CLA-2 CO:R:C:G 088335 DFC
Mr. Richard Desmarais
Revenue Canada
Customs and Excise
400 Youville Square
3rd Floor
Montreal, Qc.
H2Y 2C2
RE: Awnings
Dear Mr. Desmarais:
In a letter dated November 7, 1990, you inquired as
to the tariff classification under the Harmonized Tariff
Schedule of the United States Annotated (HTSUSA) of awnings
produced in Canada.
FACTS:
The merchandise consists of awning systems of man-made
fabrics imported together with the frames. A bench test by
burning indicates that the fabric is of synthetic fibers.
ISSUE:
Does the presence of frames preclude classification
of the merchandise as awnings?
Are the awnings eligible for duty treatment under the
United States-Canada Free Trade Agreement (CFTA)?
LAW AND ANALYSIS:
In applying the HTSUSA, the Customs Service must follow
the terms of the statute. Classification of goods under the
HTSUSA is governed by the General Rules of Interpretation
(GRI's). GRI 1 provides that "classification shall be
determined according to the terms of the headings and any
relative section or chapter notes, and, provided such headings
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or notes do not otherwise require, according to [the remaining
GRI's taken in order]." In other words, classification is
governed first by the terms of the headings of the tariff and
any relative section or chapter notes.
Heading 6306, HTSUSA, provides for awnings. The
Explanatory Notes (EN) are the official interpretation of
the Harmonized System at the international level. EN 3 to
Heading 63.06 which is pertinent here reads as follows:
(3) Awnings, sunblinds (for shops, cafes, etc.)
These are designed for protection against
the sun; they are generally made of strong
plain or striped canvas, and may be mounted on
roller or folding mechanisms. They remain
classified in this heading even when provided
with frames, as is sometimes the case with sunblinds.
It is clear from the cited EN that the presence of frames
does not preclude the awning systems from classification as
awnings.
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), HTSUSA. There are two primary
means in General Note 3(c) (vii) (B) 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 or produced in the territory of Canada and/or
the United States." General Note 3(c) (vii) (B) (1). 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).
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), HTSUSA. Obviously, the awnings
are not "wholy 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
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transformed in Canada and/or the United States in accordance
with General Note 3(c) (vii) (B) (2). A transformation is
evident when a change in tariff classification occurs that is
authorized by General Note 3(c) (vii) (R), HTSUSA. However, in
this instance the fabric in rolls is from Chapters 54 or 55,
HTSUSA, depending on whether it is of man-made filaments or
man-made staple filaments. Consequently, in view of General
Note 3(c) (vii) (R) (11) (pp), TSUSA, which precludes changes
from Chapters 54 and 55 to Chapter 63, TSUSA, the awnings are
not "originating goods" under General Note 3(c) (vii) (B) (1)
Another method of establishing a transformation is by the
50% direct cost of processing test. The CFTA includes a
provision that grants transformation status to certain goods of
which 50% or more of the direct costs of processing are
performed in Canada and/or the United States. General Note 3
(c) (vii) (H). If these items are assembled in Canada, and 50%
of the value of materials and cost of processing are Canadian
and U.S., then they are "originating goods" under General Note
3(c) (vii) (B) (2) (II). See General Note 3(c) (vii) (G) and
(H). Such goods are considered to be originating goods and
receive the CFTA duty treatment. However, there are only two
types of goods subject to this provision. The first are those
articles which are imported into Canada in an unassembled or
disassembled form in accordance with GRI 2(a) HTSUSA. General
Note 3(c) (vii) (G) (1). The second type of goods are those
covered by tariff provisions which provide for both the goods
themselves and their parts. General Note 3(c) (vii) (G) (2).
HOLDING:
The awning systems are classifiable under subheading
6306.12.0000, HTSUSA, as awnings of synthetic fibers, with
duty at the general rate of 10 percent ad valorem. The
applicable textile category is 669. Articles originating in
Canada and classifiable under this subheading are eligible
for a duty rate of 7 percent ad valorem under the CFTA. The
awning systems may be eligible for duty treatment under the
CFTA, if the direct cost of processing test is met. We cannot
ascertain from the file whether an assembly process is involved
here.
Due to the changeable nature of the statistical annotation
(the ninth and tenth digits of the classification) and the
restraint (quota/visa) categories applicable to textile
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merchandise, you should contact your local Customs office prior
to importation of this merchandise to determine the current
status of any import restraints or requirements.
The designated textile and apparel category may be
subdivided into parts. If so, visa and quota requirements
applicable to the subject merchandise may be affected. Since
part categories are the result of international bilateral
agreements which are subject to frequent renegotiations and
changes, to obtain the most current information available, we
suggest that you check, close to the time of shipment, the
Status Report on Current Import Quotas (Restraint Levels).
Sincerely,
John Durant, Director
Commercial Rulings Division
6cc AD NY Seaport
1cc Legal Reference
1cc A Falcone NY Seaport
John Durant
cahill library/peh