contained therein are U.S.-formed (i.e., the

fabric is woven or milled in the U.S.), this fabric is cut in the

U.S., and the other conditions of the statute are satisfied.

In this case, a manufacturer\'s affidavit has been submitted

as proof that the sewing thread and labels are made in the U.S.,

and that the polyester material is made in the U.S. from U.S.

materials. Furthermore, the polyester material will be cut into

shirt components in the U.S., and these components are joined

(i.e., sewn) together in a manner acceptable under subheading

9802.00.80, HTSUS. See 19 CFR 10.16(a) (sewing is a proper

assembly operation). Consequently, the shirts will qualify for

duty-free treatment under subheading 9802.00.90, HTSUS.

II\. NAFTA Originating Goods

In regard to your question whether the shirts may be

considered NAFTA originating goods, General Note 12, HTSUS,

incorporates Article 401 of the NAFTA, into the HTSUS. Note

12(b) provides in pertinent part:

For the purposes of this note, goods imported into the

customs territory of the United States are eligible for

the tariff treatment and quantitative limitations set

forth in the tariff schedule as \"goods originating in

the territory of a NAFTA party\" only if\--

\(I\) they are goods wholly obtained or produced

entirely in the territory of Canada, Mexico and/or

the United States; or

\(ii\) they have been transformed in the territory

of Canada, Mexico and/or the United States so

that\--

\(A\) except as provided in subdivision (f) of

this note, each of the non-originating

materials used in the production of such

goods undergoes a change in tariff

classification described in subdivisions

(r),(s) and (t) of this note or the rules set

forth therein, or,

\(B\) the goods otherwise satisfy the

applicable requirements of subdivisions (r),

\(s\) and (t) where no change in tariff

classification is required, and the goods

satisfy all other requirements of this note;

or

\(iii\) they are goods produced entirely in the

territory of Canada, Mexico and/or the United

States exclusively from originating materials\....

First, it is not clear whether the shirts are wholly

obtained or produced entirely in the territory of Canada, Mexico

and/or the U.S. Therefore, we turn to the rule applicable to

goods of subheading 6110.30.30, HTSUS, which is provided for in

General Note 12(t)/61.35. It provides:

\[a\] change to headings 6109 through 6111 from any other

chapter, except from \... chapter 54, or headings 5508

through 5516 or 6001 through 6002\....

While we do not have the precise classification of the fabric,

the fabric from which the sample shirt is constructed is knit

with filament yarns. Chapter 54, HTSUS, includes within its

coverage filament yarns. Since a change from chapter 54 is

excepted from the tariff shift rule applicable to the subject

goods, in order for Customs to determine if those goods are

originating goods for NAFTA duty preference purposes, as we

stated in a telephone conversation to you on March 1, 1995, we

will require the following information: (1) where the yarns were

produced; and (2) where the fabric was formed. A general

statement that the shirts are made of U.S. materials, as you

provided in NYRL 803926, is not sufficient for us to determine if

the shirts are eligible for NAFTA duty preference treatment.

III\. Country of Origin Marking

In regard to country of origin marking, since the good at

issue is subjected to processing in the territories of NAFTA

parties, it will be subject to the country of origin marking

rules set out in the interim amendments to the Customs

Regulations (19 CFR Part 102). The interim amendments to the

Customs Regulations were published as T.D. 94-4 (59 Fed. Reg.

109, January 3, 1994) with corrections (59 Fed. Reg. 5082,

February 3, 1994) and T.D. 94-1 (59 Fed. Reg. 69460, December 30,

1993). These interim amendments took effect on January 1, 1994,

to coincide with the effective date of the NAFTA.

Section 102.11 sets forth the general rules of origin.

Section 102.11(a) states that the country of origin of a good is

the country in which:

\(1\) The good is wholly obtained or produced;

\(2\) The good is produced exclusively from domestic

materials; or

\(3\) Each foreign material incorporated in that good

undergoes an applicable change in tariff classification

set out in section 102.20 and satisfies any other

applicable requirements of that section, and all other

applicable requirements of these rules are satisfied.

\"Domestic material\" is defined in section 102.1(d) as a material

whose country of origin as determined under these rules is the

same country as the country is which the good is produced.

\"Foreign material\" is defined in section 102.1(e) as a material

whose country of origin as determined under these rules is not

the same country as the country in which the good is produced.

Accordingly, since the shirts are not wholly obtained or

produced in Mexico, or produced exclusively from domestic

materials in Mexico (since the fabric was made in the U.S.), we

must determine whether under section 102.11(a)(3) each foreign

material incorporated in the shirt undergoes an applicable change

in tariff classification set out in section 102.20 in Mexico.

According to NYRL 803926, the shirt is classified under

subheading 6110.30.3050, HTSUS. Section 102.20(k) provides the

applicable tariff shift rule for this subheading as follows:

\"A change to heading 6110 from any other chapter, or\....\"

The foreign materials incorporated in the shirt are the cut 100

percent polyester components of the shirt, sewing thread and

labels. While the classification of these items has not been

provided, it appears that the cut components of the shirt are

classifiable under subheading 6117.90.90, HTSUS, as \"other made

up clothing accessories, knitted or crocheted; knitted or

crocheted parts of garments or of clothing accessories: parts:

other.\"

Accordingly, the cut components of the shirt do not meet the

required tariff shift. Section 102.20(k), section XI (Chapters

50 through 63), contains Notes applicable to the various tariff

shift requirements contained therein. Note 3 provides:

\[f\]or the purposes of section 102.11(b) of the General

Rules \..., where a good classifiable in Chapters 61

through 63 does not meet the tariff shift and/or other

requirements of the heading or subheading under which

it is classifiable, the country of origin of that good

shall be the single country where the component which

determines the classification of that good was cut or

formed (e.g. knit to shape).

The fabric is cut in the U.S. However, section 102.14 states

that no good, last advanced in value or improved in condition

outside the U.S. has U.S. origin, and if under any provision of

part 102 it is determined that a good has U.S. origin, that

determined will be disregarded and the country of origin of the

goods will be the last foreign country in which the good was

advanced in value or improved in condition. Accordingly,

pursuant to 19 CFR 134.43(3)(1), where the country of origin of

an article is determined in accordance with 19 CFR 102.14, the

good may be marked \"Assembled in (name of foreign country) from

U.S. components.\" Accordingly, the proposed marking \"Assembled

in Mexico from Material of U.S. Origin\" is appropriate.

HOLDING:

Based upon the information provided, the shirts will qualify

for the duty exemption under subheading 9802.00.90, HTSUS, when

returned to the U.S. from Mexico. Pursuant to 19 CFR 102.14, the

shirts may be marked \"Assembled in Mexico from Material of U.S.

Origin.\"

Sincerely,

John Durant, Director

Commercial Rulings Division