CLA-2-95:RR:NC:2:224 G82058
John E.Guida
E.R. Hawthorne & Co., Inc.
9370 Wallisville Road
Houston TX 77013
RE: Dunnage bags; the tariff classification and status under the North American
Free Trade Agreement (NAFTA); General Notes 12(b)(i) and (ii),
and 12(t)/39.10, Customs Regulations; Article 509.
Dear Mr. Guida:
In your letter dated September 6, 2000, you requested a ruling on the status of dunnage bags from Mexico on behalf of Shipping Systems, Inc.
The dunnage bags at issue are designed to be placed in a void between cargo transported by truck, ship or rail to prevent damage to the transported product due to load shifting. The finished bags range in size from 36 inches up to 48 inches by 120 inches. The major components of a bag would be a one-ply polyethylene plastic liner manufactured in the United States and woven polypropylene fabric originating in Turkey.
The fabric and the film liner materials are shipped to Mexico where they are assembled into finished dunnage bags by the following processes:
The circular woven polypropylene fabric is unwound from a roll, cut to
a specified length, and a hole is punched into the fabric to facilitate the
placement of an air valve;
the polyethylene lining is unwound from a roll, cut to a specified length,
and an air valve is heat sealed to the liner. Both ends of the liner are then
heat sealed forming the inflatable component of the bag;
the polyethylene liner is manually inserted into the tube of woven fabric
and both ends are sewn together forming the finished product;
the finished product is tested for quality and prepared for shipment.
The applicable tariff provision for finished inflatable dunnage bags will be 3926.90.7500, Harmonized Tariff Schedule of the United States (HTSUS), which provides for pneumatic mattresses and other inflatable articles, not elsewhere specified or included. The general rate of duty is 4.2 percent ad valorem. See New York Ruling C80550 dated October 24, 1997. Assuming the goods are eligible for preferential treatment under the NAFTA, the merchandise will be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.
To be eligible for tariff preferences under the NAFTA, goods must be an “originating good” within the rules of origin in General Note 12(b), HTSUS. General Notes 12(b)(i) and (ii), HTSUS, state:
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—
they are goods wholly obtained or produced entirely in the territory
of Canada, Mexico and/or the United States; or
they have been transformed in the territory of Canada, Mexico and/or
the United States so that—
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 subdivision (s) and (t) of
this note or the rules set forth therein***.
Thus, General Note 12(b)(ii)(A) specifies in part that merchandise will qualify as originating goods if the non-originating material – in this case, the fabric - undergoes a change in tariff classification described in subdivision (t). The rule applicable to the subject merchandise is found in General Note 12(t), Chapter 39, Rule 10, which states
“a change to headings 3924 through 3926 from any other heading, including another heading within that group, provided there is a regional value content of not less than: (A) 60 percent where the transaction value method is used, or (B) 50 percent where the net cost method is used.” This rule is applicable to the subject merchandise as the finished dunnage bag is classified within heading 3926, HTSUS. Therefore, the rule indicates that if the fabric component exported from Turkey is classifiable within any heading of the HTSUS other than 3926, the finished dunnage bag will qualify for NAFTA preferential treatment provided there is a regional value content equal to or exceeding the percentages given above.
The non-originating fabric material prior to the assembly process in Mexico is classifiable in heading 5407, HTSUS. Thus, the fabric’s assembly into dunnage bags has partly satisfied the change in tariff classification criteria required under the General Note 12(t)/39.10. As stated above, the dunnage bags will also be subject to a Regional Value Content (RVC) criterion as required under the rule applicable to the dunnage bags.
Because of insufficient information in your ruling request, Customs has not addressed the Regional Value Content (RVC) of the subject goods. If you desire a ruling regarding the RVC of your goods and their eligibility for NAFTA preferential treatment, furnish the information noted in Section 181.93(b) of the Customs Regulations (19 CFR 181.93(b)), to the Director, Commercial Rulings Division, Headquarters, U.S. Customs Service, 1300 Pennsylvania Ave. N.W., Washington, D.C. 20229, along with a copy of this letter.
This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 C.F.R. 181).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Tom McKenna at 212.637.7015.
Sincerely,
Robert B. Swierupski
Director,
National Commodity
Specialist Division