CLA-2 CO:R:C:M 951996 KCC
Mr. Ian MacDonald
Polliwogs Handcrafted Ltd.
#407-1952 Kingsway Avenue
Port Coquitlam, B.C. Canada V3C 6C2
RE: Padded car seat covers and an infant head rest/cushions;
CFTA; originating goods; General Rule 3(c)(vii)(B); change
in tariff classification; General Rule 3(c)(vii)(R)(20)(aa)
Dear Mr. MacDonald:
This is in reference to a ruling issued to you by Customs in
New York, on April 1, 1992 (NY 872130), concerning the tariff
classification under the Harmonized Tariff Schedule of the United
States ("HTSUS"), and eligibility under the United States-Canada
Free Trade Agreement ("CFTA"), of various infant products from
Canada.
FACTS:
NY 872130 classified various infant products. At issue in
this decision is the applicability of the CFTA to the cozy cover
(style 105), cuddle up (style 204) and head rest (style 206)
("covers and cushions"). These products are made from Chinese
65/35 polycotton shell fabric and Canadian polyester fiber fill.
The fabric is cut, sewn and assembled with the fiber fill in
Canada. The completed covers and cushions are then imported into
the U.S.
NY 872130 classified these articles under subheading
9404.90.20, HTSUS, which provides for "Mattress supports;
articles of bedding and similar furnishings (for example,
mattresses, quilts, eiderdowns, cushions, pouffes and pillows)
fitted with springs or stuffed or internally fitted with any
material...Other...Pillows, cushions and similar
furnishings...Other." NY 872130 stated that goods classifiable
under subheading 9404.90.20, HTSUS, which have originated in the
territory of Canada will be entitled to a 3.6 percent rate of
duty under the CFTA. Furthermore, NY 872130 stated that to be
considered an originating good "the value of materials
originating in the territory of Canada and/or the United States
plus the direct cost of processing performed in the territory of
Canada and/or the United States must constitute not less than 50
percent of the value of the goods" for items classifiable in
subheading 9404.90.20, HTSUS.
ISSUE:
Whether the infant covers and cushions are eligible for
preferential duty treatment under the CFTA?
LAW AND ANALYSIS:
To be eligible for tariff preferences under the CFTA, goods
must be "originating goods" within the rule of origin in General
Note 3(c)(vii)(B), HTSUS. There are two primary means in General
Note 3(c)(vii)(B), HTSUS, by which articles imported into the
United States may be "goods originating in the territory of
Canada." The first method is if the goods are "wholly obtained."
General Note 3(c)(vii)(B)(1), HTSUS. The second method is if the
goods are "transformed in the territory of Canada and/or the
United States." General Note 3(c)(vii)(B)(2), HTSUS.
A product which is "wholly obtained or produced in the
territory of Canada and or the United States" is one which is
grown, mined, harvested, born and raised in Canada and/or the
United States, or otherwise intimately connected to the two
countries and their land, air and sea territories as defined in
General Note 3(c)(vii)(L), HTSUS. The covers and cushions
contain fabric from a third country, China. Since they contain
foreign materials, the covers and cushions are not "wholly
obtained or produced in the territory of Canada and/or the United
States."
The second method to become an originating good for CFTA
purposes is for an article made of foreign materials to be
transformed in Canada and/or the United States in accordance with
General Note 3(c)(vii)(B)(2), HTSUS. A transformation occurs
when a change in tariff classification occurs that is authorized
by General Note 3(c)(vii)(R), HTSUS. Pursuant to General Note
3(c)(vii)(R)(20)(aa), HTSUS, a transformation is evident for
Chapter 94, HTSUS, when:
A change from one chapter to another, except a change to
subheading 9404.90 from headings 5007, 5111 through 5113,
5208 through 5212, 5309 through 5311, 5407 through 5408, and
5512 through 5516.
In this instance, the fabric is classified in either heading 5513
or 5514, HTSUS, when it enters Canada. Upon importation into the
U.S., the fabric incorporated into the covers and cushions is
classified in subheading 9404.90.20, HTSUS. A change in tariff
classification occurs. However, the change is not a change
required by General Note 3(c)(vii)(R)(20)(aa), HTSUS, for goods
of subheading 9404.90.20, HTSUS. Therefore, these articles are
not considered to be "goods originating in the territory of
Canada."
HOLDING:
The covers and cushions are not transformed in Canada so to
affect a required change in tariff classification in accordance
with General Notes 3(c)(vii)(B)(2) and 3(c)(vii)(R), HTSUS.
Thus, the covers and cushions are not "goods originating in the
territory of Canada" for CFTA purposes in accordance with General
Note 3(c)(vii)(B), HTSUS.
The covers and cushions are classified under subheading
9404.90.20, HTSUS, which provides for "Mattress supports;
articles of bedding and similar furnishings (for example,
mattresses, quilts, eiderdowns, cushions, pouffes and pillows)
fitted with springs or stuffed or internally fitted with any
material...Other...Pillows, cushions and similar
furnishings...Other", which is dutiable at the rate of 6 percent
ad valorem.
This notice to you should be considered a modification of NY
872130 under 19 CFR 177.9(d)(1). It is not to be applied
retroactively to NY 872130 (19 CFR 177.9(d)(1)) and will not,
therefore, affect past transactions for the importation of your
client's merchandise under that ruling. However, for the
purposes of future transactions in merchandise of this type, NY
872130 will not be valid precedent. We recognize that pending
transactions may be adversely affected by this revocation, in
that current contracts for importations arriving at a port
subsequent to this decision will be classified pursuant to it.
If such a situation arises, you may, at your discretion, notify
this office and apply for relief from the binding effects of this
decision as may be warranted by the circumstances.
Sincerely,
John Durant, Director
Commercial Rulings Division