Entry of Certain Goods Assembled Abroad From Components Cut to Shape in the U.S. From Foreign Fabric

DEPARTMENT OF THE TREASURY

Customs Service

Entry of Certain Goods Assembled Abroad From Components Cut to

Shape in the U.S. From Foreign Fabric

AGENCY: U.S. Customs Service, Treasury.

ACTION: General notice.

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SUMMARY: This document sets forth instructions for the proper entry

under the Harmonized Tariff Schedule of the United States of certain

goods assembled abroad from components cut to shape in the U.S. from

foreign fabric.

FOR FURTHER INFORMATION CONTACT: Craig Walker, Special Classification

and Marking Branch, Office of Regulations and Rulings (202-482-6980).

SUPPLEMENTARY INFORMATION:

Background

1. Entry of Section 334(b)(4)(A) Goods Under 9802.00.8065

Section 10.25, Customs Regulations (19 CFR 10.25) implements

section 334(b)(4)(A) of the Uruguay Round Agreements Act (``the Act'')

(codified at 19 U.S.C. 3592), which provides that where components are

cut to shape in the U.S. from foreign fabric and exported to another

country for assembly into an article that is returned to the U.S. and

entered, or withdrawn from warehouse, for consumption on or after July

1, 1996, the dutiable value of the article shall not include the value

of such components. In the final rule document implementing the

provisions of section 334 of the Act, published in the Federal Register

on September 5, 1995 (60 FR 46188), Customs stated the following

regarding 19 CFR 10.25:

Under section 334(b)(4), where goods are assembled abroad from

components cut in the United States from foreign fabric (even though

under section 334 the cut components are not products of the United

States and the assembling country is the country of origin), the

assembled goods, when imported into the United States, will continue

to receive the same duty treatment presently accorded to such goods

under subheading 9802.00.80, HTSUS * * * section 334(b)(4) serves to

preserve a tariff treatment that otherwise would no longer be

available under the section 334 origin rules * * *.

Section 10.25 incorporates by reference the same operational,

valuation, and documentation requirements applicable to goods entered

under subheading 9802.00.80, HTSUS. Accordingly, in promulgating 19 CFR

10.25, Customs expressed its intent to continue to allow entry of these

goods under subheading 9802.00.80, on and after July 1, 1996. Thus,

imported goods entitled to a duty allowance under 19 CFR 10.25 are to

be entered under subheading 9802.00.8065, HTSUS, and, solely for

purposes of calculating the duty allowance under this subheading,

Customs will treat these textile components as if they were ``U.S.

fabricated components''.

It is important to note, however, that permitting the entry of

section 10.25 goods under subheading 9802.00.8065, in order to

implement the duty allowance provided under section 334(b)(4)(A) of the

Act, should not be interpreted as a determination of the country of

origin of these cut components. The determination of the country of

origin of textile components cut in the U.S. from foreign fabric will

be made under a general application of the section 334 rules of origin,

as implemented by section 102.21, Customs Regulations (19 CFR 102.21).

Thus, it is possible that a shipment of assembled goods will be

eligible for a partial duty allowance under subheading 9802.00.8065

pursuant to 10.25, but the country of origin of those goods, for quota,

marking and other general origin purposes, will be neither the country

of assembly nor the U.S.

[[Page 36785]]

because the origin of the assembled goods is determined by the origin

of the fabric comprising the goods. For example, if Indian-origin

fabric is dyed, printed and cut to shape in the U.S. into components

for a tent, and those components are assembled in Mexico into a tent,

the country of origin of that tent, pursuant to section 334(b)(1) or

(2) of the Act, is the origin of the fabric--India. Upon importation

into the U.S., the tent may receive a duty allowance under 19 CFR 10.25

for the value of the fabric components, but it will be a product of

India for purposes of marking (and quota if applicable).

2. Entry of Section 334(b)(4)(B) Goods Under 9802.00.8040

U.S. Note 2(b), subchapter II, Chapter 98, HTSUS (``Note 2(b)'')

(commonly referred to as ``CBI II''), provides for the duty-free

treatment of articles (except textile and apparel products, petroleum

and petroleum products) assembled or processed in a designated CBI

beneficiary country in whole of U.S.-origin components or ingredients

(other than water).

Headquarters telex No. 9264071 to Customs field offices dated

September 28, 1990, set forth instructions regarding the proper entry

of goods entitled to duty-free treatment under Note 2(b). Specifically,

the telex advised that two statistical breakouts had been created for

Note 2(b) articles: subheading 9802.00.5010, HTSUS--for articles

processed in whole of U.S. ingredients (other than water); and

subheading 9802.00.8040, HTSUS--for articles assembled in whole of U.S.

fabricated components.

Section 10.26(b), Customs Regulations (19 CFR 10.26(b)), implements

section 334(b)(4)(B) of the Act, which provides that, effective for

goods entered, or withdrawn from warehouse, for consumption on or after

July 1, 1996, no article (except a textile or apparel product)

assembled in whole of components cut to shape in the U.S. from foreign

fabric, or of such components and components of U.S. origin, in a

designated CBI beneficiary country shall be treated as a foreign

article or as subject to duty. Thus, through the promulgation of 19 CFR

10.26(b), Customs has fulfilled Congressional intent to continue the

duty-free treatment accorded such articles under Note 2(b) prior to

July 1, 1996.

In keeping with the overall statutory intent, as expressed in 19

CFR 10.26(b), Customs has determined that imported goods entitled to

duty-free treatment under 19 CFR 10.26(b) should continue to be entered

under subheading 9802.00.8040, HTSUS. All other instructions and

documentation requirements set forth in telex No. 9264071 shall also

continue to apply to such articles.

Dated: July 8, 1996.

Stuart P. Seidel,

Assistant Commissioner, Office of Regulations and Rulings.

[FR Doc. 96-17689 Filed 7-11-96; 8:45 am]

BILLING CODE 4820-02-P