CLA-2-63:OT:RR:NC:TA:349
Ms. Kay Morrell
JCPenney Purchasing Corp.
6501 Legacy Drive, MS 2316
Plano TX 75024
RE: The tariff classification and country of origin determination for curtains; Products of the West Bank, the Gaza Strip or a Qualifying Industrial Zone; General Note 3(a)(v); 19 CFR 102.21(c)(2); tariff shift: 19 CFR 102.21(c)(5): last country
Dear Ms. Morrell:
This is in reply to your letter dated November 18, 2009, requesting a classification, eligibility for Duty-Free treatment for products of a Qualifying Industrial Zone (QIZ) and country of origin determination for curtains which will be imported into the United States.
FACTS:
The subject merchandise consists of five different curtains; each produced using different manufacturing scenarios. A sample of three of the curtains and a swatch of fabric used to make one curtain was submitted with the request. You state in your letter that the manufacturing operations in Egypt will occur in one of the Qualifying Industrial Zones (QIZ). Sample 1 is a tab top curtain made from a printed 100 percent polyester woven fabric. Sample 2 is stated to be a 100 percent polyester woven rod pocket curtain that will be either printed or dyed. A swatch of double-faced woven polyester yarn-dyed fabric with a heat embossed design was submitted to represent Sample 3.
Sample 4 is a woven grommet top curtain made from a dyed 100 percent cotton fabric. The Sample 5 grommet top curtain or drapery panel is lined. The woven yarn-dyed face fabric features stripes made from chenille yarns and is stated to be 100 percent polyester. The lining is a 50 percent cotton and 50 percent polyester woven fabric.
The manufacturing scenarios are as follows:
Scenario 1 – Sample 1:
China:
-polyester fabric is woven.
-greige fabric is shipped to Egypt.
Egypt – QIZ:
-fabric is printed.
-fabric is cut to length and width for panel and tabs.
-panel is hemmed on all sides and tab tops are sewn on.
-finished curtain is shipped to the United States.
Scenario 2 – Sample 2:
China:
-polyester fabric is woven.
-fabric is shipped to Egypt.
Egypt – QIZ:
-fabric is dyed or printed.
-fabric is cut to length and width.
-panel is sewn on all sides with a rod pocket created along the top.
-finished curtain is shipped to the United States.
Scenario 3 – Sample 3:
Turkey:
-polyester fabric is woven.
-yarn-dyed fabric is shipped to Egypt.
Egypt – QIZ:
-fabric is heat embossed.
-fabric is cut to length and width.
-panel is sewn on all sides with a rod pocket created along the top.
-finished curtain is shipped to the United States.
Scenario 4 – Sample 4:
Turkey:
-cotton fabric is woven.
-fabric is shipped to Egypt.
Egypt – QIZ:
-fabric is dyed.
-fabric is cut to length and width.
-panel is hemmed on all sides with metal grommets added along the top.
-finished curtain is shipped to the United States.
Scenario 5 – Sample 5:
China:
-50/50 cotton and polyester fabric is woven.
-lining fabric is shipped to Egypt.
Egypt – QIZ:
-polyester face fabric is woven.
-fabrics are cut to length and width.
-face and lining panels are joined and hemmed on all sides.
-metal grommets are added along the top.
-finished curtain is shipped to the United States.
You indicate that after processing in the QIZ all of the curtains are shipped directly to the ultimate consignee in the United States and that the direct processing costs in the QIZ equal or exceed 35 percent of the appraised value.
ISSUE:
What are the classification, eligibility for Duty-Free treatment for products of a Qualifying Industrial Zone (QIZ) and country of origin for the subject merchandise?
CLASSIFICATION:
The applicable tariff provision for the Samples 1, 2, 3 and 5 will be 6303.92.2010, Harmonized Tariff Schedule of the United States (HTSUS), which provides for curtains (including drapes) and interior blinds: curtain or bed valances: other: of synthetic fibers: other… window curtains (including drapes) and window valances. The general rate of duty will be 11.3 percent ad valorem.
The applicable tariff provision for the Sample 4 will be 6303.91.0010, HTSUS, which provides for curtains (including drapes) and interior blinds: curtain or bed valances: other: of cotton… window curtains (including drapes) and window valances. The general rate of duty will be 10.3 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/.
COUNTRY OF ORIGIN - LAW AND ANALYSIS:
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.
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." As the subject merchandise is not wholly obtained or produced in a single country, territory or insular possession, paragraph (c)(1) of Section 102.21 is inapplicable.
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
6301-6306 Except for goods of heading 6302 through 6304 provided for in paragraph (e)(2) of this section, the country of origin of a good classifiable under heading 6301 through 6306 is the country, territory or insular possession in which the fabric comprising the good was formed by a fabric making process.
Subheading 6303.91 is not included in the paragraph (e)(2) exception to the above tariff shift rule. As the fabric comprising the cotton curtain, Sample/Scenario 4, is formed in a single country, that is, Turkey, as per the terms of the tariff shift requirement, country of origin is conferred in Turkey.
Subheading 6303.92, applicable to the other four Sample/Scenarios, is included in the paragraph (e)(2) exception to the above tariff shift rule. Paragraph (e)(2)(i) is not applicable as the fabrics comprising the curtains are not both 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.” As the fabric comprising the curtain in Sample/Scenarios 1, 2 and 3 was formed in a single country, that is, China for Sample/Scenarios 1 and 2 and Turkey for Sample/Scenario 3, as per the terms of the tariff shift requirement, country of origin is conferred in China for Sample/Scenarios 1 and 2 and Turkey for Sample/Scenario 3.
The Sample/Scenario 5 curtain is made up from fabrics that are formed in different countries. As the fabrics comprising the curtain are not formed in a single 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 subject merchandise is not knit to shape, and heading 6303, 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). The fabrics that make up the Sample/Scenario 5 curtain are sourced in China and Egypt. As the fabrics for the curtain are sourced in more that one country, a single country of origin determination cannot be made based on Section 102.21(c)(4).
Paragraph (c)(5) states that "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." Accordingly, in the case of the Sample/Scenario 5 curtain, country of origin is conferred by the last country in which an important assembly or manufacturing process occurred, that is, Egypt.
STATUS UNDER THE UNITED STATES-ISRAEL FREE TRADE AGREEMENT
Pursuant to the authority conferred by section 9 of the U.S.-Israel Free Trade Area Implementation Act of 1985 (19 U.S.C. §2112 note), the President issued Proclamation No. 6955 dated November 13, 1996 (published in the Federal Register on November 18, 1996 (61 Fed. Reg. 58761)), which modified the Harmonized Tariff Schedule of the United States (HTSUS) (by creating a new General Note 3(a)(v)) to provide duty-free treatment to articles which are the product of the West Bank, Gaza Strip or a qualifying industrial zone, provided certain requirements are met. Such treatment was effective for products of the West Bank, Gaza Strip or a qualifying industrial zone entered or withdrawn from warehouse for consumption on or after November 21, 1996.
Under General Note 3(a)(v), HTSUS, articles the products of the West Bank, Gaza Strip or a qualifying industrial zone which are imported directly to the U.S. from the West Bank, Gaza Strip, a qualifying industrial zone or Israel qualify for duty-free treatment, provided the sum of 1) the cost or value of materials produced in the West Bank, Gaza Strip, a qualifying industrial zone or Israel, plus 2) the direct costs of processing operations performed in the West Bank, Gaza Strip, a qualifying industrial zone or Israel, is not less than 35% of the appraised value of such articles when imported into the U.S. An article is considered to be a product of the West Bank, Gaza Strip or a qualifying industrial zone if it is either wholly the growth, product or manufacture of one of those areas or a new and different article of commerce that has been grown, produced or manufactured in one of those areas.
You state that the processing operations will be performed in a QIZ in Egypt. General Note 3(a)(v)(G), HTSUS, defines a "qualifying industrial zone" as any area that: "(1) encompasses portions of the territory of Israel and Jordan or Israel and Egypt; (2) has been designated by local authorities as an enclave where merchandise may enter without payment of duty or excise taxes; and (3) has been designated by the U.S. Trade representative in a notice published in the Federal Register as a qualifying industrial zone." For the purposes of this letter, we will assume that the QIZ you are using will meet the requirements of General Note 3(a)(v)(G), HTSUS.
Based upon the above production information the curtains have been processed in one of the Egyptian Qualifying Industrial Zones. However, the Sample/Scenario 1-4 curtains have been determined to be products of China (Samples 1 and 2) or Turkey (Samples 3 and 4) under the applicable rules of origin for textiles. These curtains do not qualify for preferential treatment. The Sample/Scenario 5 curtain meets the country of origin requirements in the West Bank, Gaza Strip or a qualifying industrial zone, specifically, in Egypt, under the applicable rules of origin for textiles and is considered to be a product of the West Bank, Gaza Strip or a qualifying industrial zone.
With respect to the requirement that the articles be imported directly, General Note 3(a) (v)(B) (1) provides in pertinent part that:
“Articles are "imported directly" for purposes of this paragraph if— (1) they are shipped directly from West Bank, the Gaza Strip, a qualifying industrial zone or Israel into the United States with out passing through the territory of any intermediate country;
Based on the facts presented, it appears that the Sample/Scenario 5 curtain will satisfy this requirement. We are unable to state definitively that the Sample/Scenario 5 curtain will or will not satisfy the 35 percent value content requirement. Whether the requirement is satisfied can only be ascertained when the "appraised value" of the curtain is determined at the time of entry into the United States.
HOLDING:
The country of origin of the Sample/Scenario 1 and 2 curtains is China. The country of origin of the Sample/Scenario 3 and 4 curtains is Turkey. They are not eligible for preferential treatment. The country of origin of the Sample/Scenario 5 curtain is Egypt. If that curtain is produced in an approved Qualifying Industrial Zone, it will be considered to be products of the West Bank, Gaza Strip or QIZ and will be eligible for duty free treatment under General Note 3(a)(v), HTSUS, assuming that it is imported directly from the West Bank, Gaza Strip, QIZ or Israel, and the 35 percent value content requirement is satisfied.
The holding set forth above applies only to the specific factual situation and merchandise identified in the ruling request. This position is clearly set forth in section 19 CFR 177.9(b)(1). This section states that a ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177). Should it be subsequently determined that the information furnished is not complete and does not comply with 19 CFR 177.9(b)(1), the ruling will be subject to modification or revocation. In the event there is a change in the facts previously furnished, this may affect the determination of country of origin. Accordingly, if there is any change in the facts submitted to Customs, it is recommended that a new ruling request be submitted in accordance with 19 CFR 177.2.
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