August 20, 2009 CBP Bulletin Notice on SFTA Treatment for Certain Women's Pullovers
In the August 20, 2009 issue of the U.S. Customs and Border Protection Bulletin (Vol. 43, No. 34), CBP published a notice proposing to modify one ruling and revoke a treatment as follows:
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Proposed modification of ruling; proposed revocation of treatment. CBP is proposing to modify one ruling on the eligibility of certain women's cotton pullovers for preferential tariff treatment under the US-Singapore Free Trade Agreement (SFTA). Additionally, CBP proposes that this notice covers any rulings on this merchandise that may exist but have not been specifically identified. CBP is also proposing to revoke any treatment it has previously accorded to substantially identical transactions.
CBP states that any party who has received an interpretive ruling or decision on the merchandise that is subject to the proposed modification and revocation, or any party involved with a substantially identical transaction, should advise CBP by September 19, 2009, the date that written comments on the proposed ruling are due. Furthermore, CBP states that an importer's failure to advise CBP of such rulings, decisions, or substantially identical transactions may raise issues of reasonable care on the part of the importer or its agent for importations subsequent to the effective date of the final decision in this notice.
Women's knit cotton pullovers. The merchandise is described a women's short sleeve pullover constructed of 100% cotton knit fabric. The pullover features a pocket with a buttoned tab closure on the upper left side front panel. The yarns used to manufacture the fabric for the pullover are of United States origin. The yarns are imported into Singapore and knitted into fabric. The fabric is then cut and sewn to create the body of the pullover. The yarns used to manufacture the fabric for the pocket are of Chinese origin. The fabric is knitted in China and imported into Singapore where it is cut, sewn and attached to the body of the pullover.
CBP is proposing to issue HQ H052137 in order to modify NY N024671 and determine that the pullovers are not eligible for duty free treatment under the SFTA.
CBP proposes this change as a correction. The pullover at issue is 100 percent cotton, and therefore, classification was accomplished by application of GRI 1. The garment is classified as a cotton knit pullover in subheading 6110.20.2079.
General Note (GN) 25 of the HTSUSA implements the provisions of the SFTA in the U.S. tariff schedule. In the case at hand, the cotton knit pullover is not wholly obtained or produced entirely in the territory of Singapore or of the U.S. and is not a good listed in the exceptions (at subdivision (m) of GN 25.) Therefore, it must be determined if the pullover has been transformed in the territory of Singapore as required by the specific rules in GN 25 (o).
The applicable rule for the cotton knit pullover in GN 25(o) is Chapter 61, Rule 59 which states:
"A change to headings 6109 through 6111 from any other chapter, except from headings 5106 through 5113, 5204 through 5212, 5307 through 5308 or 5310 through 5311, chapter 54 or headings 5508 through 5516 or 6001 through 6006, provided that the good is both cut (or knit to shape) and sewn or otherwise assembled in the territory of Singapore or of the United States, or both."
In addition, GN 25 contains additional chapter rules which pertain to goods classified in HTS Chapter 61. GN 25(o), Chapter 61, Chapter Rule 2, states in relative part:
"For purposes of determining the origin of a good of this chapter, the rule applicable to that good shall only apply to the component that determines the tariff classification of the good and such component must satisfy the tariff change requirements set out in the rule for that good."
In NY N024671, CBP had applied Chapter Rule 2 to establish that the body of the garment was determinative of classification, and therefore only the body of the garment was required meet the tariff shift stated in Rule 59. CBP now asserts that in this case, the Chapter Rule 2 is not applicable. The component that determines the classification of the garment is the cotton knit fabric. Classification of the subject garment is accomplished by application of GRI 1, without making a distinction between the two cotton knit fabrics. CBP states that Chapter Rule 2 simply does not apply in this case to restrict the application of the tariff shift rule (Rule 59) to a specific component in the subject garment.
The fabric for the body of the pullover meets the terms of Rule 59 as the yarns and fabric are formed in the territories of the parties. The fabric for the pocket, however, does not meet the terms of Rule 59 as the yarns and fabric are formed in China. Both fabrics meet the requirement of being cut and assembled in the territory of one or both parties, .i.e., the garment is cut and sewn in Singapore. However, as the pocket fabric does not meet the terms of Rule 59 (based on the formation of the fabric in China), the pullover is ineligible for preferential treatment under the SFTA.
In addition, CBP refers to the following prior rulings as support for this proposal: HQ 561892, dated August 30, 2002, and HQ H043056, dated May 5, 2009.
Proposed: not eligible for preference;Current: eligible for preference
August 20, 2009 CBP Bulletin (Vol. 43, No. 34) available athttp://www.cbp.gov/xp/cgov/trade/legal/bulletins_decisions/bulletins_2009/