CLA-2-63:OT:RR:NC:TA:349
Ms. Elise Shibles
Sandler, Travis & Rosenberg, P.A.
505 Sansome Street, Suite 1475
San Francisco, CA 94111
RE: The tariff classification, status under the North American Free Trade Agreement (NAFTA) and country of origin determination for drapes, umbrella canopies and cushions from Mexico; General Note 12(b)(ii)(A); General Note 12(b)(iii); 19 CFR 102.21(c)(2); tariff shift; 19 CFR 102.19(b); NAFTA Preference Override; Article 509
Dear Ms. Shibles:
In your letter dated December 2, 2010 you requested a ruling on the status of drapes, cushions and umbrella canopies from Mexico under the NAFTA. This request is made on behalf of Easyway Products Co.
The subject merchandise consists of drapes, cushions and umbrella canopies. The submitted drape panel is made from 100 percent acrylic woven fabric. All four sides are hemmed. The top hem features eight 5-inch diameter grommets. The cushion is comprised of a 100 percent acrylic woven fabric cover that is stuffed with a 2-inch thick plastic foam cushion. The foam cushion is wrapped with polyester batting. The cover features a zipper opening along one edge and fabric ties at two corners. The cushion measures 21 x 23 inches. The umbrella canopy is made from 100 percent acrylic woven fabric. It has pockets for ribs at the corners and sides and a grommet for a center pole. The rectangular canopy measures approximately 6 x 10 feet.
The manufacturing operations for the drapes, cushions and umbrella canopies are as follows:
NON-NAFTA COUNTRY:
-metal or plastic grommets.
-sewing thread
-zippers
-polyester fiber for batting is formed.
-acrylic fiber is extruded and cut.
-acrylic staple fibers are shipped to the United States.
UNITED STATES:
-staple fibers are spun into a yarn.
-yarns are woven into a fabric.
-fabric is shipped to Mexico.
MEXICO:
-polyester batting is formed from non-NAFTA fiber
-plastic cushion is formed.
-fabrics are cut to size and shape.
-components are sewn forming the drapes, cushion covers and canopies.
-foam is wrapped with batting and stuffed into the cover.
-cushions, canopies and drapes are packaged and shipped to the United States.
The applicable tariff provision for the drapes 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 subheading for the cushions will be 9404.90.2000, HTSUS, which provides for mattress supports; articles of bedding and similar furnishing (for example, mattresses, quilts, eiderdowns, cushions, pouffes and pillows) fitted with any material or of cellular rubber or plastics, whether or not covered: other: pillows, cushions and similar furnishings: other. The general rate of duty will be 6 percent ad valorem.
The applicable subheading for the umbrella canopies will be 6307.90.9889, HTSUS, which provides for other made up textile articles, other. The general rate of duty will be 7 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/.
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 drapes, cushions and umbrella canopies undergo processing operations in the United States and Mexico which are countries provided for under the North American Free Trade Agreement. The drapes, cushions and canopies at issue will be eligible for the NAFTA preference if they qualify to be marked as a good of Mexico and if they are transformed in Mexico so that the non-originating material undergoes a change in tariff classification described in subdivision (t) to General Note 12, HTSUS. For headings 6303 and 6307, HTSUS, the appropriate subdivision (t), Chapter 63 rules state that:
A change to heading 6303 from any other chapter, except from headings 5106 through 5113, 5204 through 5212, 5307 through 5308 or 5310 through 5311, chapters 54 through 55, or headings 5801 through 5802 or 6001 through 6006, provided that the good is both cut (or knit to shape) and sewn or otherwise assembled in the territory of one or more of the NAFTA parties.
A change to headings 6304 through 6310 from any other chapter, except from headings 5106 through 5113, 5204 through 5212, 5307 through 5308 or 5310 through 5311, chapters 54 through 55, or headings 5801 through 5802 or 6001 through 6002, provided that the good is both cut (or knit to shape) and sewn or otherwise assembled in the territory of one of more of the NAFTA parties.
For heading 9404, HTSUS, the appropriate subdivision (t), Chapter 94 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 acrylic staple fibers leave the non-NAFTA country they are classified in subheading 5503.30, HTSUS. As products of chapter 55, HTSUS, are excepted from meeting the tariff change to headings 6303 and 6307 , HTSUS, it would initially appear that the non-originating material does not undergo the requisite change in tariff classification. It is noted however, that the non-originating staple fibers are spun into a yarn and woven into a fabric in the United States. The acrylic yarn is classified in heading 5509, HTSUS, while the woven fabric is classified in heading 5512, HTSUS. For heading 5512, HTSUS, the appropriate subdivision (t) Change in Tariff Classification Rules states that:
A change to headings 5512 through 5516 from any heading outside that group, except from headings 5106 through 5110, 5205 through 5206, 5401 through 5404 or 5509 through 5510.
As heading 5503, HTSUS is not excepted by subdivision (t), the non-originating staple fibers undergo the requisite change in tariff classification in the United States and the woven fabric qualifies as an originating material.
The sewing thread and zippers are non-originating however, the drapes and canopies would qualify for the NAFTA preference following General Note 12(b) (ii) (A), HTSUS. Subdivision (t), Chapter rule 1 for Chapter 63 states that the rule applicable to the good shall only apply to the component that determines the tariff classification, in this case, the acrylic fabric that has been determined to be an originating material. The sewing thread and zipper therefore do not need to meet the change in tariff classification rule, notwithstanding the fact that the zipper would make the shift and the thread would probably be de minimis.
In the case of the cushions all of the components undergo the tariff shift. Accordingly, the drapes, canopies and cushions 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.
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.
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.
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.
Subheading 6303.92 is included in the paragraph (e) (2) exception to the above tariff shift rule. Paragraph (e)(2)(i) is not applicable as the fabric comprising the drapes 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 fabrics comprising the drapes and canopies were formed in a single country. As per the terms of the tariff shift requirement, country of origin of the drapes and canopies is conferred in the United States.
The acrylic cushions are not included in the paragraph (e)(2) exception. The cushions are made from a shell fabric and a batting fabric. As the fabrics comprising the cushions 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 cushions 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 cushion, 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 cushions, the fabric making process of the outer shell constitutes the most important manufacturing process. The outer shell of the cushion is made from fabrics formed in a single country. Accordingly, the fabric making process in the United States, where the fabric for the outer shell is formed, constitutes the most important manufacturing process and the country of origin for the cushion is the United States.
However, the drapes, cushions and canopies qualify as a NAFTA originating good. As stated in Section 102.19(b):
If, under any provision of this part, the country of origin of a good which is originating within the meaning of § 181.1(q) of this chapter is determined to be the United States and that good has been exported from, and returned to, the United States after having been advanced in value or improved in condition in another NAFTA country, the country of origin of such good for Customs duty purposes is the last NAFTA country in which that good was advanced in value or improved in condition before its return to the United States.
Based on the facts presented, the drapes, canopies and cushions are an originating good under NAFTA and have been determined under section 102.21(c)(2) and (c)(4) to be a good of U.S. origin. Because the articles were returned to the U.S. after having been advanced in value or improved in condition in Mexico by virtue of cutting and sewing into finished drapes, canopies and cushions the country of origin of the drapes, canopies and cushions for Customs duty purposes is Mexico, pursuant to Section 102.19(b). Accordingly, the “MX” NAFTA rate of FREE will be applicable to the cushion cover.
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