CLA-2-94:OT:RR:E:NC:TA:349
Mr. Adolfo Saldivar
RM Customhouse Brokers, Inc.
4707 E. Montana Ave., Ste. 203
El Paso, TX 79903
RE: The tariff classification, status under the North American Free Trade Agreement (NAFTA) and country of origin determination for bedding sets; 19 CFR 102.21(d); sets; 19 CFR 102.21(c)(1); wholly obtained or produced in a single country; 19 CFR 102.21(c)(2); tariff shift; 19 CFR 102.21(c)(4); most important assembly or manufacturing process; 19 CFR 102.19(a); NAFTA Preference Override; Article 509
Dear Mr. Saldivar:
In your letter dated May 13, 2008 you requested a ruling on the status of bed in a bag and comforter sets from Mexico under the NAFTA. This request is made on behalf of Welspun AG.
The merchandise consists of bedding sets or bed ensembles. Copies of the package inserts were submitted in lieu of samples. The first set, referred to as a “12 Piece Bed Ensemble,” contains a comforter, two pillow shams, two euro shams, two decorative pillows, a bed skirt, two pillowcases and flat and fitted sheets. The face and back of the comforter, the shams, shells of the pillows, the pillowcases and the sheets are made from 100 percent cotton woven fabric. The bed skirt will be made from either woven cotton fabric or the platform section will be cotton and the skirt will be made from a woven polyester fabric. The comforter and pillows are stuffed with polyester fill. All of the components of the bed ensemble or bed-in-a-bag are packed together for retail sale.
The second set is a comforter set and contains a comforter, two pillow shams and a bed skirt. The face sides of the comforter and shams are made from 100 percent silk woven fabric. The backs are made from 100 percent polyester woven fabric. The bed skirt has a 100 percent cotton platform section and a polyester skirt. The silk sides of the shams and comforter are the primary surfaces. The components of the set are packed for retail sale. In both sets the comforters may or may not contain embroidery, lace, braid, edging, trimming, piping or appliqué work. The manufacturing operations for the bed ensemble and comforter sets are stated to be as follows:
CHINA, INDIA or PAKISTAN:
-cotton, polyester and silk fabrics are woven and finished.
-fabrics are cut to size and shape.
-components are sewn on 3 sides creating the comforter shell.
-components are sewn on 3 sides creating the pillow shells.
-components are sewn creating the finished shams, bed skirt, sheets
and pillowcases.
-comforter shells, pillow shells, shams, bed skirts, sheets and pillowcases
are shipped to Mexico.
MEXICO:
-polyester batting fabric is formed.
-batting is cut to size and stuffed into the comforter shell.
-batting is cut to size and stuffed into the pillow shells.
-comforter is sewn closed and quilted.
-pillows are sewn closed.
-comforter, shams, pillows, bed skirt, sheets and pillowcases are packed for
retail sale and the bed ensemble is shipped.
-comforter, shams and bed skirt are packed for retail sale and the comforter
set is shipped.
Classification of merchandise under the Harmonized Tariff Schedule of the United States (HTSUS) is in accordance with the General Rules of Interpretation (GRI's), taken in order. GRI 1 provides that classification shall be determined according to the terms of the headings and any relative section or chapter notes.
The comforter and pillows are classifiable in subheading 9404.90 as articles of bedding and similar furnishing that are stuffed or fitted. The fitted sheet, flat sheet and pillowcases are classifiable in heading 6302 as bed linen; the bed skirt is classifiable under the provision for curtain and bed valances in heading 6303 and the pillow shams under the provision for other furnishing articles in 6304. Since classification of the submitted merchandise in a single heading cannot be determined by applying GRI 1, we must apply the other GRI's.
GRI 3 provides for goods that are, prima facie, classifiable in two or more headings. GRI 3(b) provides that goods put up in sets for retail sale shall be classified as if they consisted of the material or component which gives them their essential character. According to the Explanatory Notes, the official interpretation of the HTSUS at the international level, “goods put up in sets for retail sale” refers to goods which:
(a) consist of at least two different articles which are, prima facie, classifiable in different headings; (b) consist of products or articles put up together to meet a particular need or carry out a specific activity; and (c) are put up in a manner suitable for sale directly to users without repacking.
The bed ensemble and the comforter set meet the qualifications of “goods put up in sets for retail sale”. The components of the sets consist of different articles which are, prima facie, classifiable in different headings. They are put up together to carry out the specific activity of furnishing a bed and they are packaged for sale directly to users without repacking. It is our opinion that the comforter is the component that gives each set their essential character.
The applicable subheading for the bed ensemble that contains a non-decorated comforter will be 9404.90.8020, HTSUS, which provides for mattress supports; articles of bedding and similar furnishing (for example, mattresses, quilts, eiderdowns, cushions, pouffes and pillows) fitted with springs or stuffed or internally fitted with any material or of cellular rubber or plastics, whether or not covered: other: other: of cotton, not containing any embroidery, lace, braid, edging, trimming, piping exceeding 6.35 mm or appliqué work… quilts, eiderdowns, comforters and similar articles. The general rate of duty will be 4.4 percent ad valorem.
The applicable subheading for the bed ensemble that contains a decorated comforter will be 9404.90.8505, HTSUS, that provides for mattress supports; articles of bedding and similar furnishing (for example, mattresses, quilts, eiderdowns, cushions, pouffes and pillows) fitted with springs or stuffed or internally fitted with any material or of cellular rubber or plastics, whether or not covered: other: other: other: quilts, eiderdowns, comforters and similar articles… with outer shell of cotton. The general rate of duty will be 12.8 percent ad valorem.
The applicable subheading for the comforter set will be 9404.90.8523, HTSUS, that provides for mattress supports; articles of bedding and similar furnishing (for example, mattresses, quilts, eiderdowns, cushions, pouffes and pillows) fitted with springs or stuffed or internally fitted with any material or of cellular rubber or plastics, whether or not covered: other: other: other: quilts, eiderdowns, comforters and similar articles… with outer shell of other textile materials: containing 85 percent or more by weight of silk or silk waste. The general rate of duty will be 12.8 percent 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 http://www.usitc.gov/tata/hts/.
The cotton comforters fall within textile category 362 and the cotton shams and pillows fall in category 369. The bed sheets fall in category 361 while the pillowcases fall in category 360. The polyester bed skirts fall in category 666 and the cotton bed skirts fall in category 369. The silk faced comforter and shams are not assigned a textile category number. With the exception of certain products of China, quota/visa requirements are no longer applicable for merchandise which is the product of World Trade Organization (WTO) member countries. Quota and visa requirements are the result of international agreements that are subject to frequent renegotiations and changes. To obtain the most current information on quota and visa requirements applicable to this merchandise, we suggest you check, close to the time of shipment, the “Textile Status Report for Absolute Quotas” which is available on our web site at www.cbp.gov. For current information regarding possible textile safeguard actions on goods from China and related issues, we refer you to the web site of the Office of Textiles and Apparel of the Department of Commerce at otexa.ita.doc.gov.
General Note 12(b), HTSUS, sets forth the criteria for determining whether a good is originating under the NAFTA. General Note 12(b), HTSUS, (19 U.S.C. § 1202) states, in pertinent part, that
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;
The comforter and pillows undergo processing operations in Mexico. Additionally, the comforter and pillows are packaged with shams, bed skirt, sheets and pillowcases in Mexico for the bed ensemble and the comforter is packaged with shams and a bed skirt in Mexico for the comforter set. Mexico is a country provided for under the NAFTA. These products will be eligible for the NAFTA preference if they qualify to be marked as a good of Mexico and if they are wholly obtained or produced in the NAFTA territories or transformed in Mexico so that the non-originating materials undergo a change in tariff classification described in subdivision (t) to General Note 12, HTSUS. In addition, all of the components of the two sets, not just the item that imparts the essential character to the set, must meet the terms of General Note 12(b). For heading 9404, HTSUS, the appropriate subdivision (t) rule states that:
A change to subheading 9404.90 from any other chapter, except from headings 5007, 5111 through 5113, 5208 through 5212, 5309 through 5311, 5407 through 5408 or 5512 through 5516.
When the non-originating comforter and pillow shells from China, India or Pakistan enter Mexico, they are classified in heading 6307, HTSUS. As heading 6307, HTSUS is not excepted by subdivision (t), the merchandise undergoes the requisite change in tariff classification and the comforters and pillows qualify for the NAFTA preference.
The bed skirts, pillow shams, sheets and pillowcases are finished products when they leave China, India or Pakistan and are imported into Mexico. The bed skirts are classifiable under heading 6303, HTSUS, the pillow shams are classifiable under heading 6304, HTSUS, and the sheets and pillowcases under heading 6302, HTSUS. As none of these headings are excepted by subdivision (t), each of these items undergoes the requisite change in tariff classification and they qualify for NAFTA preference.
The fact that the bed skirts, pillow shams, sheets and pillowcases are merely packaged together with the originating comforter and/or pillows in Mexico does not disqualify the bed ensemble or the comforter sets from being considered as originating goods. The issue was addressed in Headquarters Ruling letter (HQ) 561326, dated April, 26, 1999. In that ruling, Customs and Border Protection explained that there is no language in General Note 12, HTSUS, which would disqualify a good from obtaining originating status by virtue of merely having undergone simple packaging or combining operations. Thus, non-originating items may undergo the requisite tariff shift under General Note 12 (t), HTSUS, when packaged in Mexico with originating items.
Pursuant to the analysis set forth above, all of the items in the bed ensemble and the comforter set qualify as originating goods. Accordingly, they will be entitled to the special "MX" rate of duty if they qualify to be marked as a good of Mexico and provided that all other NAFTA requirements are met.
Section 334 of the Uruguay Round Agreements Act (codified at 19 U.S.C. 3592), enacted on December 8, 1994, provided rules of origin for textiles and apparel entered, or withdrawn from warehouse for consumption, on and after July 1, 1996. Section 102.21, Customs Regulations (19 C.F.R. 102.21), published September 5, 1995, in the Federal Register, implements Section 334 (60 FR 46188). Section 334 of the URAA was amended by section 405 of the Trade and Development Act of 2000, enacted on May 18, 2000, and accordingly, section 102.21 was amended (68 Fed. Reg. 8711). Thus, the country of origin of a textile or apparel product shall be determined by the sequential application of the general rules set forth in paragraphs (c)(1) through (5) of Section 102.21.
Section 102.21(d) addresses the treatment of sets for country of origin purposes. Section 102.21(d) provides the following:
Where a good classifiable in the HTSUS as a set includes one or more components that are textile or apparel products and a single country of origin for all of the components of the set cannot be determined under paragraph (c) of this section, the country of origin of each component of the set that is a textile or apparel product shall be determined separately under paragraph (c) of this section.
The classification of the subject bed ensemble and comforter sets, as per an essential character determination, is based on the comforter, however, per the terms of Section 102.21(d), one must determine whether or not a single country of origin exists for the entire set.
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." The bed skirts, pillow shams, sheets and pillowcases were wholly obtained or produced in China, India or Pakistan. Thus the country of origin initially appears to be China, India or Pakistan for those items. Since the comforters and pillows were not wholly obtained or produced in a single country, territory or insular possession, paragraph (c)(1) of Section 102.21 is inapplicable for those items.
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 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
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.
Parts of subheading 9404.90 are included in the paragraph (e)(2) exception to the above tariff shift rule. The decorated comforter in the bed ensemble falls under a subheading that is included in (e)(2) however, goods classified in that subheading which consist of blends containing 16 percent or more by weight of cotton are excepted. The comforter in the comforter set is included in the paragraph (e)(2) exception. Paragraph (e)(2)(i) is not applicable as the fabric comprising the comforter is not dyed and printed. Paragraph (e)(2)(ii) states that "If the country of origin cannot be determined under (i) above, except for goods of HTSUS subheading 6117.10 that are knit to shape or consist of two or more component parts, the country of origin is the country, territory, or insular possession in which the fabric comprising the good was formed by a fabric-making process."
The non-decorated comforter and the pillows from the bed ensemble are not included in the (e)(2) exception. You have indicated that the pillows as well as the comforters in both sets are made from a shell fabric and a batting fabric. As the fabrics comprising the pillows and the comforters in both sets are formed in more than one country, Section 102.21 (c)(2) is inapplicable.
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 pillows and comforters are not knit and subheading 9404.90, HTSUS, is excepted from provision (ii), Section 102.21 (c)(3) is inapplicable.
Section 102.21 (c)(4) 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". In the case of the subject merchandise, the most important manufacturing process occurs at the time of fabric making. Basing the country of origin determination on the fabric making process as opposed to the assembly process carries out the clear intent of Section 334 as expressed in Section 334 (b)(2) and Part 102.21(c)(3)(ii). In the case of the subject pillows and comforters, the fabric making process of the outer shell constitutes the most important manufacturing process. The outer shell of the pillows and comforters are made from fabrics formed in a single country. Accordingly, the fabric making process in China, India or Pakistan, where the fabric for the outer shell is formed, constitutes the most important manufacturing process and the country of origin for the pillows and comforters is China, India or Pakistan.
However, the bed-in-a-bag set qualifies as a NAFTA originating good. As stated in Section 102.19(a):
Except in the case of goods covered by paragraph (b) of this section, if a good which is originating within the meaning of §181.1(q) of this chapter is not determined under §102.11(a) or (b) or §102.21 to be a good of a single NAFTA country, the country of origin of such good is the last NAFTA country in which that good underwent production other than minor processing, provided that a Certificate of Origin (see §181.11 of this chapter) has been completed and signed for the good.
We have previously determined that the items in the bed ensemble and comforter sets are "originating" for purposes of the NAFTA preference rule applicable to the sets. It is the belief of Customs and Border Protection that Section 102.19(a) operates as an override for all of the items in the set and that all of the items are entitled to be marked as country of origin Mexico. Although packing is considered a non-qualifying operation under Section 102.17, the assembly of the comforter in Mexico meets the requirement that the good underwent production other than minor processing. Customs and Border Protection has previously stated that as long as one item in the set undergoes production other than minor processing, the remaining items in the set will receive the benefit of the NAFTA override. See HQ 559421, dated September 16, 1996; HQ 560577, dated August 4, 1997; HQ 560456, dated September 26, 1997; and HQ 560992, dated July 6, 1998. Thus, each item in the bed ensemble and comforter sets qualifies to be marked as country of origin Mexico.
As each item in the bed ensemble and comforter sets have been found to be originating and qualify to be marked Mexico, the bed ensemble and comforter sets are entitled to the special "MX" duty rate, provided that all other requirements of the NAFTA are met.
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 John Hansen at 646-733-3043.
Sincerely,
Robert B. Swierupski
Director,
National Commodity
Specialist Division