CLA 2-OT:RR:NC:N3:351
Mr. Paul Vroman
DHL Global Forwarding
2660 20th Street
Port Huron, MI 48060
RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of drainage fabrics; Article 509
Dear Mr. Vroman:
In your letter dated Nov. 1, 2011, you requested a ruling on behalf of your client, the Texel division of ADS, Inc., of Quebec, Canada, on the status of certain drainage fabrics from Canada under the NAFTA.
FACTS:
The subject merchandise consists of a product you call Draintube. The classification of this item was the subject of New York Ruling Letters N029375, dated June 25, 2008 and N173609 (July 20, 2011). No sample was submitted with your current ruling request, but we have the sample of the fabric without the tubes from our file for those previous rulings. In those rulings, the merchandise was described as follows:
It is composed of three layers. The center layer is a loosely woven fabric of man-made textile strips in the warp and a textile yarn in the weft. This layer is sandwiched between two needleloom felt materials that, according to your letter, are composed of polypropylene man-made fibers. One of these layers is approximately 1/4" thick and the other approximately 1/8". This is a textile product. (The documentation states that an optional sheet of polypropylene sealant is available; the sample we received had no such layer and our ruling will not address it.) A perforated plastic drainage tube runs between the thicker of the two layers and the center woven layer. This product is used for drainage purposes at sports facilities, landfills, and other sites. Both the textile and the plastic tube provide drainage. In addition, the textile provides filtration, coverage, cushioning, protection. According to a chart you have provided, the textile portion makes up between 64% and 91% of the weight of the various composition options. The number and placement of the tubes is variable. This item is considered made up according to the terms of Note 7 to Section XI, Harmonized Tariff Schedule of the United States (HTSUS).
It is the position of this office that the textile portion imparts the essential character to the completed Draintube. General Rule of Interpretation (GRI) 3(b), HTSUS, noted.
In those earlier rulings, the applicable subheading for the Draintube was determined to be 6307.90.9889, HTSUS, which provides for other made up textile articles, other. This classification still stands.
The manufacturing operations for the Draintube are as follows:
The base layer of polyester fabric is manufactured in Canada by Texel using a needle-punch process with a blend of 20% Chinese-origin fibers and 80% fibers of U.S. origin. [In N1173609, the figures were stated to be 85% Chinese fibers and 15% U.S.-origin fibers.]
The plastic tubing is manufactured in France.
The top layer of polypropylene needle-punch fabric is manufactured in Canada by Texel using 100% U.S.-origin fibers, again using a needle-punch process.
The three components are assembled into the finished Draintube in Canada by Texel.
Both the polyester fibers and the polypropylene fibers imported into Canada are classifiable in subheading 5303, HTSUS, which provides for synthetic staple fibers, not carded or combed or otherwise processed for spinning.
ISSUES:
What are the classification and country of origin of the subject merchandise? Do the finished items qualify for eligibility under NAFTA?
CLASSIFICATION:
As stated above, the applicable subheading for the Draintube is 6307.90.9889, HTSUS, which provides for other made up textile articles, other. The general rate of duty is 7% 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/.
NAFTA ELIGIBILITY:
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; or
(iv) they are produced entirely in the territory of Canada, Mexico and/or the United States but one or more of the nonoriginating materials falling under provisions for “parts” and used in the production of such goods does not undergo a change in tariff classification because--
(A) the goods were imported into the territory of Canada, Mexico and/or the United States in unassembled or disassembled form but were classified as assembled goods pursuant to general rule of interpretation 2(a), or
(B) the tariff headings for such goods provide for and specifically describe both the goods themselves and their parts and is not further divided into subheadings, or the subheadings for such goods provide for and specifically describe both the goods themselves and their parts,
provided that such goods do not fall under chapters 61 through 63, inclusive, of the tariff schedule, and provided further that the regional value content of such goods, determined in accordance with subdivision (c) of this note, is not less than 60 percent where the transaction value method is used, or is not less than 50 percent where the net cost method is used, and such goods satisfy all other applicable provisions of this note.
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 the earlier rulings, we determined that the textile fabrics, as opposed to the plastic tubing, imparted the essential character to the Draintube, so only the fabrics need to meet the requirements of the tariff shift in GN 12(t)/63/4. However, both needle-punch textile fabrics that make up the Draintube must meet the tariff shift, which requires the following:
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 [emphasis added], 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 of more of the NAFTA parties.
As stated above, the polyester fibers in the base-layer fabric are from China and are thus non-originating. These non-originating fibers are classified in heading 5503; chapter 55 is one of the exclusions listed in the above tariff shift.
However, GN 12(f)(vi) contains the following de minimus allowance:
(vi) A good provided for in chapters 50 through 63, inclusive, of this schedule that does not originate because certain fibers or yarns used in the production of the component of the good that determines the tariff classification of the good do not undergo an applicable change in tariff classification, provided for in subdivisions (r), (s) and (t) of this note, shall nonetheless be considered to originate if the total weight of all such fibers or yarns in that component is not more than 7 percent of the total weight of that component.
Based on your figures, the textile portion of the Draintube, meaning both the base layer and top layer in the aggregate, is comprised of 5.4% Chinese polyester fiber by weight. The merchandise qualifies for preferential treatment under the NAFTA because the above de minimus rule applies.
The merchandise will therefore be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.
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, “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
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.
As the fabric is formed in a single country, that is, Canada, by a needle-punch fabric-making process, as per the terms of the tariff shift requirement of 19 C.F.R. 102.21, country of origin is conferred in Canada.
HOLDING:
The Draintube as described above qualifies for NAFTA eligibility. The country of origin of the Draintube is Canada.
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 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 classification of the Draintube, contact National Import Specialist Mitchel Bayer at (646) 733-3102. If you have any questions regarding the NAFTA determination, contact National Import Specialist Rosemarie Hayward at (646) 733-3064.
Sincerely,
Robert B. Swierupski
Director
National Commodity Specialist Division