HQ 555805: Eligibility for duty-free treatment under U.S. Note 2(b), subchapter II, Chapter 98, HTSUS, of earrings and brooches made in Costa Rica from U.S. materials.

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 555805

                          July 10, 1991

CLA-2 CO:R:C:S  555805 KCC

CATEGORY:  Classification

Mr. Mike Theryoung
TeMik Corporation
111 Cranbrooke Drive
Seffner, Florida  33584

RE:  Eligibility for duty-free treatment under U.S. Note 2(b),
     subchapter II, Chapter 98, HTSUS, of earrings and brooches
     made in Costa Rica from U.S. materials.

Dear Mr. Theryoung:

     This is in response to your letter dated November 2, 1990,
to the Area Director, New York Seaport, requesting a ruling
concerning the tariff treatment and country of origin marking
requirements applicable to earrings and brooches imported from
Costa Rica.  Your letter and samples of the earrings were
forwarded to this office for a response.  Your request concerning
the country of origin marking requirements has been forwarded to
the Value and Marking Branch for a separate response.  We regret
the delay in responding to your request.

FACTS:

     TeMik intends to ship glue, cardboard, plastic beads,
plastic rhinestones, sequins, thread, foil, and fabric, all of
U.S. origin, to Costa Rica.  In Costa Rica, the components will
be processed into women's fashion jewelry, primarily earrings and
brooches.  Although the jewelry is made in a wide range of colors
and shapes, the same materials and processes are used in the
production of each jewelry piece.  Upon completion of the foreign
operations, the jewelry will be returned to the U.S.

ISSUE:

     Whether the earrings and brooches will be entitled to duty-
free treatment under one of the tariff preference programs when
imported into the U.S.

LAW AND ANALYSIS:

     All articles imported into the U.S. are subject to duty
unless specifically exempted therefrom under the Harmonized
Tariff Schedule of the United States (HTSUS).  To determine the
duty applicable to an imported article, it must be properly
classified in a HTSUS tariff provision.  Based on the information
and samples provided, the clip-on earrings and brooches would
appear to be classified under subheading 7117.90.5000, HTSUS,
which provides for imitation jewelry:  other:  other:  valued
over 20 cents per dozen pieces or parts, dutiable at the rate of
11 percent ad valorem.  A pair of earrings has been held to
constitute two pieces under this tariff provision.  See,
Headquarters Ruling Letter (HRL) 023470 dated October 25, 1972.

     Articles entered under subheading 7117.90.5000, HTSUS, are
eligible for duty-free treatment under certain tariff preference
programs, assuming compliance with the requirements of those
programs.  These programs are:  the Generalized System of
Preferences (GSP) (19 U.S.C. 2461-2466), the Caribbean Basin
Economic Recovery Act (CBERA) (19 U.S.C. 2701-2706), and U.S.
Note 2(b), subchapter II, Chapter 98, HTSUS (Note 2(b)).

     Under the GSP, eligible articles the growth, product or
manufacture of a designated beneficiary developing country (BDC)
which are imported directly into the customs territory of the
U.S. from a BDC may receive duty-free treatment if the sum of 1)
the cost or value of materials produced in the BDC, plus 2) the
direct costs of the processing operation in the BDC, is
equivalent to at least 35% of the appraised value of the article
at the time of entry.  See, 19 U.S.C. 2463(b).  Costa Rica is a
designated BDC.  See, General Note 3(c)(ii)(A), HTSUS.

     Under the CBERA, eligible articles the growth, product or
manufacture of designated beneficiary countries (BC's) may
receive duty-free treatment if such articles are imported
directly to the U.S. from a BC, and if the sum of 1) the cost or
value of the materials produced in a BC or BC's, plus 2) the
direct cost of processing operations performed in a BC or BC's,
is not less than 35% of the appraised value of the article at the
time it is entered into the U.S.  See, 19 U.S.C. 2703(a).  The
cost or value of materials produced in the U.S. may be applied
toward the 35% value-content minimum in an amount not to exceed
15% of the imported article's appraised value.  See, section
10.195(c), Customs Regulations (19 CFR 10.195(c)).

     Note 2(b) provides for the duty-free treatment of articles
(other than textile and apparel articles and petroleum and
petroleum products) which are assembled or processed in a CBERA
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.

     To qualify for duty-free treatment under Note 2(b), the
manufacture of the earrings and brooches must take place in one
of the CBERA designated BC'S.  Costa Rica is a BC.  See, General
Note 3(c)(v)(A), HTSUS.  Upon review of the applicable duty-free
programs, Note 2(b) is clearly more relevant to your proposed
transactions than the GSP and CBERA.  Therefore, we will limit
our discussion to the Note 2(b) program.

     We are of the opinion that the earrings and brooches
produced in Costa Rica may enter the U.S. duty free pursuant to
Note 2(b).  Only U.S. origin components or ingredients are used
during the foreign processing operation, which involves gluing
fabric, beads, rhinestones, thread, sequins and foil onto
cardboard backings to produce an earring or brooch.  We believe
that these processes are encompassed by the operations specified
in Note 2(b).  See, HRL 555742 dated November 5, 1990, and HRL
555656 dated December 24, 1990.

     Enclosed is a copy of Headquarters telex 9264071 dated
September 28, 1990, to Customs field offices, setting forth
procedures for entry under Note 2(b).

HOLDING:

     The earrings and brooches which are produced entirely from
U.S. materials in Costa Rica may enter the U.S. duty-free
pursuant to Note 2(b), provided the documentation requirements
set forth in the attached telex dated September 28, 1990, are
satisfied.

                              Sincerely,



                              John Durant, Director
                              Commercial Rulings Division

Enclosure

cc:  Asst. Area Dir., NIS
     857904