OT:RR:CTF:VS H260670 EE
Port Director
Service Port of Blaine
U.S. Customs and Border Protection
9901 Pacific Highway
Blaine, WA 98230
RE: Application for Further Review of Protest No. 3004-14-100050; NAFTA eligibility
Dear Port Director:
This is in reference to the Application for Further Review (“AFR”) of Protest No. 3004-14-100050, timely filed on October 21, 2014, on behalf of True North LLC (hereinafter, the “protestant”) concerning the eligibility of certain men’s knit mainline jackets and mid weight power dry shirts from Canada for preferential tariff treatment under the North American Free Trade Agreement (“NAFTA”).
FACTS:
The merchandise subject to the protest at issue are men’s knit mainline jackets (style no. CMT437) and men’s knit mid weight power dry shirts (style no. DFB35). The merchandise was entered by the protestant on February 1, 2013 under subheadings 6101.30.2010 (style no. CMT437) and 6110.30.3053 (style no. DFB35), Harmonized Tariff Schedule of the United States Annotated (“HTSUSA”), claiming duty-free treatment under NAFTA. The fiber contents for the jackets are 64% modacrylic, 22% nomex, 10% kevlar, 2% lycra, and 2% carbon fiber. The jackets are not lined. The fiber content for the shirts are 70% modacrylic and 30% rayon. The fabric for both garments was knit in the U.S. by the fabric supplier with yarn that was spun and twisted in the U.S. It was then cut and sewn in Canada by the seller.
On April 4, 2014, U.S. Customs and Border Protection (“CBP”) issued a proposed Notice of Action (CBP Form 29) to the protestant stating that the verification conducted by the port revealed that the goods do not qualify as originating under NAFTA since the tariff shift rules were not met and that the goods did not qualify for TPL. Counsel for the protestant claims that the protestant did not make a claim under NAFTA preference claim criterion C, therefore, the underlying materials do not need to each meet their own tariff shift requirements. The protestant’s claim is made under NAFTA preference criterion B, where the only required tariff shift is for the component that determines the classification of the good.
We reviewed the following documents submitted by the protestant:
A commercial invoice/packing list, dated January 31, 2013, from the seller to the protestant for the men’s knit mainline jackets;
A production order, dated December 15, 2012, issued by the seller for the men’s knit mainline jackets;
A cutting record, dated January 5, 2013, for the men’s knit mainline jackets;
A purchase order, dated September 26, 2012, from the protestant to the fabric supplier for the fabric for the men’s knit mainline jackets;
An invoice, dated January 1, 2013, from the fabric supplier to the protestant for the fabric for the men’s knit mainline jackets;
A commercial invoice/packing list, dated January 31, 2013, from the seller to the protestant for the men’s knit mid weight power dry shirts;
A purchase order, dated September 18, 2012, from the protestant to the fabric supplier for the fabric for the men’s knit mid weight power dry shirts;
An invoice, dated September 21, 2012, from the fabric supplier to the protestant for the fabric for the men’s knit mid weight power dry shirts;
A production order, dated December 28, 2012, issued by the seller for the men’s knit mid weight power dry shirts;
A cutting record, dated January 5, 2013, for the men’s knit mid weight power dry shirts;
The NAFTA Certificate of Origin signed by the protestant for the garments at issue for the blanket period from January 1, 2013 to December 31, 2013;
The NAFTA Certificate of Origin signed by the seller for the garments at issue for the blanket period from January 1, 2013 to December 31, 2013;
Affidavits of origin for yarns sold to the fabric supplier stating that they were produced in the U.S.;
An affidavit of origin, dated September 20, 2012, for fabric knit and finished in the U.S. sold from the fabric supplier to the seller.
ISSUE:
Whether the imported men’s knit mainline jackets and mid weight power dry shirts are eligible for preferential tariff treatment under the NAFTA.
LAW AND ANALYSIS:
General Note (“GN”) 12, HTSUS, incorporates Article 401 of the NAFTA into the HTSUS. GN 12(a)(i), HTSUS, provides that goods are eligible for the NAFTA rate of duty if they originate in the territory of a NAFTA party and qualify to be marked as goods of Canada. GN 12(b), HTSUS, sets forth the various methods for determining whether a good originates in the territory of a NAFTA party. Specifically, these provisions provide, in relevant part, as follows:
(a) Goods originating in the territory of a party to the North American Free Trade Agreement (NAFTA) are subject to duty as provided herein. For the purposes of this note--
* * * *
(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 set forth in regulations issued by the Secretary of the Treasury (without regard to whether the goods are marked), and goods enumerated in subdivision (u) of this note, when such goods are imported into the customs territory of the United States 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, in accordance with section 201 of the North American Free Trade Agreement Implementation Act.
(b) 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.
There is no dispute as to the classification of the merchandise in subheadings 6101.30.20 and 6110.30.30, HTSUS. The applicable rule of origin for the garments is in GN 12(t), Chapter 61, HTSUS. Chapter rule 1 provides:
A change to any of the following headings or subheadings for visible lining fabrics:
5111 through 5112, 5208.31 through 5208.59, 5209.31 through 5209.59, 5210.31 through 5210.59, 5211.31 through 5211.59, 5212.13 through 5212.15, 5212.23 through 5212.25, 5407.42 through 5407.44, 5407.52 through 5407.54, 5407.61, 5407.72 through 5407.74, 5407.82 through 5407.84, 5407.92 through 5407.94, 5408.22 through 5408.24 (excluding tariff items 5408.22.10, 5408.23.11, 5408.23.21 or 5408.24.10), 5408.32 through 5408.34, 5512.19, 5512.29, 5512.99, 5513.21 through 5513.49, 5514.21 through 5515.99, 5516.12 through 5516.14, 5516.22 through 5516.24, 5516.32 through 5516.34, 5516.42 through 5516.44, 5516.92 through 5516.94, 6001.10, 6001.92, 6005.31 through 6005.44 or 6006.10 through 6006.44 from any other heading outside that group.
Chapter rule 1 does not apply since the garments do not have any lining. Chapter rule 2 provides:
For purposes of determining the origin of a good of this chapter, the rule applicable to that good shall only apply to the component that determines the tariff classification of the good, and such component must satisfy the tariff change requirements set out in the rule for that good. If the rule requires that the good must also satisfy the tariff change requirements for visible lining fabrics listed in chapter rule 1 for this chapter, such requirement shall only apply to the visible lining fabric in the main body of the garment, excluding sleeves, which covers the largest surface area, and shall not apply to removable linings.
The component that determines the classification of the men’s knit mainline jackets is the fabric from which the garment is made. The applicable tariff shift rule for the men’s knit mainline jackets classified under subheading 6101.30.20, HTSUS, is set forth in GN 12(t)/61.1, HTSUS, which provides:
A change to subheadings 6101.10 through 6101.30 from any other chapter, except from headings 5106 through 5113, 5204 through 5212, 5307 through 5308 or 5310 through 5311, chapter 54, or headings 5508 through 5516 or 6001 through 6006, provided that:
the good is both cut (or knit to shape) and sewn or otherwise
assembled in the territory of one or more of the NAFTA parties, and
(B) the visible lining fabric listed in chapter rule 1 for chapter 61 satisfies the tariff change requirements provided therein.
The protestant states that the modacrylic staple fiber, nomex staple fiber, and kevlar are of unknown origin classified under headings 5501-5507, HTSUS. The protestant also states that the carbon fiber/yarn is of unknown origin and is classified under heading 6815, HTSUS. Since these presumably non-originating materials are classified in headings which are not set forth in the tariff shift rule in GN 12(t)/61.1, HTSUS, and the remainder of the materials are originating, the tariff shift rule is met.
The component that determines the classification of the men’s knit mid weight power dry shirts is the fabric from which the garment is made. The applicable tariff shift rule for men’s knit mid weight power dry shirts classified under 6110.30.30, HTSUS, is set forth in GN 12(t)/61.35, HTSUS, which provides:
A change to headings 6109 through 6111 from any other chapter, except from headings 5106 through 5113, 5204 through 5212, 5307 through 5308 or 5310 through 5311, chapter 54, or headings 5508 through 5516 or 6001 through 6006, provided that the good is both cut (or knit to shape) and sewn or otherwise assembled in the territory of one or more of the NAFTA parties.
The protestant states that the modacrylic staple fiber and the rayon staple fiber are of unknown origin and are classified under headings 5501-5507, HTSUS. Since these are the only presumably non-originating materials and they are classified in headings which are not set forth in the tariff shift rule in GN 12(t)/61.1, HTSUS, the tariff shift rule is met. Accordingly, we find that the men’s knit mainline jackets and the men’s knit mid weight power dry shirts qualify as NAFTA originating goods eligible for preferential tariff treatment.
HOLDING:
The protest should be allowed.
In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the Protestant no later than sixty (60) days from the date of this letter. Any re-liquidation of the entry or entries in accordance with the decision should be accomplished prior to mailing of this decision. Sixty (60) days from the date of this decision, the Office of International Trade; Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division