OT:RR:CTF:FTM H323925 TSM
Center Director
CEE – Apparel, Footwear and Textiles
U.S. Customs & Border Protection
797 S. Zaragosa Rd.
El Paso, TX 79907
Attn: Kathleen A. Cheney, Supervisory Import Specialist
Re: Country of origin of certain pillows; Section 301 Measures
Dear Center Director:
This is in response to your correspondence, dated March 14, 2022, forwarding an internal advice request of March 8, 2022, initiated by Wendt & Temples, LLC, counsel for Encompass Group LLC (“Encompass”), concerning the country of origin of certain pillows and the applicability of Section 301 measures.
FACTS:
The merchandise at issue consists of certain pillows, which are produced in Torreon, Coahuila, Mexico, in a manufacturing process that produces a pillow bun that is stuffed into a pillow tick, also called a pillow shell. The pillow bun is produced using a Poly Stable Fiber (PSF) manufactured in Mexico, which is further refined in a series of operations to produce what is called “Fluffy Fiber Pillow Bun.” The pillow bun is stuffed into the pillow shell, which is then sewn closed to form the outside of the pillow. Some of the pillow shells are manufactured in China from fabrics of Chinese origin. Other pillow shells are manufactured in Mexico from fabrics of Chinese origin. All pillow shells are filled with the pillow buns in Mexico.
According to the information provided by Encompass, the pillow shells are manufactured from four different fabrics, described as follows: (1) nonwoven spun bond polypropylene; (2) nonwoven spun bond polypropylene, laminated with polyethylene film laminate; (3) nonwoven spun bond polypropylene, laminated with polyethylene film laminate, impregnated with an anti-microbial treatment film; and, (4) knitted polyester coated with vinyl. Documents detailing the manufacturing specifications for each of the fabrics were provided by Encompass. According to the information provided, all four fabrics at issue are textile products.
Encompass argued that the Chinese origin pillow shells and fabrics are substantially transformed into products of Mexico during the manufacturing process performed in Mexico. The manufacturing process is described as follows:
Manufacturing of the pillow shells: (a) rolls of Chinese-origin fabrics are received; (b) rolls of fabrics are slit to width; (c) pillow shells are produced by cutting to length and sewing; and (d) pillow shells are inspected, turned if needed, and stacked.
Processing of the PSF into pillow buns and finished pillows consists of the following steps: (a) the PSF bale is moved from the warehouse and loaded into the hopper; (b) PSF is pre-opened, weighed and dropped into the garneting line where it is fed through a Doffer machine that lays down two individual PSF sheets called a fiber web; (c) the fiber web is moved up a conveyor called the cross lapper apron, to create fiber bat; (d) the fiber bat is slit and rolled-up to create a fiber pillow bun; (e) the pillow bun is inserted through the stuffer machine into a pillow shell; (f) the pillow shell is sewn closed to create a pillow; (g) the pillow is inspected for defects and beaten to even out fiber; (h) the pillow is bagged, compressed, and packaged for shipment.
The finished pillows are classified in subheading 9404.90.2000, Harmonized Tariff Schedule of the United States (Annotated) (“HTSUSA”).
ISSUES:
What is the country of origin of the pillows under consideration and are the pillows subject to Section 301 measures?
LAW AND ANALYSIS:
Country of Origin
To determine the country of origin of the subject merchandise, CBP must apply the statutory rules of origin set forth in Section 334 of the Uruguay Round Agreements Act (“URAA”) (codified at 19 U.S.C. § 3592), enacted on December 8, 1994, which provides the rules of origin for textiles and apparel products for purposes of the customs laws and the administration of quantitative restrictions, unless otherwise provided by the statute, entered, or withdrawn from warehouse, for consumption on or after July 1, 1996. In pertinent part, 19 U.S.C. § 3592 reads:
(b) Principles
(1) In general
Except as otherwise provided for by statute, a textile or apparel product, for purposes of the customs laws and the administration of quantitative restrictions, originates in a country, territory, or insular possession, and is the growth, product, or manufacture of that country, territory, or insular possession, if –
the product is wholly obtained or produced in that country, territory, or possession;
the product is a yarn, thread, twine, cordage, rope, cable, or braiding and —
the constituent staple fibers are spun in that country, territory, or
possession, or
the continuous filament is extruded in that country, territory, or
possession;
the product is a fabric, including a fabric classified under chapter 59 of the HTS, and the constituent fibers, filaments, or yarns are woven, knitted, needled, tufted, felted, entangled, or transformed by any other fabric-making process in that country, territory, or possession; or
the product is any other textile or apparel product that is wholly assembled in that country, territory, or possession from its component pieces.
Section 3592 has been described as Congress’s expression of substantial transformation as it relates to textile and apparel products. Section 102.21 of the Code of Federal Regulations (19 C.F.R. § 102.21), implements the URAA. The rules set forth in §?102.21, which became effective for goods entered, or withdrawn from warehouse, for consumption on or after July 1, 1996, are used to determine the country of origin of textile and apparel products subject to manufacture or processing in all countries, except Israel. A “textile or apparel product” for purposes of these rules of origin is defined in 19 C.F.R. § 102.21(b)(5), in part, as any good classifiable in a number of headings including subheading 9404.90, HTSUS. As such, a good classifiable in subheading 9404.90, HTSUS, should be analyzed to determine if it is a “textile or apparel product” of 19 C.F.R. § 102.21. In this case, since the merchandise at issue are pillows with a textile outer shell, they are considered textile products, and the country of origin of the subject merchandise shall be determined by the sequential application of the general rules set forth in paragraphs (c)(1) through (5) of Section 102.21. See 19 C.F.R. § 102.21(c). Section 102.21(c) provides in pertinent part as follows:
(c) General rules. Subject to paragraph (d) of this section, the country of origin of a textile or apparel product will be determined by sequential application of paragraphs (c) (1) through (5) of this section and, in each case where appropriate to the specific context, by application of the additional requirements or conditions of §§ 102.12 through 102.19 of this part.
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.
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.
Where the country of origin of a textile or apparel product cannot be determined under paragraph (c) (1) or (2) of this section:
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
Except for fabrics of chapter 59 and 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.
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.
Where the country of origin of a textile or apparel product cannot be determined under paragraph (c) (1), (2), (3) or (4) of this section, the country of origin of the good is the last country, territory, or insular possession in which an important assembly or manufacturing process occurred.
Paragraph (c)(1) provides that “[t]he 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.” The pillows at issue are produced in two different countries: (1) China (where the component fabrics are formed and some of the pillow shells are produced), and Mexico (where the pillow buns and the finished pillows are manufactured). Therefore, the origin of the pillows cannot be determined by reference to paragraph (c)(1).
Paragraph (c)(2) of Section 102.21 provides that where the country of origin cannot be determined according to paragraph (c)(1), resort should next be to paragraph (c)(2). The country of origin, according to paragraph (c)(2), 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 section 102.21. As Encompass accurately stated in their letter, pillows are classified in subheading 9404.90, HTSUS. More specifically, the pillows at issue are classified in subheading 9404.90.2000, HTSUSA. Therefore, paragraph (e)(1), as applicable to the instant determination, establishes a tariff shift rule that provides:
HTSUS Tariff Shift and/or Other Requirement
9404.90 Except for goods of subheading 9404.90 provided for in paragraph (e)(2) of this section, 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.
Paragraph (e)(2) provides an exception for goods classifiable in headings 6213 and 6214 and HTSUS subheadings 6117.10, 6302.22, 6302.29, 6302.52, 6302.53, 6302.59, 6302.92, 6302.93, 6302.99, 6303.92, 6303.99, 6304.19, 6304.93, 6304.99, 9404.90.85 and 9404.90.95. Paragraph (e)(2) of section 102.21 (19 C.F.R. § 102.21(e)(2)) is inapplicable because it does not include the goods of subheading 9404.90.20, HTSUS. The term “fabric-making process” is defined by 19 C.F.R. § 102.21(b)(2) as “any manufacturing operation that begins with polymers, fibers, filaments (including strips), yarns, twine, cordage, rope, or fabric strips and results in a textile fabric.” The fabrics comprising the goods in this instance, are the fabrics of the pillow shell. Encompass indicates that the pillow shell fabrics are manufactured in China. Therefore, applying the tariff shift rule of 19 C.F.R. § 102.21(e) to the subject pillows, we find that the fabric-making process occurred in China. Accordingly, the country of origin of the subject pillows is determined by application of section 102.21(c)(2) and is China.
In its request for internal advice, Encompass argued that the Chinese origin of the fabrics and pre-made pillow shells was substantially transformed based on the manufacturing process performed in Mexico, referencing the following rulings in support of this argument: New York Ruling Letter (“NY”) N320075, dated June 25, 2021, Headquarters Ruling Letter (“HQ”) H301619, dated November 6, 2018, NY N320075, dated June 25, 2021, NY N306222, dated September 17, 2019, NY N307432, dated December 4, 2019, HQ 084718, dated July 31, 1989, and HQ H312777, dated May 3, 2021. Upon review, we disagree. We note that most of the rulings referenced by Encompass are not authoritative, because in NY N320075, HQ H301619, NY N306222, NY N307432, HQ 731433, and HQ 734374, the products under consideration were not textile or apparel products. With regard to HQ 084718, which concerned the country of origin of certain pillow shells, as well as HQ 731433 and HQ 734374, which concerned the country of origin of certain vinyl shells, we note that these rulings were issued prior to July 1, 1996. As discussed above, effective July 1, 1996, the country of origin of textile and apparel products is determined by the sequential application of paragraphs (c)(1) through (c)(5) of Section 102.21. Therefore, in HQ H312777, dated May 3, 2021, the country of origin of a pillow classified in subheading 9404.90.20, HTSUS, was determined to be China by sequential application of paragraphs (1) through (5) of Section 102.21. In HQ H312777, the pillow at issue was manufactured in two different countries: China, where the component fabrics were manufactured, and Mexico, where the finished pillow was manufactured. Because the pillow was not manufactured in a single country, paragraph (c)(1) of Section 102.21 was not applicable. However, the country of origin of the pillow was determined by application of paragraph (c)(2) of Section 102.21. This is because, for goods classified in subheading 9404.90.20, HTSUS, the country of origin is the country in which the fabric comprising the good was formed by a fabric-making process. The fabric-making process in which the fabric for the pillow was formed occurred in China.
Section 301 measures
The United States Trade Representative (“USTR”) has determined that an additional ad valorem duty will be imposed on certain Chinese imports pursuant to USTR’s authority under Section 301(b) of the Trade Act of 1974 (“Section 301 measures”). The relevant Section 301 measures apply to products of China enumerated in Section XXII, Chapter 99, Subchapter III, U.S. Note 20(r), which provides in pertinent part that for the purposes of subheading 9903.88.15, products of China that are classified in the subheadings enumerated in U.S. note 20(s)(i), shall be subject to an additional 7.5 percent ad valorem rate of duty. Among the subheadings listed in U.S. Note 20(s)(i) is subheading 9404.90.20, HTSUS. Therefore, because the pillows at issue are products of China, as determined by the rules of origin for textiles and apparel products set forth in §?102.21, and are classified in subheading 9404.90.20, HTSUS, they are subject to Section 301 measures. Accordingly, at the time of importation, subheading 9903.88.15, HTSUS, must be reported in addition to subheading 9404.90.2000, HTSUSA.
HOLDING:
The country of origin of the pillows at issue is China pursuant to 19 C.F.R. § 102.21(c)(2). The pillows are subject to Section 301 measures pursuant to Section XXII, Chapter 99, Subchapter III, U.S. Note 20(r) and U.S. Note20(s)(i). At the time of importation, subheading 9903.88.15, HTSUS, must be reported in addition to subheading 9404.90.2000, HTSUSA.
You are to mail this decision to the requestor no later than 60 days from the date of the decision. At that time, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel and to the public on the Customs Rulings Online Search System (“CROSS”), at https://rulings.cbp.gov/, and other methods of public distribution.
Sincerely,
Yuliya A. Gulis, Director
Commercial and Trade Facilitation Division