CLA-2 RR:TC:TE 959834 jb
Angel L. Cooper
A.N. Deringer, Inc.
173 W. Service Road
Champlain, NY 12919
RE: Revocation of HQ 959592; country of origin determination for
comforters and a pillow; Section 102.21(c)(4); most
important manufacturing process; NAFTA; Section 102.19; NAFTA
preference override
Dear Ms. Cooper:
In Headquarters Ruling Letter (HQ) 959592, dated October 1,
1996, this office issued to you a country of origin
determination, on behalf of your client, Marimac Manufacturing,
for certain comforters and a pillow which will be imported into
the United States. We have reviewed that ruling and determined
that it is in error.
FACTS:
The subject merchandise consists of a comforter made of a
woven blend of 50 percent polyester and 50 percent cotton fabric,
a comforter made of 100 percent woven cotton fabric, and a pillow
measuring approximately 20 inches by 30 inches or 20 inches by
25-1/2 inches, made of a woven blend of 50 percent polyester and
50 percent cotton fabric. You state that the comforters do not
contain any embroidery, lace, braid, edging, trimming, piping or
applique work. The manufacturing operations are as follows:
PAKISTAN
- fabric is woven and printed;
- fabric is cut;
- comforter shells and pillow shell is assembled by sewing
on three sides.
UNITED STATES
- 100 percent polyester fabric filling is formed.
CANADA
- the comforter shells and pillow shell are stuffed with the
polyester filling;
- the comforter shells and pillow shell are sewn on the
fourth side to form the completed comforters and pillow;
- the comforters and pillow are quilted.
ISSUE:
1. Whether the subject merchandise is eligible for duty
free treatment under the North American Free Trade
Agreement (NAFTA)?
2. What is the country of origin of the subject
merchandise?
LAW AND ANALYSIS:
NAFTA Eligibility
In HQ 959592 it was determined that the subject merchandise
did not qualify as a good of Canada because the good had not been
transformed in Canada, that is, the non-originating material from
Pakistan did not undergo the applicable change in tariff
classification. This determination was based on the fact that
the non-originating material consisted of the fabric woven in
Pakistan. Upon review of that ruling we realize that this
analysis is incorrect. The proper analysis for the non-originating material is based on the change in tariff
classification undergone by non-originating material which is
comprised of the comforter and pillow shells from Pakistan, not
the woven fabric. The proper analysis is thus set forth below.
The subject comforters and pillow shell undergo 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 North American Free Trade
Agreement (NAFTA) into the HTSUSA. Note 12(a) provides, in
pertinent part:
* * *
(i) Goods that originate in the territory of a NAFTA party
under 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 comforters and pillow at issue will be eligible
for the "Special" "CA" rate of duty provided they are NAFTA
"originating" goods under General Note 12(b), HTSUSA, and they
qualify to be marked as goods 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
* * *
Accordingly, the subject merchandise qualifies as a good of
Canada only if the good has been transformed in Canada such that
the non-originating materials (comforter shells and pillow shell
woven, cut and sewn in Pakistan) undergo the applicable change in
tariff.
The subject comforters are classified in subheading 9404.90,
Harmonized Tariff Schedule of the United States (HTSUS), which
provides for, among other things, articles of bedding and similar
furnishings. The pillows, which we note are adequate in size to
provide support, are similarly classified in subheading 9404.90,
HTSUS. For merchandise classifiable in this heading subdivision
(t), chapter 94, 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 both the case of the comforters and the pillow, when the
non-originating materials from Pakistan enter Canada they are
classifiable in heading 6307, HTSUS. As heading 6307, HTSUS, is
not excepted by subdivision (t), the merchandise undergoes the
requisite change in tariff. As such, the merchandise qualifies
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, codified at 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
subheading 9404.90, 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.
Section 102.21(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 neither wholly obtained
or produced in a single country, section 102.21(c)(1) is not
applicable.
Section 102.21(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."
Section 102.21(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":
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.
In the case of the subject merchandise as the fabric is
formed in both Pakistan and the United States, the terms of
section 102.21(e) are not applicable.
Section 102.21(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.
As the subject merchandise is not knit and provision (ii)
excepts heading 9404.90, HTSUS, section 102.21(c)(3) is also not
applicable.
Section 102.21(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 merchandise the
most important manufacturing process occurs at the time of the
fabric-making process of the outer shells of the comforters and
pillow, which actually forms the merchandise. Moreover, basing
the country of origin determination on the fabric-making 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 outer
shells of the comforters and pillow shell is formed, constitutes
the most important manufacturing process. Accordingly, the
country of origin for this merchandise is Pakistan.
However, as stated in section 102.19(a):
Except in the case of goods covered by paragraph (b) of this
section, if a good which is originating within the meaning
of 181.1(q) of this chapter is not determined under
102.11(a) or (b) or 102.21 to be a good of a single NAFTA
country, the country of origin of such good is the last
NAFTA country in which that good underwent production other
than minor processing, provided that a Certificate of Origin
(see 181.11 of this chapter) has been completed and signed
for the good.
As this merchandise qualifies as a NAFTA originating good,
applying the terms of section 102.19(a), the country of origin of
the subject comforters and pillow is Canada.
HOLDING:
Accordingly, as set forth in the analysis herein, HQ 959592
is revoked. The proper country of origin for the subject
comforters and pillow is Canada for duty, quota and marking
purposes.
The subject merchandise is eligible for the NAFTA
preference.
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