On August 6, 2009, CBP published notice of proposed Headquarters ruling (“HQ”) H052137, which is intended to modify New York ruling letter (“NY”) N024671 (March 19, 2008) on the eligibility for preferential treatment under the United States- Singapore Free Trade Agreement (“SFTA”) of certain women’s knit pullover garments. In HQ H052137, CBP Headquarters determined that a woman’s cotton knit pullover cut and sewn in Singapore from fabric knit in Singapore of US yarns, and featuring a patch pocket of fabric knit in China of Chinese yarns, was ineligible for preferential tariff treatment under the SFTA.
In NY N024671, CBP applied General Note (“GN”) 25(o), Chapter 61, Chapter Rule 2, which provides that, with respect to a good of HTSUS Chapter 61, the applicable rule for purposes of determining origin shall only apply to the component that determines the tariff classification of the good, and such component must satisfy the tariff change requirements set out in the rule for that good. CBP then found that the pullover component determined the classification of the good and, thus, evaluated whether the pullover alone met the requisite tariff shift. In HQ H052137, CBP Headquarters found that NY N024671 incorrectly applied GN 25(o), Chapter 61, Chapter Rule 2, and that Chapter Rule 2 did not apply because the component that determined the classification of the garment was the cotton knit fabric in both the pullover and the pocket, not just the pullover. Therefore, CBP Headquarters examined both cotton knit fabrics for compliance with the tariff shift rule. The fabric for the body of the pullover met the terms of the applicable tariff shift rule, as the yarns and fabric were formed in the territories of the parties. The fabric for the pocket, however, did not meet the terms of the tariff shift rule, as the yarns and fabric were formed in China. Thus, CBP Headquarters concluded that the pullover was ineligible for preferential treatment under the SFTA. CBP intends to modify NY N024671 accordingly, but will take no action until it considers written comments received on or before September 19, 2009.