CLA-2 RR:TC:TE 959813 jb
Angel L. Cooper
A.N. Deringer, Inc.
173 W. Service Road
Champlain, NY 12919
RE: Country of origin determination for a comforter, sham,
bedskirt and sheet set; 19 CFR 102.21(c)(2); tariff shift;
19 CFR 102.21 (c)(4); most important assembly; 19 CFR 102.21(c)(5); last country in which an important assembly or
manufacturing process occurs; 102.21(d); sets; NAFTA
eligibility; Article 509
Dear Ms. Cooper:
This is in reply to your letter dated September 27, 1996,
requesting a country of origin determination for a comforter,
sham, bedskirt and sheet set which will be imported into the
United States. Although no samples were submitted to this office
for examination, information was provided regarding the
manufacturing operations.
FACTS:
The merchandise at issue, which you claim to be a set,
consists of a comforter, sham, bedskirt and sheet set. The
comforter, sheets and sham are made of 50 percent polyester and
50 percent cotton fabric. You state that the bedskirt has a
platform made of 100 percent cotton fabric and skirting of 50
percent polyester and 50 percent cotton. The comforter has a 100
percent polyester nonwoven fiberfill fabric batting.
Additionally, the sheets are napped and the top sheet features a
ruffle at the top. The manufacturing operations are as follows:
Scenario I
PAKISTAN
- fabric for sheets, top and bottom panels of comforter,
sham and skirting of bedskirt is formed and printed.
CANADA
- fabric for the bedskirt platform is formed;
- fabric for the comforter's batting is formed;
- cutting;
- assembly into completed articles.
Scenario II
PAKISTAN
- fabric for the sheets, comforter's top panel, sham and
skirting of bedskirt is formed.
CANADA
- fabric for the comforter's bottom panel is formed;
- fabric for the bedskirt platform is formed;
- fabric for the comforter's batting is formed;
- cutting;
- assembly into completed articles.
Scenario III
PAKISTAN
- fabric for sheets, top and bottom panel of comforter, sham
and skirting of bedskirt is formed and shipped in the greige
state to Canada;
CANADA
- fabric for sheets, top and bottom panel of comforter, sham
and skirting of bedskirt is printed;
- fabric for bedskirt platform is formed;
- fabric for comforter's batting is formed;
- cutting;
- assembly into completed articles.
Scenario IV
PAKISTAN
- fabric for the sheets, comforter's top panel, sham, and
skirting of bedskirt is formed and shipped in the greige
state to Canada.
CANADA
- fabric for the sheets, comforter's top panel, sham, and
skirting of bedskirt is printed;
- fabric for the comforter's bottom panel is formed;
- fabric for the bedskirt platform is formed;
- fabric for the comforter's batting is formed;
- cutting;
- assembly into completed articles.
Scenario V
PAKISTAN
- fabric for the sheets, comforter's top panel, sham, and
skirting of bedskirt is formed and shipped in the greige
state to Canada;
- fabric for the comforter's batting is formed.
CANADA
- fabric for the sheets, comforter's top panel, sham, and
skirting of bedskirt is printed;
- fabric for the comforter's bottom panel is formed;
- fabric for the bedskirt platform is formed;
- cutting;
- assembly into the completed articles.
ISSUE:
1. What is the proper classification for the subject
merchandise?
2. Whether the subject merchandise is eligible for duty free
treatment under the North American Free Trade Agreement
(NAFTA)?
3. What is the country of origin of the submitted
merchandise?
4. Which items have to be separately identified on the entry
for Visa/Quota purposes and what rates of duty apply?
5. If Pakistan is the country of origin for quota and
marking purposes, can the merchandise be
entered with a certificate of eligibility under the NAFTA tariff preferential level (TPL) rate
of duty?
LAW AND ANALYSIS:
Classification
Classification of merchandise under the Harmonized Tariff
Schedule of the United States Annotated (HTSUSA) is in accordance
with the General Rules of Interpretation. GRI 1 requires that
classification be determined according to the terms of the
headings and any relative section or
chapter notes. Where goods cannot be classified solely on the
basis of GRI 1, the remaining GRI will be applied, in the order
of their appearance.
GRI 3 states that when goods are classifiable under two or
more headings, classification shall be as follows:
(b) Mixtures, composite goods consisting of different
materials or made up of different components, and goods put
up in sets for retail sale, which cannot be classified by
reference to 3(a), shall be classified as if they consisted of
the material or component which gives them their
essential character, insofar as this criterion is applicable.
The Explanatory Notes to the Harmonized Commodity
Description and Coding System (EN) to GRI 3(b) define "goods put
up in sets for retail sale" as follows:
(a) consist of at least two different articles which are,
prima facie, classifiable in different headings.
Therefore, for example, six fondue forks cannot be regarded as a
set within the meaning of this Rule;
(b) consist of products or articles put up together to meet
a particular need or carry out a specific activity; and
(c) are put up in a manner suitable for sale directly to
users without repacking (e.g., in boxes or cases or on
boards).
In the case of the subject merchandise the components of
what you refer to as a "set" meet the criteria of "goods put up
in sets for retail sale". The components of the set consist of
different articles which are classifiable in different headings,
they are put together to meet a particular need or carry out a
specific activity, that is, articles of bedding to furnish a bed,
and they are packed for sale directly to users without repacking.
In the opinion of this office, the comforter imparts the
essential character of the set due to its bulk when compared to
the other components. Accordingly, the subject merchandise is
properly classifiable as a set in subheading 9404.90.8522,
HTSUSA, which provides for, among other things, comforters with
outershells of man-made fibers.
NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA) ELIGIBILITY
The subject comforter set undergoes processing operations in
Canada which is a country provided for under the North American
Free Trade Agreement (NAFTA). General Note 12, HTSUSA,
incorporates Article 401 of the NAFTA into the HTSUSA. Note
12(a) provides, in pertinent part:
* * *
(i) Goods that originate in the territory of a NAFTA party
under the terms of subdivision (b) of this note and that
qualify to be marked as goods of Canada under the terms
of the marking rules... and are entered under a subheading for
which a rate of duty appears in the "Special" subcolumn
followed by the symbol "CA" in parentheses, are eligible
for such duty rate... . [Emphasis added]
Accordingly, the comforter set at issue will be eligible for the
"Special" "CA" rate of duty provided it is a NAFTA "originating"
good under General Note 12(b), HTSUSA, and it qualifies to be
marked as a good of Canada. Note 12(b) provides in pertinent
part,
For the purposes of this note, goods imported into the
customs territory of the United States are eligible for the
tariff treatment and quantitative limitations set forth in
the tariff schedule as "goods originating in the territory
of a NAFTA party" only if--
(i) they are goods wholly obtained or produced entirely in
the territory of Canada, Mexico and/or the United States;
or
(ii) they have been transformed in the territory of
Canada, Mexico and/or the United States so that--
(A) except as provided in subdivision (f) of this note,
each of the non-originating materials used in
the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and
(t) of this note or the rules set forth therein,
or
(B) the goods otherwise satisfy the applicable
requirements of subdivisions (r), (s) and (t) where
no change in tariff classification is required, and the goods
satisfy all other requirements of this note; or
(iii) they are goods produced entirely in the territory
of Canada, Mexico and/or the United States exclusively
from originating materials; or
* * *
The subject merchandise qualifies for NAFTA treatment only
if the provisions of General Note 12(b)(ii)(A) are met, that is,
if the merchandise is transformed in the territory of Canada so
that the non-originating material undergoes a change in tariff
classification as described in subdivision (t).
The comforter set is classifiable in subheading
9404.90.8522, HTSUSA. For subheading 9404.90, HTSUS, subdivision
(t), Chapter 94, rule 7, states that:
A change to subheading 9404.90 from any other chapter,
except from headings 5007, 5111 through 5113, 5208 through
5212, 5309 through 5311, 5407 through 5408 or 5512 through
5516.
In Scenarios I through V when the fabric for the subject
comforter set leaves Pakistan, it is classifiable within headings
5208 through 5212. As these headings are excepted by subdivision
(t) for subheading 9404.90, HTSUS, the non-originating material
from Pakistan does not undergo the requisite change in tariff
classification. Accordingly, the merchandise is not eligible for
the NAFTA preference.
Country of origin
On September 5, 1995, Customs published in the Federal
Register (60 FR 46188) T.D. 95-69 which set forth final
amendments to the Customs Regulations to implement the provisions
of section 334(b) of the Uruguay Round Agreements Act ("the
Act"), Public Law 103-465, 108 Stat. 4809, hereinafter 19 U.S.C.
3592, regarding the country of origin of textile and apparel
products. These final regulations apply to goods entered, or
withdrawn from warehouse, for consumption on or after July 1,
1996. The regulatory provisions in T.D. 95-69 that implement the
basic origin principles of section 334(b) of the Act are
contained in a new 102.21 of the Customs Regulations (19 CFR
102.21).
The final rule for the rules for determining country of
origin of a good for purposes of Annex 311 of the NAFTA was
published by Customs on June 6, 1996, in the Federal Register (61
FR 28932). Therein it was stated, in pertinent part:
New 102.21 was modeled on the approach taken in the
interim Part 102 texts as published in T.D. 94-4 and thus
incorporates a general statement of applicability (paragraph
(a)), various definitions (paragraph (b)), general origin
rules (paragraphs (c) and (d)), and specific tariff shift
and/or other requirements (paragraph (e)) that apply under
the second general rule. Of particular note for purposes of
the present document is the definition of "textile or
apparel product" in 102.21(b)(5) which delineates the class
of goods covered by the 102.21 rules. That definition
identifies those goods with reference to classification in
the HTSUS and refers to Chapters 50 through 63 (that is, all
of Section XI) of the HTSUS as well as to specific headings
and 6-, 8- or 10-digit subheadings of the HTSUS that fall
outside Section XI. Thus, if a good is classifiable in an
HTSUS provision listed in 102.21(b)(5), precedence must be
given to the 102.21 rules over any other regulatory
provision with regard to that good, including any origin
rules contained elsewhere in part 102.
Accordingly, as the subject merchandise is classified in headings
9404.90.85, 6302, 6304 and 6303, HTSUS, textile articles
identified by 102.21(b)(5), the 102.21 rules take precedence
over any other rules of origin to determine the appropriate
country of origin.
Paragraph (c)(1) states that "The country of origin of a
textile or apparel product is the single country, territory, or
insular possession in which the good was wholly obtained or
produced." As the subject merchandise is not wholly obtained or
produced in a single country, territory or insular possession,
paragraph (c)(1) of Section 102.21 is inapplicable.
Paragraph (c)(2) states that "Where the country of origin of
a textile or apparel product cannot be determined under paragraph
(c)(1) of this section, the country of origin of the good is the
single country, territory, or insular possession in which each
foreign material incorporated in that good underwent an
applicable change in tariff classification, and/or met any other
requirement, specified for the good in paragraph (e) of this
section".
Paragraph (e) states that "The following rules shall apply
for purposes of determining the country of origin of a textile or
apparel product under paragraph (c)(2) of this section":
6301-6306 The country of origin of a good classifiable under
heading 6301 through 6306 is the country,
territory, or insular possession in which the fabric comprising the good was formed by a fabric-making process.
9404.90 The country of origin of a good classifiable under
subheading 9404.90 is the country, territory, or
insular possession in which the fabric comprising the good was formed by a fabric-making process.
Section 102.21(d) addresses the treatment of sets for
country of origin purposes. Section 102.21(d) provides the
following:
Where a good classifiable in the HTSUS as a set includes one
or more components that are textile or apparel products and
a single country of origin for all of the components of the
set cannot be determined under paragraph (c) of this
section, the country of origin of each component of the set
that is a textile or apparel product shall be determined
separately under paragraph (c) of this section.
Although the classification of the subject comforter set, as per
an essential character determination, is based on the comforter,
per the terms of Section 102.21(d), the country of origin of each
of the items comprising the set must be determined separately.
As the comforter and bedskirt in the comforter set are
comprised of fabric sourced in more than one country, there is no
single country in which the fabric was formed. Accordingly,
Section 102.21(c)(2) is not applicable to this merchandise.
However, the tariff shift rule may be applicable in determining
the country of origin of some of the components of the set. The
sheet set and pillow sham are classifiable in headings 6302 and
6304, HTSUS, respectively. In scenarios I through V, as the
fabric comprising the sheets and pillow sham are formed by a
fabric-making process in a single country, that is, Pakistan, the
country of origin of these articles is Pakistan.
Paragraph (c)(3) states that, "Where the country of origin
of a textile or apparel product cannot be determined under
paragraph (c)(1) or (2) of this section":
(i) If the good was knit to shape, the country of origin of
the good is the single country, territory, or insular
possession in which the good was knit; or
(ii) Except for goods of heading 5609, 5807, 5811,
6213, 6214, 6301 through 6306, and 6308, and subheadings
6209.20.5040, 6307.10, 6307.90, and 9404.90, if the good was not knit to shape and the good was wholly assembled in a
single country, territory, or insular possession, the
country of origin of the good is the country, territory, or
insular possession in which the good was wholly assembled.
The remaining merchandise, that is, the comforter and
bedskirt, are classifiable in subheading 9404.90 and heading
6303, HTSUS, respectively. As this merchandise is not knit to
shape and subheading 9404.90, and heading 6303, HTSUS, are
excepted from provision (ii), paragraph (c)(3) is inapplicable.
Paragraph (c)(4) states that, "Where the country of origin
of a textile or apparel product cannot be determined under
paragraph (c) (1), (2) or (3) of this section, the country of
origin of the good is the single country, territory, or insular
possession in which the most important assembly or manufacturing
process occurred". In the case of the subject comforter in
scenarios I and III, the fabric making process of the comforter's
outer shell constitutes the most important manufacturing process.
It is the outer shell which actually forms the merchandise.
Moreover, basing the country of origin determination on the
fabric making process as opposed to the assembly process carries
out the clear intent of Section 334 as expressed in Section 334
(b)(2) and Part 102.21(c)(3)(ii). Accordingly, the fabric making
process in Pakistan, where the fabric for the comforter's outer
shell is formed, constitutes the most important manufacturing
process. Therefore, the country of origin of the subject
comforter in scenarios I and III is Pakistan. In the case of the
comforter in scenarios II, IV and V, and in the case of the
bedskirts in scenarios I through V, the most important
manufacturing process occurs at the time of the fabric making.
As the fabric for the bedskirts and the shells of the comforters
is sourced in more than one country and no one fabric is more
important than the other, the country of origin cannot be readily
determined based on the fabric making process. As such,
paragraph (c)(4) is not applicable to this merchandise.
Paragraph (c)(5) states that, "Where the country of origin
of a textile or apparel product cannot be determined under
paragraph (c) (1), (2), (3) or (4) of this section, the country
of origin of the good is the last country, territory or insular
possession in which an important assembly or manufacturing
process occurred". Accordingly, in the case of the comforter in
scenarios II, IV, and V, and in the case of the bedskirt in
scenarios I through V, the country of origin is conferred by the
last country in which an important assembly or manufacturing
process occurred, that is, Canada.
As per Additional U.S. Note 4(a) to Section XI, HTSUS, goods
of subheading 9404.90 that are cut and sewn or otherwise
assembled from fabric produced or obtained outside the territory
of one of the NAFTA parties, are eligible for the rate of duty in
the "Special" column of rates of duty column 1 followed by the
symbol "CA" in parentheses. In the case of the subject
merchandise, the essential character of the set is imparted by
the comforter which is partially made of foreign fabric from
Pakistan, cut and sewn in Canada. Accordingly, the comforter
meets the terms of Additional U.S. Note 4(a) to Section XI and
thus qualifies for the NAFTA tariff preferential level rate of
duty. It thus follows that as the comforter determines the
classification of the set, the set receives the preferential duty
rate.
HOLDING:
The subject merchandise, the comforter set, is classified in
subheading 9404.90.8522, HTSUSA, which provides for, mattress
supports; articles of bedding and similar furnishing (for
example, mattresses, quilts, eiderdowns, cushions, pouffes and
pillows) fitted with springs or stuffed or internally fitted with
any material or of cellular rubber or plastics, whether or not
covered: other: other: other: quilts, eiderdowns, comforters and
similar articles; with outer shell of man-made fibers.
Although the subject merchandise is not eligible for the
NAFTA preference, it is eligible for the tariff preferential
level assuming the tariff preferential level is available up to
the annual quantity specified. However, to receive the
preferential tariff treatment, at the time of entry a certificate
of eligibility is required from the following office: Import
Controls Division (Textiles and Clothing), Export and Import
Permits Bureau, Department of Foreign Affairs and International
Trade, P.O. Box 481, Station "A", Ottawa, Ontario, K1N 9K6.
Thus, provided the appropriate documents are submitted at the
time of entry, the rate of duty is 2.9 percent ad valorem for
1996.
The country of origin of the subject sheets and pillow sham
is Pakistan and will require the appropriate quota/visa, that is,
textile category 666.
The country of origin of the subject comforter in scenarios
I and III is Pakistan and will require the appropriate
quota/visa, that is, textile category 666.
The country of origin of the subject comforter in scenarios
II, IV and V is Canada.
The country of origin of the subject bedskirt in scenarios I
through V is Canada.
For quota/visa purposes all of the components must be
separately identified on the entry. The applicable rate of duty
for the subject merchandise is based on the comforter (the item
which imparts the essential character to the set).
The holding set forth above applies only to the specific
factual situation and merchandise identified in the ruling
request. This position is clearly set forth in section 19 CFR
177.9(b)(1). This section states that a ruling letter is issued
on the assumption that all of the information furnished in the
ruling letter, either directly, by reference, or by implication,
is accurate and complete in every material respect.
Should it be subsequently determined that the information
furnished is not complete and does not comply with 19 CFR
177.9(b)(1), the ruling will be subject to modification or
revocation. In the event there is a change in the facts
previously furnished, this may affect the determination of
country of origin. Accordingly, if there is any change in the
facts submitted to Customs, it is recommended that a new ruling
request be submitted in accordance with 19 CFR 177.2.
Sincerely,
John Durant, Director
Tariff Classification Appeals
Division