[Federal Register Volume 61, Number 135 (Friday, July 12, 1996)]
[Notices]
[Pages 36784-36785]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17689]


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entered, or withdrawn from warehouse, for consumption on or after July 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