HQ 555777: Duty-free treatment of camera bags from the Dominican Republic under U.S. Note 2(b), subchapter II, Chapter 98, HTSUSA

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                         HQ 555777

                     September 24, 1991
CLA-2 CO:R:C:S 555777 SER

CATEGORY: Classification

Ralph H. Sheppard, Esq.
Adduci, Mastriani, Meeks & Schill
330 Madison Avenue
New York, NY 10017

RE:  Duty-free treatment of camera bags from the Dominican
     Republic under U.S. Note 2(b), subchapter II, Chapter 98,
     HTSUSA

Dear Mr. Sheppard:

     This is in reference to your letters of November 7, 1990,
and April 19, 1991, on behalf of Coast Manufacturing Company
(Coast), requesting duty-free treatment under U.S. Note 2(b),
subchapter II, Chapter 98, Harmonized Tariff Schedule of the
United States (HTSUS), for camera bags produced from various
U.S.-origin components and materials in the Dominican Republic.

FACTS:

     Coast imports camera bags from the Dominican Republic which
are comprised of four types of outer surfaces: vinyl, cotton,
man-made fiber and leather.  All of the components and materials
used in the manufacture of the camera bags in the Dominican
Republic are of U.S.-origin.  Some of the components are exported
in pre-cut sections which are ready for assembly.  The remaining
U.S.-origin materials are exported to the Dominican Republic in
rolls and cut to length prior to the final assembly operations.

     The first step of the operation involves sewing the
materials to form the major panels of the camera bags.  A
paperboard reinforcer and a piece of foam are then sewn into the
bottom compartment door and top flap.  After each of the major
panels are formed, parts of the bags, such as plastic snap locks,
are attached to the panels where needed.  Velcro is then sewn to
the inside of the back and front panels to be used in connection
with interior dividers.  The panels are then sewn together,
forming the bag, foam is inserted where needed, and edges or
seams are finished with welting or binding.  The welting,
binding, velcro and webbing are cut to the desired length just
prior to assembly.  Upon completion, the bags are packaged and
exported to the U.S.


                               -2-


ISSUE:

     Whether the camera bags at issue are entitled to duty-free
treatment under U.S. Note 2(b), subchapter II, Chapter 98,
HTSUSA, when imported into the U.S.

LAW AND ANALYSIS:

     Section 222 of the Customs and Trade Act of 1990 (P.L. 101-
382) amended U.S. Note 2, subchapter II, Chapter 98, HTSUS,
("Note 2(b)") to provide for duty-free treatment of articles,
other than certain specified products, which are assembled or
processed in a Caribbean Basin Initiative beneficiary country
(BC) wholly of fabricated components or ingredients (except
water) of U.S. origin.  This amendment was effective with respect
to goods entered on or after October 1, 1990.

     Specifically Note 2(b) provides as follows:

     (b) No article (except a textile article, apparel article,
     or petroleum, or any product derived from petroleum,
     provided for in heading 2709 or 2710) may be treated as a
     foreign article, or as subject to duty, if-

       (i) the article is--

          (A) assembled or processed in whole of fabricated
          components that are a product of the United
          States, or

          (B) processed in whole of ingredients (other than
          water) that are a product of the United
          States, in a beneficiary country; and

       (ii) neither the fabricated components, materials or
            ingredients, after exportation from the United
            States, nor the article itself, before importation
            into the United States, enters the commerce of any
            foreign country other than a beneficiary country.

     As used in this paragraph, the term "beneficiary country"
means a country listed in General Note 3(c)(v)(A), HTSUSA.  The
Dominican Republic is a designated BC.

     As stated above, Note 2(b) specifies four categories of
products which are excluded from duty-free treatment under this
provision: textile articles; apparel articles; petroleum; and
certain petroleum products.  The issue presented here concerns
whether the camera bags are included in the "textile articles"
exclusion for purposes of Note 2(b) and, therefore, precluded
from receiving duty-free treatment under this provision.  In a
                               -3-

letter dated August 28, 1991 (555886) to the Office of Textiles
and Apparel, International Trade Administration, U.S. Department
of Commerce (copy enclosed), we stated:

     ... as a general rule, we believe that those articles
     (other than footwear and parts of footwear) classified
     in HTSUS provisions which include a textile category
     number should be considered "textile and apparel
     articles" for purposes of U.S. Note 2(b) and,
     therefore, precluded from receiving duty-free under
     this provision.  Conversely, those articles (except
     petroleum and certain petroleum products) classified in
     tariff provisions not containing a textile category
     number should be entitled to such treatment, assuming
     compliance with the requirements of U.S. Note 2(b).

     Heading 4202, HTSUSA, provides for camera bags.  The camera
bags with an exterior surface of vinyl are classified in
subheading 4202.92.9040, HTSUSA; the camera bags with an outer
surface of cotton are classified in subheading 4202.92.6000,
HTSUSA; the camera bags of man-made fiber are classified in
subheading 4202.92.9020, HTSUSA; and the camera bags made of
leather are classified in subheading 4202.91.0090, HTSUSA.
Subheadings 4202.92.9020 and 4202.92.6000, HTSUSA, encompassing
respectively, camera bags made of man-made fiber and cotton, are
tariff provisions which include textile category numbers, and,
therefore, these bags are not entitled to duty-free treatment.
The camera bags made of vinyl and leather, classified in
subheadings 4202.92.9040 and 4202.91.0090, HTSUSA, respectively,
are not classified in provisions which include a textile category
number.  Therefore, these bags are eligible for duty-free
treatment under this note, assuming all other conditions are
fulfilled.

     As stated above, to qualify for duty-free treatment under
Note 2(b), an article must be assembled or processed in a BC
entirely of components or ingredients that are a "product of" the
U.S.  An article manufactured within the customs territory of the
U.S. is considered a "product of" the U.S.  You state in your
submission that all of the materials used to produce the bags are
products of the U.S.

     Note 2(b)(i) specifies that an eligible article will be
entitled to duty-free treatment if it is:

     (A)  assembled or processed in whole of fabricated
          components that are a product of the U.S.,
          or

     (B)  processed in whole of ingredients (other than
          water) that are a product of the U.S., in a
          BC.

                               -4-


     The operations to be performed in the production of the
eligible camera bags consist of: cutting to length of various
materials in the Dominican Republic; sewing and assembling the
components together; and packaging for shipment to the U.S.

     Although Note 2(b)(i)(A) and (B) are separated by the word
"or", it is our opinion that Congress did not intend to preclude
free treatment under this provision to an article which is
created in a BC both by assembling and processing U.S.
fabricated components and by processing U.S. ingredients.

     In regard to the operations performed in the Dominican
Republic, we believe that the cutting and assembly of the U.S.
materials are encompassed by the operations specified in Note
2(b).  See HRL 555742 dated November 5, 1990.  Therefore, if all
the components are of U.S. origin and the finished articles are
shipped directly to the U.S. without entering into the commerce
of any foreign country other than a BC, and the applicable
documentation requirements are satisfied, the eligible camera
bags will be entitled to duty-free treatment under this
provision.  We have enclosed a copy of Headquarters telex 9264071
to Customs field offices, dated September 28, 1990, which
outlines the documentation requirements.

HOLDING:

     On the basis of the information submitted, we conclude that
the vinyl and leather camera bags, classified in subheadings
4202.92.9040 and 4202.91.0090, HTSUSA, respectively, and made in
the Dominican Republic wholly from materials of U.S. origin, are
entitled to duty-free treatment under Note 2(b), upon compliance
with the documentation requirements set forth in Headquarters
telex 9264071 dated September 28, 1990.  The camera bags with an
outer surface of cotton or man-made fibers, which are classified
in HTSUS subheadings containing a textile  category number, are
ineligible for duty-free treatment under Note 2(b).

                                   Sincerely,



                                   John Durant, Director
                                   Commercial Rulings Division
Enclosures