MAR 2-OT:RR:NC:TA:349
Ms. Jeanne A. Wade
DSV Air and Sea Inc.
898 N. Sepulveda Blvd.
El Segundo, CA 90245
RE: Marking and Country of origin determination for towels that are cut and sewn in the United States from foreign fabric; 19 CFR 102.21(c)(2); tariff shift;
Dear Ms. Wade:
This is in reply to your letter dated October 6, 2010, requesting a marking and country of origin determination for towels that are cut and sewn in the United States from foreign fabric. This request is made on behalf of Saip Ereren dba Terry Town.
FACTS:
The subject merchandise consists of various terry towels including bath towels, beach towels, hooded baby towels and sports towels. Samples were not submitted. All of the towels are made from a 100 percent cotton woven terry fabric. The fabric is sheared on one side. The manufacturing operations are as follows:
United States: Cotton is grown and shipped to China.
China: Cotton fibers are spun into a yarn, woven into a terry fabric, sheared to create a velour terry fabric, dyed, packaged into rolls approximately 35 inches wide by 70 meters long and shipped to the United States.
United States: Cotton terry fabric is cut and sewn forming the various towels.
You ask if these towels may be marked as a product of the United States and if there are any allowances in duty for the returned U.S. cotton.
ISSUE:
What is the country of origin and proper marking for the finished towels?
CLASSIFICATION:
Although woven cotton terry fabric is the actual product imported, this ruling request concerns the origin and marking of the finished product. The applicable subheading for the finished beach, bath and hooded towels will be 6302.60.0020, Harmonized Tariff Schedule of the United States (HTSUS), which provides for toilet linen and kitchen linen, of terry toweling or similar terry fabrics, of cotton... other. The applicable heading for the finished sports towels will be 6307.90.8940, HTSUS which provides for other made up articles, including dress patterns: other: other: cotton towels of pile or tufted construction.
COUNTRY OF ORIGIN AND MARKING - LAW AND ANALYSIS:
The towels are made from U.S. origin cotton fibers that have been spun and woven into a fabric in China. U.S. Note 2(a) to Subchapter II of Chapter 98, HTSUS, states in part that: “…any product of the United States which is returned after having been advanced in value or improved in condition abroad by any process of manufacture or other means, or any imported article which has been assembled abroad in whole or in part of products of the United States, shall be treated for the purposes of this act as a foreign article, and, if subject to a duty which is wholly or partly ad valorem, shall be dutiable, except as otherwise prescribed in this part, on its full value determined in accordance with section 402 of the tariff act of 1930, as amended. If such product or such article is dutiable at a rate dependent upon its value, the value for the purpose of determining the rate shall be its full value under the said section 402.”
Since there is no other part of Subchapter II Chapter 98 which would specifically exempt the Chinese made fabric from the application of this Note and the spinning and weaving of the fibers is considered an advance in value or improvement in condition, the terry fabric would be considered a foreign article for duty assessment purposes. In addition, the cost or value of the fiber may represent an assist under Section 402 of the Tariff Act (TA). The term "assist" is defined as that which is supplied directly or indirectly by the buyer of imported merchandise, and free of charge or at reduced cost, for use in connection with the sale of the merchandise for export to the U.S., 19 U.S.C. 1401a(h)(1)(A). There are four categories of assist; but only the first, encompassing "materials, components, parts and similar items incorporated in the imported merchandise," is potentially relevant to the instant situation. As an assist the value of the fibers would be added to the processing costs before the ad valorem rate of duty is applied pursuant to Section 402, TA. Additionally please note, that the value of any assist will include transportation costs to the place of production. See, Section 152.103(d), Customs Regulations (19 CFR 152.103(d)).
The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. Congressional intent in enacting 19 U.S.C. 1304 was “that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will.” United States v. Friedlaender & Co. Inc. 27 CCPA 297, 302, C.A.D. 104 (1940).
Part 134, Customs Regulations (19 CFR Part 134), implements country of origin marking requirements and exceptions of 19 U.S.C. 1304. As cited above, the marking statute specifically states that “every article of foreign origin (or its container) imported into the U.S. ... shall be marked ... in such a manner as to indicate to the ultimate purchaser in the U.S. ... the country of origin of the article.” In this case, the article imported into the U.S. is the foreign formed fabric. In order to determine whether the imported foreign formed fabric, after it has been used to make towels, remains an article of foreign origin for purposes of the marking requirements under 19 U.S.C. 1304, Customs must apply the statutory rules of origin set forth in section 334 of the Uruguay Round Agreements Act. In HQ 559625 dated January 19, 1996, the marking of down comforters produced in the U.S. from imported Chinese origin comforter shells was considered. Without reiterating the law and rationale applied in HQ 559625, it was held that since section 334 applies “for purposes of the customs laws” and 19 U.S.C. 1304 is a Customs law, section 334 must be applied to determine the country of origin of the down comforters finished in the U.S. for purposes of 19 U.S.C. 1304. Following that, Customs must apply the statutory rules of origin set forth in section 334 to the towels.
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, “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, “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,
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.
6307.90 The country of origin of a good classifiable under subheading 6307.90 is the country, territory or insular possession in which the fabric comprising the good was formed by a fabric-making process.
Subheading 6302.60 is not included in the paragraph (e)(2) exception to the above tariff shift rule. The towels are made from a fabric that was formed in a single country. As the fabric comprising the towels is formed in a single country, that is, China, as per the terms of the tariff shift requirement, country of origin for the various terry towels is conferred in China.
Based on the above origin determination, the towels may not be marked as a product of the United States. Since the fabric's country of origin remains foreign, for purposes of 19 U.S.C. 1304, the article which reaches the ultimate purchaser must indicate that the fabric is a product of a foreign country. Marking the towels “Made in China,” “Made in China, Cut and Sewn in the United States” or “Fabric Made in China, Finished in the United States” would satisfy that requirement.
Section 134.46, Customs Regulations (19 CFR 134.46), requires that when the words “United States,” “American,” the letters “U.S.A.,” any variation of such words or letters, or the name of any city or locality in the United States, or the name of any foreign country or locality which is not the country of origin appears on the imported article or its container the name of the country of origin shall appear legibly, permanently, in close proximity, and in at least comparable size, preceded by the additional words “Made in,” “Product of,” or other words of similar meaning. The purpose of this section is to prevent the possibility of misleading or deceiving the ultimate purchaser. The requirements of 19 CFR 134.46 are satisfied by the suggested markings and they are acceptable country of origin marking for the finished towels under 19 U.S.C. 1304.
Additionally, separate Federal Trade Commission marking requirements exist regarding country of origin, fiber content, and other information that must appear on many textile items. For more information on the applicability of the requirements under the Textile Fiber Products Identification Act (TFPIA) and the “Made in USA” marking, you should contact the Federal Trade Commission, Textile Program, Division of Enforcement, Bureau of Consumer Protection, 600 Pennsylvania Avenue, N.W., Washington, D.C., 20580.
HOLDING:
The country of origin of the various cotton terry towels is China.
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