CLA-2: RR:CTF:TCM 967601 KSH
Assistant Port Director
Customs and Border Protection
477 Michigan Ave Room 210 Detroit, MI 48226
RE: Application for Further Review of Protest 3801-04-100419
Dear Assistant Port Director: This is in reply to your correspondence forwarding Application for Further Review (AFR) of protest no. 3801-04-100419, filed by Brintons U.S. Axminster, Inc. In reaching our decision, we also considered the information provided in protestant’s submissions of June 7, 2005 and January 3, 2006.
The protest is against Customs and Border Protection’s (CBP) classification of four entries of custom designed carpets under subheading 5702.31.2000 of the Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for “Carpets and other textile floor coverings, woven, not tufted or flocked, whether or not made up, including “Kelem”, “Shumacks”, “Karamanie” and similar hand-woven rugs: Other, of pile construction, not made up: Of wool or fine animal hair: Other” with a rate of duty of 4% ad valorem. Liquidation of the entries occurred on June 14, 2004 and June 25, 2004. Protestant entered the merchandise subject to this protest in subheading 5702.41.2000, HTSUSA, as “Carpets and other textile floor coverings, woven, not tufted or flocked, whether or not made up, including “Kelem”, “Shumacks”, “Karamanie” and similar hand-woven rugs: Other: of pile construction, made up: Of wool or fine animal hair: Other” with a rate of duty of free.
Protestant filed the protest with an AFR on September 13, 2004, challenging the reclassification of the entries at issue. The importer’s request for AFR was approved. It is important to note that the protest was timely filed with respect to only one of the entries, which was liquidated on June 25, 2004. Although the protest also referenced three additional entry numbers, which were liquidated on June 14, 2004, these entries were untimely in that they were protested beyond the 90-day time frame permitted for filing a protest under the 2004 CBP Regulations.
Protestant has alleged the decision against which the protest is filed involves questions of fact that have not been ruled upon by the Commissioner of Customs or his designee or by the Customs Courts. No rulings on substantially similar merchandise have been located, thus, further review is warranted pursuant to 19 CFR §§174.24(a) and 174.25.
Protestant has requested confidential treatment of customer and client names and drawings which were submitted in subsequent submissions. We are granting protestant’s request for confidential treatment for the confidential commercial information referring to customer and client names and drawings as requested. It has long been the position of Customs and Border Protection (CBP) that a section 177.2(b)(7) grant of confidentiality is coterminous with Exemption 4 of the Freedom of Information Act (5 U.S.C. 552(b)(4)). Exemption 4 was enacted to protect from disclosure information such as customer lists, costs, identities of suppliers, quantities of merchandise, formulas, assets, profits, losses, market shares, and similar information, the disclosure of which would inure to the competitive disadvantage of the party providing the information.
FACTS:
The merchandise at issue is custom designed and patterned axminster carpet which has a pile surface of 80% wool and 20% nylon yarn. The backing of the carpet is composed of polyester and polypropylene. Prior to the placement of an order for the carpeting, a design is developed including the pattern, repeat and colors to be used. Once the design has been finalized, it is scaled or “shaped” to fit the parameters of the areas requiring the carpeting. A seaming diagram is subsequently developed and the number of rolls necessary to cover the intended area are determined. After the customer has placed an order, the roll size and sequence for which the rolls are to be installed are set. The carpeting is imported in rolls with several feet of waste to protect the carpeting during shipment. It will be later cut to size and trimmed during the installation process. The carpeting does not have lines of demarcation nor does it have finished edges. At importation the carpet is not worked beyond the mill product.
ISSUE:
Whether the carpet is classified in subheading 5702.31.2000, HTSUS, as carpet, not made up or in subheading 5702.41.2000, HTSUS, as carpet, made up.
LAW AND ANALYSIS: Classification of goods under the HTSUSA is governed by the General Rules of Interpretation (GRI). GRI 1 provides that classification shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRI may then be applied. The Harmonized Commodity Description and Coding System Explanatory Notes (EN), constitute the official interpretation at the international level. While neither legally binding nor dispositive, the EN provide a commentary on the scope of each heading of the HTSUSA and are generally indicative of the proper interpretation of the headings. See T.D. 89-80. 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).
Heading 5702, HTSUSA, provides for “Carpets and other textile floor coverings, woven, not tufted or flocked, whether or not made up, including “Kelem”, “Shumacks”, “Karamanie” and similar hand-woven rugs.” While heading 5702, HTSUSA, covers carpets whether or not made up, at GRI 6, classification requires a determination at the international six-digit level whether or not the carpet is “made up.”
Subheading 5702.31.2000, HTSUSA, provides for “Carpets and other textile floor coverings, woven, not tufted or flocked, whether or not made up, including “Kelem”, “Shumacks”, “Karamanie” and similar hand-woven rugs: Other, of pile construction, not made up: Of wool or fine animal hair: Other.
Subheading 5702.41.2000, HTSUSA, provides for “Carpets and other textile floor coverings, woven, not tufted or flocked, whether or not made up, including “Kelem”, “Shumacks”, “Karamanie” and similar hand-woven rugs: Other, of pile construction, made up: Of wool or fine animal hair: Other.”
Heading 5702 provides for Section XI, Note 7 of the HTSUSA, defines the term “made up” for the purposes of Section XI, as follows:
For the purposes of this section, the expression “made up” means:
(a) Cut otherwise than into squares or rectangles;
Produced in the finished state, ready for use (or merely needing separation by cutting dividing threads) without sewing or other working (for example, certain dusters, towels, tablecloths, scarf squares, blankets);
Hemmed or with rolled edges, or with a knotted fringe at any of the edges, but excluding fabrics the cut edges of which have been prevented from unravelling by whipping or other simple means;
Cut to size and having undergone a process of drawn thread work;
Assembled by sewing, gumming or otherwise (other than piece goods consisting of two or more lengths of identical material joined end to end and piece goods composed of two or more textiles assembled in layers, whether or not padded); or
Knitted or crocheted to shape, whether presented as separate items or in the form of a number of items in the length.
You argue that the carpeting meets the definition of “made up” as set forth in Note 7(b), as the carpets are designed and ordered to be woven directly to size and ready for use at the time of importation. Although the carpets are trimmed, you state that such an incidental process does not prevent them from being “made up.” You refer to a two-prong test developed in court cases, under the prior tariff, the Tariff Schedules of the United States and referred to in HQ 957218, dated March 24, 1995. It should be noted that the two- pronged test to which you refer is actually used to determine whether goods are classifiable as material or as parts of the article into which they are intended to be incorporated. See also HQ 960054, dated May 9, 2000. Although the two-prong test for determining “parts” versus “materials” is similar to the definition of “made up”, in this instance, the use of the explanations and instructions in the ENs to Section XI, Note 7(b), HTSUS, are more specific and relevant to the issue at hand.
The EN to Section XI, Note 7(b), is set forth in the General Notes, Section XI, (II) Chapters 56 to 63, and provides in relevant part as follows:
Made up articles.
Under Note 7 to this Section, the expression “made up” in
Chapters 56 to 63 means:
* * *
Produced in the finished state, ready for use (or merely needing separation by cutting dividing threads) without sewing or other working. Goods of this kind include products knitted or crocheted directly to shape and certain dusters, towels, table cloths, scarf squares, blankets, etc., with threads along the warp left unwoven or the weft edges cut to form a fringe. Such articles may have been woven separately on the loom, but may also have been simply cut from lengths of fabric which have bands of unwoven threads (generally warp threads) at regular intervals. These lengths of fabric, from which ready-made articles of the types described above may be obtained by simply cutting the dividing threads, are also considered as “made up” articles.
However, rectangular (including square) articles simply cut out from larger pieces without other working and not incorporating fringes formed by cutting dividing threads are not regarded as “produced in the finished state” within the meaning of this Note. The fact that these articles may be presented folded or put up in packings (e.g., for retail sale) does not affect their classification.
The General EN to Chapter 57, HTSUSA, provides examples of carpeting that is made up. It provides in relevant part:
This Chapter covers carpets and other textile floor coverings in which textile materials serve as the exposed surface of the article when in use. It includes articles having the characteristics of textile floor coverings (e.g., thickness, stiffness and strength) but intended for use for other purposes (for example, as wall hangings or table covers or for other furnishing purposes).
The above products are classified in this Chapter whether made up (i.e., made directly to size, hemmed, lined, fringed, assembled, etc.), in the form of carpet squares, bedside rugs, hearth rugs, or in the form of carpeting for installation in rooms, corridors, passages or stairs, in the length for cutting and making up.
The subject carpet is a rectangular piece of fabric that has been cut from the loom. The fabric has not been additionally worked, nor does it incorporate fringed edges that have been formed by cutting dividing threads.
Although the carpeting is designed and scaled for production in a specific location, the carpet remains a rectangular piece of fabric that is rolled and sent for installation to a specific customer. The custom pattern of the carpet requires that it be placed in a specified area in a specified sequence. However, the carpet must be seamed with the corresponding sequenced rolls and must be cut to fit the dimensions of the sequenced area allowing for interruptions in the floor area such as pillars, indents in walls and doors. The carpeting is not similar to carpet squares, bedside rugs or hearth rugs. Rather it is carpeting for installation in rooms, corridors, passages or stairs. By way of example, a portion of the protested entry included a specified number of rolls of carpet varying in length from 96’5 to 103’8 feet in length. A review of the seaming diagram evidences that there is no single area in which the rolls are to be placed that meet those exact dimensions. As such, the roll must be further worked to conform to the designated area for installation.
It is our determination that the subject carpet is not “made up” within the meaning of Note 7, Section XI, HTSUSA. This decision is consistent with numerous CBP administrative rulings where a fabric that is cut to a square or rectangle and sold to consumers was not considered “made up”. In Headquarters’ Ruling Letter (HQ) 955458, dated June 8, 1994, a tack cloth was not considered to be “made up” pursuant to Note 7(b), Section XI, because it had been cut into rectangles and was unhemmed. The fact that it had been folded and sold directly to consumers in such condition did not bring the product within the purview of Note 7(b), Section XI. The decision in HQ 955458, cited to the EN for Note 7(b), Section XI, in finding that the tack cloth could not be regarded as “produced in the finished state” because the fact that these articles may be presented folded or put up in packings (e.g., for retail sale) does not affect their classification. See also HQ 089058, dated July 25, 1991, and HQ 089592, dated September 20, 1991, where CBP set forth the same rationale in determining that certain unhemmed cloth wipes were not “made up” within the meaning of Note 7, Section XI.
In view of the foregoing, we find that the carpeting was properly classified in subheading 5702.31.2000, HTSUSA, in the provision for “Carpets and other textile floor coverings, woven, not tufted or flocked, whether or not made up, including “Kelem”, “Shumacks”, “Karamanie” and similar hand-woven rugs: Other, of pile construction, not made up: Of wool or fine animal hair: Other.”
HOLDING:
The carpeting is classified in subheading, 5702.31.2000, HTSUSA, as “Carpets and other textile floor coverings, woven, not tufted or flocked, whether or not made up, including “Kelem”, “Shumacks”, “Karamanie” and similar hand-woven rugs: Other, of pile construction, not made up: Of wool or fine animal hair: Other.” The applicable general column one duty rate is 4% ad valorem. The textile category code is 465.
Quota/visa requirements are no longer applicable for merchandise which is the product of World Trade Organization (WTO) member countries. The textile category number above applies to merchandise produced in non-WTO member-countries. Quota and visa requirements are the result of international agreements that are subject to frequent renegotiations and changes. To obtain the most current information on quota and visa requirements applicable to this merchandise, we suggest you check, close to the time of shipment, the “Textile Status Report for Absolute Quotas” which is available on our web site at www.cbp.gov. For current information regarding possible textile safeguard actions on goods from China and related issues, we refer you to the web site of the Office of Textiles and Apparel of the Department of Commerce at otexa.ita.doc.gov.
The protest should be DENIED. In accordance with the Protest/Petition Processing Handbook, (CIS HB, June 2002, pp 18 and 21), you are to mail this decision, together with the CBP Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. No later than sixty days from the date of this letter, the Office of Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP
Home Page on the World WideWeb at www.cbp.gov, by means of the Freedom of Information Act, and by other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division