CLA-2-56:RR:NC:TA:350 D86947
Mr. John Martincic
Upholstery Felt Co Ltd.
4418 Sumas Street
Burnaby B.C. V5C 4A9
Canada
RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of high bulk polyester wadding for use in furniture and mattresses, from Canada.; Article 509.
Dear Mr. Martincic:
In your letter dated January 14, 1999, you requested a ruling on the status of high bulk polyester wadding from Canada under the NAFTA.
Your letter, as evidenced by the representative samples, indicates that raw staple fibers of Korean origin, which are identified in your correspondence as “15 Denier, 51MM Grade A 2", are shipped to your warehouse in Canada where they are processed in a specialized machine called a “Garnet”. In the process, the staple fibers are loaded into a picker where the fiber mass is opened up and then fed into the garnet where the fibers are carded out onto an apron and cross lapped to build up the desired thickness and width. The formed batt is then rolled up to a designated length. The particular submitted sample is approximately three to three and half inches thick and weighs approximately 300 oz/y². The finished material, which will be imported as roll goods, will be used in the manufacture of furniture, mattresses and futons.
We note, that while you mention that the fibers shipped to Canada belong under subheading 5505.10.0020 as “waste”, that actually, they fall under tariff subheading 5503.20.00 as synthetic staple fibers of polyester.
The applicable tariff provision for the product, as imported into the United States, will be 5601.22.0010, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for wadding, ... in the piece, of man-made fibers. The general rate of duty will be 9.4 percent ad valorem.
NAFTA ELIGIBILITY
For the purposes of NAFTA, 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; or
The subject merchandise qualifies for NAFTA treatment only if the provisions of General Note 12(b)(ii)(A) are met, that is, if the merchandise is transformed in the territory of Canada so that the non-originating material undergoes a change in tariff classification as described in subdivision (t).
This merchandise does not qualify for preferential treatment under the NAFTA because
the non-originating materials used in the production of the wadding did not undergo the change in tariff classification required by General Note 12(t)/56--129t)/61 CR1, HTSUSA.
Specifically, such note sets out the tariff shift rule applicable to goods classified in heading subheading 5601.22.0010 and it reads as follows:
Chapter 56. A change to heading 5601 through 5609 from any other chapter, except from heading 5106 through 5113, 5204 through 5212, 5307 through 5308 or 5310 through 5311, or chapters 54 through 55".
As the rule precludes a change from heading 5503 to 5601 as a qualifying tariff change, the operations which occur in Canada do not render the wadding classifiable in subheading 5601.22.0010 eligible for the NAFTA preferential duty treatment.
COUNTRY OF ORIGIN - LAW AND ANALYSIS
On December 8, 1994, the President signed into law the Uruguay Round Agreements Act. Section 334 of that Act (codified at 19 U.S.C. §3592) provides new rules of origin for textiles and apparel entered, or withdrawn from warehouse, for consumption, on and after July 1, 1996. On September 5, 1995, Customs published Section 102.21, Customs Regulations, in the Federal Register, implementing Section 334 (60 FR 46188). Thus, effective July 1, 1996, the country of origin of a textile or apparel product shall be determined by sequential application of the general rules set forth in paragraphs (c)(1) through (5) of Section 102.21.
Paragraph (c)(1) states that "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." This criteria is not met because processing occurred in more than one country.
Paragraph (c)(2) states that "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 of the foreign materials 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:"
Paragraph (e) in pertinent part states that “the following rules shall apply for the purposes of determining the country of origin of a textile or apparel product under paragraph (c)(2) of this section”:
HTSUS Tariff shift and/or other requirements
5601 A change to wadding of heading 5601 from any other heading, except from heading 5105, 5203, and 5501 through 5507.
As the fibers used to manufacture this wadding fall in subheading 5503.20.00, HTS, the tariff shift requirement specified in this note is not met.
Section 102.21(c)(3) states that, "Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) or (2) of this section":
(I) 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
(ii) Except for 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.
As the subject merchandise is neither knit, nor is any assembly involved, Section 102.21 (c)(3) is inapplicable.
We, therefore, turn to Section 102.21 (c)(4) which states, “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.”
We deem the processing of the raw staple fibers of Korean origin in Canada to produce, through a series of operations, the finished wadding material to be the most important manufacturing operation. Therefore, Canada would be the country of origin.
To reiterate, this material is classifiable in subheading 5601.10.0020, HTS, which provides for wadding ... in the piece, of man-made fibers. The general rate of duty is 9.4 percent ad valorem.
In conclusion, while the polyester wading does not qualify for preferential treatment under NAFTA, it does qualify to be marked as a Product of Canada.
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 George Barth at 212-637-7085.
Should you wish to request an administrative review of this ruling, submit a copy of this ruling and all relevant facts and arguments within 30 days of the date of this letter, to the Director, Commercial Rulings Division, Headquarters, U.S. Customs Service, 1300 Pennsylvania Ave., NW, Washington, DC 20229.
Sincerely,
Robert B. Swierupski
Director,
National Commodity
Specialist Division