CLA-2-58:OT:RR:NC:N3:350
Matthew Bock
Bock Trade Law
53 State Street, Suite 500
Boston, MA 02109
RE: The tariff classification, country of origin and eligibility under United States-Mexico-Canada Agreement of a quilted fabric from Canada; 19 CFR 102(c)(2); 19 CFR 134
Dear Mr. Bock:
In your letter dated May 09, 2022, you requested a tariff classification and country of origin ruling on behalf of your client, Cooley Group Holdings, Inc. You also requested that the ruling address eligibility of the goods under the United States-Mexico-Canada Agreement (“USMCA”) for preferential treatment. Samples of the fabric were provided and sent to the Customs and Border Protection (“CBP”) Laboratory for analysis. The samples will be retained for reference purposes.
FACTS:
The samples you have submitted of the subject fabric will be referred to as the “quilted fabric.”
The CBP Laboratory determined the fabric to be composed of four layers. The first is a green warp knit face-fabric, which is quilted to the second layer, a white nonwoven fabric which has been laminated to the third layer, a plastic lamination layer which is laminated to the fourth layer, a blue warp knit backing fabric. The completed, quilted fabric weighs 482.9 g/m2.
According to the information you provided, in Canada, the backing fabric (produced in China) will be laminated to the polymeric film (produced in the US) using an adhesive (produced in Canada) to produce a launderable, impervious barrier. The launderable, impervious barrier (backing fabric) will then be laminated to the quilted face fabric to create a “4-ply composite” construction fabric providing incontinence protection. In Canada, after each state of lamination the product is conditioned to perform adhesive curing and the finished product will then be prepared to ship in rolls, which entails trimming to width, packaging, and quality assurance.
ISSUES:
What is the classification, country of origin, and the eligibility of the quilted fabric under the USMCA?
ANALYSIS:
Your analysis concludes that the classification of the quilted fabric when imported into the United States from Canada is to be placed under subheading 5903.20.2500, Harmonized Tariff Schedule of the United States (“HTSUS”), which provides for, in pertinent part, “Textile fabric impregnated, coated, covered or laminated with plastics, other than those of heading 5902.”
It is our opinion that the quilted fabric is not classifiable in heading 5903.20.2500, HTSUS, as a laminated fabric for the reasons set forth.
While it may be apparent that the quilted face fabric and knit backing fabric are laminated, per the terms of Note 3 to Chapter 59, which states:
For the purposes of heading 5903, “textile fabrics laminated with plastics” means products made by the assembly of one or more layers of fabrics with one or more sheets or film of plastics which are combined by any process that bonds the layers together, whether or not the sheets or film of plastics are visible to the naked eye in the cross-section.
Opposingly, Note 1 to Chapter 59 states that:
Except where the context otherwise requires, for the purposes of this chapter the expression "textile fabrics" applies only to the woven fabrics of chapters 50 to 55 and headings 5803 and 5806, the braids and ornamental trimmings in the piece of heading 5808 and the knitted or crocheted fabrics of headings 6002 to 6006.
The Explanatory Notes (“ENs”) titled “Heading 5811” detail exactly what type of material construction is classifiable as a quilted textile product in the piece. In pertinent part it states:
This heading covers textile products in the piece consisting of:
(1) a layer of fabric, normally knitted or woven or of nonwovens, and a layer of padding material (of textile fibres frequently in the form of a web, of felt, of cellulose wadding, of foam plastics or of foam rubber, for example), or
(2) two layers of fabric, normally knitted or woven or of nonwovens, or of combinations thereof, separated by a layer of padding. [emphasis added]
These layers are usually held together by needling or stitching (including stitch bonding) either with straight rows of stitches or by stitching in a decorative pattern, provided the stitches are used principally to quilt [emphasis added] and do not constitute designs giving the product the character of embroidery. They may also be held together by knotted ties, or by adhesive, by heat bonding or other means, provided the product also has a quilted effect [emphasis added], that is, has a raised or puffed effect similar to quilting by stitching, needling or stitch bonding.
Heading 5811 provides for quilted textile products in the piece, composed of one or more layers of textile materials assembled with padding by stitching or otherwise. Based upon the relevant ENs and provisions provided for in heading 5811, it is our opinion that the quilted fabric, or “4-ply composite” as you refer to it, is a quilted textile fabric for the purposes of the HTSUS. The quilted face fabric is combined to a knit backing fabric and maintains a quilted effect.
Therefore, a fabric classifiable in Chapter 58, will not be considered to be a “textile fabric” for the purposes of Chapter 59, and therefor Chapter 59 Note 3, does not apply. For the purposes of the HTSUS, this fabric cannot be considered “textile fabrics laminated with plastics” of heading 5903.
Further because it is our opinion that the quilted fabric is classifiable in Chapter 58, Note 1 to that chapter, which states the following, applies:
This chapter does not apply to textile fabrics referred to in note 1 to chapter 59, impregnated, coated, covered or laminated, or to other goods of chapter 59.
CLASSIFICATION:
The applicable subheading for the quilted fabric will be 5811.00.3000, (HTSUS), which provides for “Quilted textile products in the piece, composed of one or more layers of textile materials assembled with padding by stitching or otherwise, other than embroidery of heading 5810: Of man-made fibers.” The applicable rate of duty will be 8% 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 the World Wide Web at https://hts.usitc.gov/current.
COUNTRY OF ORIGIN:
It is initially noted that your analysis indicates that substantial transformation is to be used to determine the applicability of any Section 301 tariffs, per HQ H313369 dated September 11, 2020. However, the ruling, which refers to H312426 dated August 7, 2020, whereby the facts are the same, does not concern textile goods, but merchandise described as “high tech goods” including automatic data processing machines, digital processing units, input/output units, and storage units.
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:
5811… The country of origin of a good classifiable under heading 5811 is the country, territory, or insular possession in which the fabric comprising the good was formed by a fabric-making process.
Paragraph (b) contains the pertinent definition:
(2) Fabric-making process. A fabric-making process is any manufacturing operation that begins with polymers, fibers, filaments (including strips), yarns, twine, cordage, rope or fabric strips and results in a textile fabric.
As stated in your submission the “Face tricot fabric” (the quilted face fabric) and the “Backing tricot fabric” (the knit backing fabric) are of Chinese origin. Although those fabrics are combined in Canada, the fabric-making process occurs in China.
The country of origin of the quilted fabric, including for purposes of determining the applicable Section 301 duties, will be China.
USMCA ELIGIBILITY:
The USMCA was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018. The USMCA was approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act. General Note (“GN”) 11 of the HTSUS implements the USMCA. GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA. GN 11(b) states, in relevant part: For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, is eligible for the preferential tariff treatment provided for in the applicable subheading and quantitative limitations set forth in the tariff schedule as a “good originating in the territory of a USMCA country” only if--
the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries;
the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials;
the good is a good produced entirely in the territory of one or more USMCA countries using nonoriginating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o)); or
[…]
Since the quilted fabric contains non-originating materials from China, it is not considered a good wholly obtained or produced entirely in a USMCA country under GN 11(b)(i). Moreover, under GN 11(b)(ii), the quilted fabric is not a good produced entirely in Canada, exclusively from originating materials. Therefore, we must next determine whether the non-originating materials undergo the tariff shift and other requirements provided for in GN 11(b)(iii) and GN 11(o).
The applicable rule of origin for merchandise under heading 5811 is located within GN 11(o), HTSUS, which provides in relevant part, the following tariff shift:
Chapter 58
3. A change to headings 5802 through 5811 from any other chapter, except from headings 5106 through 5113, 5204 through 5212, 5310 through 5311, or chapters 54 through 55.
According to the requisite tariff shift rule under GN 11(o), Rule 3 to Chapter 58, HTSUS, a tariff shift must occur. In the case of the subject fabric, the outer surface is a quilted fabric classified in heading 5811. As the fabric is formed in China, it is considered a non-originating material. As the combined fabric is also classified under heading 5811, it does not undergo the requisite change in tariff classification. Based upon the preceding analysis, the quilted fabric does not qualify for preferential treatment under the USMCA.
HOLDING:
The applicable subheading for the quilted fabric will be subheading 5811.00.3000, HTSUS, which provides for “Quilted textile products in the piece, composed of one or more layers of textile materials assembled with padding by stitching or otherwise, other than embroidery of heading 5810: Of man-made fibers. The applicable rate of duty will be 8% ad valorem.
The country of origin of the quilted fabric, including for purposes of determining the applicable Section 301 duties will be China. Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 5811.00.3000, HTSUS, unless specifically excluded, are subject to an additional 25 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.03, in addition to subheading 5811.00.3000, HTSUS, listed above.
The criteria required for preferential treatment under the USMCA have not been satisfied based upon an analysis of the facts provided. Therefore, the quilted fabric is not eligible for preferential treatment under the USMCA and will be subject to the column 1 General Rate of duty within the HTSUS.
The HTSUS is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Note cited above and the applicable Chapter 99 subheading. For background information regarding the Section 301 trade remedy, you may refer to the relevant parts of the USTR and CBP websites, which are available at https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions and https://www.cbp.gov/trade/remedies/301-certain-products-china, respectively.
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 the World Wide Web at https://hts.usitc.gov/current.
This ruling is being issued under the assumption that the subject goods, in their condition as imported into the United States, conform to the facts and the description as set forth both in the ruling request and in this ruling. In the event that the facts or merchandise are modified in any way, you should bring this to the attention of Customs and you should resubmit for a new ruling in accordance with 19 CFR 177.2. You should also be aware that the material facts described in the foregoing ruling may be subject to periodic verification by Customs.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
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 Michael Capanna via email at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division