HQ 556434: Applicability of duty exemption under U.S. Note 2(b), subchapter II, Chapter 98, HTSUS, to boot inserts produced in the Dominican Republic; T.D. 91-88; HRL 555788

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 556434

                        April 1, 1992

CLA-2 CO:R:C:S 556434 SER

CATEGORY: Classification

Mr. Michael F. Watson
A.W. Fenton
P.O. Box 360614
Columbus, OH 43236-0614

RE:  Applicability of duty exemption under U.S. Note 2(b),
     subchapter II, Chapter 98, HTSUS, to boot inserts produced
     in the Dominican Republic; T.D. 91-88; HRL 555788

Dear Mr. Watson:

     This is in reference to a letter dated October 30, 1991,
from your company on behalf of William Brooks Shoe Company
("William Brooks"), requesting a ruling on the eligibility for
duty-free treatment under U.S. Note 2(b), subchapter II, Chapter
98 of the Harmonized Tariff Schedule of the United States
Annotated (HTSUSA), of boot liners produced in the Dominican
Republic.

FACTS:

     William Brooks assembles footwear uppers in the Dominican
Republic from U.S.-origin materials.  The sample provided is a
removable "Gortex" liner for boots.  The U.S.-origin material is
shipped in rolls to the Dominican Republic.  In the Dominican
Republic the materials will be cut to shape and then assembled by
stitching and sealing the seams.  All materials are stated to be
of U.S.-origin.

ISSUE:

     Whether the boot liners are entitled to duty-free treatment
under U.S. Note 2(b), subchapter II, Chapter 98, HTSUSA.

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, HTSUSA,
("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.
                               -2-

     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
            in the United States, enters the commerce of any
            foreign country other than a beneficiary country.

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

  1.   Eligibility of Boot Liners

     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 footwear liners are included in the "textile and
apparel article" exclusion for purposes of Note 2(b).  In HRL
555788 dated September 9, 1991, we held that parts of footwear,
which encompass liners for boots, are not considered a textile or
apparel article, and, therefore, are eligible for duty-free
treatment under Note 2(b). See also, Treasury Decision 91-88,
Vol. 25 Cus. Bull. No. 45 (November 6, 1991).

2.   Assembly and Processing in the Dominican Republic

     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.
                               -3-


     Even though 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.

     Although a detailed description of the assembly operations
to be performed in the Dominican Republic was not provided, it
would appear in examining the samples that the operations entail
cutting to shape and then sewing the cut-to-shape materials
together to form the final article.  These operations are
encompassed by the operations specified in Note 2(b)(i).
Therefore, if, in fact, all materials are of U.S. origin and have
been shipped directly to the Dominican Republic, and the uppers
are shipped directly to the U.S. without entering into the
commerce of any foreign country other than a BC, the boot liners
will be entitled to duty-free treatment under Note 2(b), provided
all documentation requirements are met.

HOLDING:

     On the basis of the information submitted, we conclude that
the boot uppers 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.

                                   Sincerely,



                                   John Durant, Director
                                   Commercial Rulings Division