CLA-2-60:OT:RR:NC:N3:352
Brett Ian Harris
Pisani & Roll LLP
1629 K Street NW, Suite 300
Washington, D.C. 20006
RE: The tariff classification and Tariff Preference Level Eligibility under North American Free Trade Agreement (NAFTA) of a double knit fabric from Mexico
Dear Mr. Harris:
In your letter dated June 17, 2019, you requested a tariff classification ruling, on behalf of your client, Innofa USA LLC (“Innofa”). A sample swatch was provided to this office.
FACTS:
Style GA433-21503 is double knit fabric composed wholly of polyester fibers with stuffing yarns inserted during the knitting process, adding both bulk and texture to the fabric. According to the information provided, the fabric is composed of two knitted layers held together by yarns traveling back and forth between the two layers, forming tuck stitches; this process keeps the polyester fiber fill permanently in place and produces a quilted effect on the fabric. The fabric weighs 220 g/m2. You state that the fabric will be imported in rolls of 91-inch widths and will be used as mattress ticking.
ISSUE:
What is the classification and the eligibility of the fabric under NAFTA Tariff Preference Levels (TPLs)?
CLASSIFICATION:
The applicable subheading for style GA433-21503 will be 6006.31.0040, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Other knitted or crocheted fabrics: Of synthetic fibers: Unbleached or bleached: Of double knit or interlock construction: Of polyester. The applicable rate of duty will be 10% ad valorem.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at https://hts.usitc.gov/current.
TARIFF PREFERENCE LEVELS:
Goods entered into the commerce of the United States from Mexico and Canada which are considered “originating” goods from those countries are granted preferential tariff treatment under NAFTA. Additionally, specified textile and apparel goods imported into the U.S. from Canada or Mexico which are not “originating” goods may nevertheless be granted the same preferential duty rate tariff as originating goods, up to specific annual quantitative TPLs. Once a TPL applicable to a NAFTA country’s exports to another NAFTA country has been reached, any further exports of goods of that TPL category to the same NAFTA country during that year may not be accorded NAFTA preferential tariff treatment, but rather will be subject to duty at the normal trade relations rate. See T.D. 95-98, the final rule implementing the submission of certificates of eligibility in 19 CFR § 12.132(b). Consequently, a TPL is a type of tariff-rate quota. As per HQ 965827, in order for a fabric to be dutiable at the NAFTA tariff rate, based on the Tariff Preference Level, three conditions must be met. First, the good must meet the requirements of the TPL definition found in Section XI, Additional U.S. Notes 3- 6, HTSUS; second, the good must be accompanied by a Certificate of Eligibility in proper form; and third, the yearly amount allowed under the TPL must not have been filled prior to the presentation of the Certificate of Eligibility. If any of these three conditions are not met then the good does not qualify under the TPL.
The double knit fabric, which is knit in Mexico from yarns imported from China, India, Taiwan, Korea, or Mexico, meets the requirements of Section XI, Additional U.S. Note 4(b) which provides in part,
The rate of duty in the “Special” subcolumn of rates of duty column 1 followed by the symbol “MX” in parentheses shall apply to imports from Mexico, up to the annual quantities specified in subdivision (d) of this note, of man-made fiber fabric that are woven or knit in the territory of a NAFTA party from yarn produced or obtained outside the territory of one of the NAFTA parties.
The double knit fabric is knit in Mexico from yarns imported from China, India, Taiwan, Korea, or Mexico. Therefore, the subject fabric meets the first requirement of the TPL in that it qualifies under the appropriate definitions of Section XI, HTSUS.
Per HQ 965827, concerning the second requirement, the Customs Regulations, Section 12.132(3)(b), concerning the Certificate of Eligibility state:
In connection with a claim for NAFTA preferential tariff treatment involving non-originating textile and apparel goods subject to the tariff preference level provisions of appendix 6.B. to Annex 300-B of the NAFTA and Additional U.S. Notes 3 through 6 to Section XI, Harmonized Tariff Schedule of the United States, the importer shall submit to Customs a Certificate of Eligibility covering the goods. The Certificate of Eligibility shall be properly completed and signed by an authorized official of the Canadian or Mexican government and shall be presented to Customs at the time the claim for preferential tariff treatment is filed under §181.21 of this chapter.
Concerning the third requirement, the yearly amount allowed under the TPL must not have been filled prior to the presentation of the Certificate of Eligibility.
Tariff Preference Levels are administered like tariff rate quotas. Tariff rate quotas permit a specified quantity of imported merchandise to be entered at a reduced rate of duty during the quota period. Once the tariff-rate quota limit is reached, goods may still be entered, but at a higher rate of duty. To check the status of a Tariff Preference Level (TPL) quota, contact your local service port of entry or visit https://www.cbp.ov/trade/quota/tariff-rate-quotas.
HOLDING:
Based on the information provided, the subject fabric meets the first requirement of the TPL. In order to meet the second requirement, you must have a valid Certificate of Eligibility at the time the claim for preferential tariff treatment is filed under §181.21. With respect to the third requirement, the determination will be made when the Certificate of Eligibility is presented and whether or not the yearly amount allowed under the TPL is filled. Therefore, upon completion of the required documentation and up to the specified annual quantities, the fabric may be eligible for the NAFTA preferential duty rate of Free. The special statistical reporting number 9999.00.62, HTSUS, is required with the above classification for the fabric imported from Mexico, under the terms of Additional U.S. Note 4 to Section XI of the HTSUS.
Tariff Preference Level (TPL) goods imported under a FTA (TPA) do not “originate” and thus are ineligible for the MPF exemption provided in 19 CFR 24.23(c).
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at https://hts.usitc.gov/current.
This ruling is being issued under the assumption that the subject goods, in their condition as imported into the United States, conform to the facts and the description as set forth both in the ruling request and in this ruling. In the event that the facts or merchandise are modified in any way, you should bring this to the attention of Customs and you should resubmit for a new ruling in accordance with 19 CFR 177.2. You should also be aware that the material facts described in the foregoing ruling may be subject to periodic verification by Customs.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
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 Nicole Rosso via email at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division