Customs Ruling NY N340542 - The tariff classification, country of origin, and eligibility of the United States-Mexico-Canada Agreement (USMCA) of a drawer liner and drawer divider rail with liner kit.

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NY N340542
Jul 02, 2024

Type : Classification; Country of Origin; Trade Agreement • HTSUS : 3926.90.9985; 5903.10.2090; 9903.88.03

CLA-2-59:OT:RR:NC:N2:350

Ian Povey
TAG Hardware
19072 26 Avenue, Suite 100
Surrey V3Z 3V7
Canada

RE: The tariff classification, country of origin, and eligibility of the United States-Mexico-Canada Agreement (USMCA) of a drawer liner and drawer divider rail with liner kit.

Dear Mr. Povey:

In your letter dated June 5, 2024, you requested a binding ruling on the tariff classification, country of origin, and eligibility of a drawer liner and drawer divider rail with liner kit under the United States-Mexico-Canada Agreement (USMCA).

FACTS:

The first item under consideration is a drawer liner intended to be used for lining drawers in a closet drawer or dresser. The liners are composed wholly of polyester woven fabric laminated to a layer of cellular PVC on one side. The PVC layer is stamped with a pattern and cured with heat to give it a faux leather look. You state that the textile layer is brushed to help with adhesion. The liners are available in four lengths, 18 inches, 24 inches, 30 inches, and 36 inches, and are available in three different colors: winter, oyster, and pewter. In your request, you indicate that the drawer liner will be imported both as a standalone item, in addition to being imported as part of a drawer divider rail with liner kit. This ruling addresses both the standalone drawer liner and the drawer divider rail with liner kit.

According to the information provided, the drawer liner manufacturing process is as follows:

The fabric is manufactured and laminated to the PVC in China.

The PVC fabric is then imported to Canada in 55-inch rolls along with rolls of double-sided adhesive tape from China.

In Canada, the PVC fabric rolls are sliced to an exact width, then re-rolled.

Once the roll is cut, the double-sided adhesive tape is applied to both sides of the PVC fabric roll.

The tape laminated rolls are cut into rectangles to match the sides of the drawer, then packaged and boxed in preparation for shipping.

The second item under consideration is a kit consisting of a pair of divider rails and a drawer liner. The pair of divider rails are made from extruded polyvinyl chloride (PVC) plastic. They serve the purpose of retaining dresser drawer dividers. You indicate the rails are extruded in Canada using resin pellets sourced from the United States. They are cut into eight-foot lengths as they exit the extruder. A double-sided adhesive tape from China is applied along the back of the entire length of the divider rail. Later they will be cut-to-length to match the drawer width. These rails will be available in four lengths, 18 inches, 24 inches, 30 inches, and 36 inches, and three different colors, winter, oyster, and pewter. You state that the liner included in this kit is the same item as the standalone liner, described above.

You further indicate that the drawer divider rail with liner kit will be available together as one part number, which is unique to the color and dimensions of the drawer. The rails and liners are meant to be used together in a single drawer; however, the purpose of the rails is to hold the drawer dividers in place.

ISSUES:

What is the classification, country of origin, and USMCA eligibility for the drawer liners and drawer divider rail with liner kit?

LAW AND ANALYSIS:

In order to classify the goods, we must first determine whether the items packaged together, the drawer divider rail with liner kit, meets the tariff definition of a set. The Explanatory Notes (ENs) to the Harmonized Tariff Schedule of the United States (HTSUS) constitute the official interpretation of the tariff at the international level. EN X to General Rule of Interpretation (GRI) 3(b) provides: for the purposes of this Rule, the term "goods put up in sets for retail sale" shall be taken to mean goods which: (a) consist of at least two different articles which are, prima facie, classifiable in different headings; (b) consist of products or articles put together to meet a particular need or carry out a specific activity; and (c) are put up in a manner suitable for sale directly to users without repacking (e.g., in boxes or cases or on boards). Sets are classified according to the component, or components taken together, which can be regarded as conferring on the set as a whole its essential character.

The drawer divider rail with liner kit, consists of two items classifiable under separate headings packaged and ready for retail sale. Therefore, the kit fulfills the requirements of (a) and (c), above. However, we believe that they fail requirement (b). The function of each item does not join that of the other items in a way that might be interpreted as meeting a particular need or carrying out a specific activity. That is, the rails serve the purpose of retaining dresser drawer dividers, which are not part of this kit and are imported separately. The liner which is included in the kit functions solely to line closet drawers or dressers and does not interact with the rails. The needs and activities are entirely independent of each other. This is a collection of related items but is not a set for tariff purposes. Thus, the drawer divider rails with liner kit is not a set for purposes of classification under GRI 3(b). We therefore proceed with classification of the drawer divider rails and drawer liner, separately.

We first consider the drawer liner. As the drawer liner is a plastic-textile combination good, we must turn to the ENs for Chapter 39, which address plastic-textile combinations in part as follows:

The following products are also covered by this Chapter:

[]

(d) Plates, sheets and strip of cellular plastics combined with textile fabrics (as defined in Note 1 to Chapter 59), felt or nonwovens, where the textile is present merely for reinforcing purposes.

In this respect, unfigured, unbleached, bleached or uniformly dyed textile fabrics, felt or nonwovens, when applied to one face only of these plates, sheets or strip, are regarded as serving merely for reinforcing purposes. Figured, printed or more elaborately worked textiles (e.g., by raising) and special products, such as pile fabrics, tulle and lace and textile products of heading 58.11, are regarded as having a function beyond that of mere reinforcement.

As the subject fabric has been brushed to help with adhesion, we have determined that this process reflects further working that therefore excludes the liners from classification in Chapter 39 and are therefore classified as fabrics of Chapter 59.

Note 2 to Chapter 59, HTSUS, defines the scope of heading 5903, under which textile fabrics, which are coated, covered, impregnated, or laminated with plastics, are classifiable. In addition, it provides guidance on the classification of combinations of textile and plastic. Note 2 states in part that heading 5903, HTSUS, applies to:

(a) Textile fabrics, impregnated, coated, covered or laminated with plastics, whatever the weight per square meter and whatever the nature of the plastic material (compact or cellular), other than:

(1) Fabrics in which the impregnation, coating or covering cannot be seen with the naked eye (usually chapters 50 to 55, 58 or 60): for the purposes of this provision, no account should be taken of any resulting change in color;

(2) Products which cannot, without fracturing, be bent manually around a cylinder of a diameter of 7 mm, at a temperature between 15 C and 30 C (usually chapter 39);

(3) Products in which the textile fabric is either completely embedded in plastics or entirely coated or covered on both sides with such material, provided that such coating or covering can be seen with the naked eye with no account being taken of any resulting change of color (chapter 39);

(4) Fabrics partially coated or partially covered with plastic and bearing designs resulting from these treatments (usually chapters 50 to 55, 58 or 60); []

Since these fabrics are not described by any of the exclusionary language above, they will be classified in heading 5903, HTSUS.

We next consider the drawer divider rails. The pair of divider rails with the double-sided adhesive tape are made predominately of plastic and would be considered articles of chapter 39. As they are not specified or included elsewhere within this chapter, they are best provided for under heading 3926, HTSUS, as Other articles of plastics and articles of other materials of headings 3901 to 3914.

CLASSIFICATION:

The applicable subheading for the drawer divider rails will be 3926.90.9985, HTSUS, which provides for Other articles of plastics and articles of other materials of headings 3901 to 3914: Other: Other: Other. The general rate of duty is 5.3 percent ad valorem.

The applicable subheading for the drawer liner will be subheading 5903.10.2090, HTSUS, which provides for Textile fabric impregnated, coated, covered or laminated with plastics, other than those of heading 5902: With poly(vinyl chloride): Of man-made fibers: Other: Over 70 percent by weight of rubber or plastics: Other. The applicable rate of duty will be Free.

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 at https://hts.usitc.gov/current.

In your request, you also request analysis on the country of origin for this kit and whether it qualifies for preferential treatment under the USMCA. We will address the rails and liner separately below.

COUNTRY OF ORIGIN:

The "country of origin" is defined in 19 CFR 134.1(b) as the country of manufacture, production, or growth of any article of foreign origin entering the United States. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the 'country of origin' within the meaning of this part; however, for a good of a NAFTA or USMCA country, the marking rules set forth in part 102 of this chapter (hereinafter referred to as the part 102 Rules) will determine the country of origin.

Pursuant to section 102.0, interim regulations, related to the marking rules, tariff-rate quotas, and other USMCA provisions, published in the Federal Register on July 6, 2021 (86 FR 35566), the rules set forth in 102.1 through 102.18 and 102.20 determine the country of origin for marking purposes with respect to goods imported from Canada and Mexico. Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes, with the exception of textile goods which are subject to the provisions of 19 CFR 102.21. See 19 CFR 102.11.

Applied in sequential order, 19 CFR Part 102.11(a) provides that the country of origin of a good is the country in which: (1) the good is wholly obtained or produced; (2) the good is produced exclusively from domestic materials; or (3) each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.

The divider rails are neither wholly obtained or produced nor produced exclusively from domestic materials. Therefore, paragraphs (a)(1) and (a)(2) cannot be used to determine the country of origin of these articles, and paragraph (a)(3) must be applied next to determine the origin of the finished articles. As indicated above, the rails are classified under heading 3926, HTSUS. The tariff shift requirement in part 102.20 for the articles of heading 3926, HTSUS, at issue states, A change to heading 3922 through 3926 from any other subheading, including another heading within that group, except for a change to heading 3926 from articles of apparel and clothing accessories, other articles of plastics, or articles of other materials of headings 3901 to 3914 of heading 9619. As the plastic resin pellets are substantially transformed into the rails within Canada, we find they make the required tariff shift and the minor processing that follows, specifically adding the adhesive tape from China and cutting to the specific size, would not alter these from being considered Canadian in origin. Section 334 of the Uruguay Round Agreements Act (URAA) (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. As the drawer liners are considered a textile product, the rules of origin set forth in Section 102.21 shall apply. 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 drawer liner 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: 5901-5903 (1) Except for fabric of wool or of fine animal hair, a change from greige fabric of heading 5901 through 5903 to finished fabric of heading 5901 through 5903 by both dyeing and printing when accompanied by two or more of the following finishing operations: bleaching, shrinking, fulling, napping, decating, permanent stiffening, weighting, permanent embossing, or moireing; or, (2) If the country of origin cannot be determined under (1) above, a change to heading 5901 through 5903 from any other heading, including a heading within that group, except from heading 5007, 5111 through 5113, 5208 through 5212, 5309 through 5311, 5407 through 5408, 5512 through 5516, 5803, 5806, 5808, and 6002 through 6006, and provided that the change is the result of a fabric-making process. In this case, (1) above is inapplicable to the drawer liner, because it does not go through a process of both dyeing and printing while being accompanied by two or more of the other allowable finishing operations. Further, (2) above is inapplicable because the fabric is exported from the country of formation (China) as a fabric of heading 5903 and as a result of operations in the subsequent country (Canada), no tariff shift occurs before exportation to the United States. Therefore, paragraph (c)(2) to Section 102.21 is inapplicable. Paragraph (c)(3) states, 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 fabrics of chapter 59 and goods of headings 5609, 5807, 5811, 6213, 6214, 6301 through 6306, and 6308, and subheadings 6307.10, 6307.90, 9404.90, and 9619.00.3133 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. In this case, (i) above is inapplicable to the drawer liners as they are not knit to shape. Further, (ii) above is inapplicable as the drawer liners are not wholly assembled in a single country, territory, or insular possession. Chapter 59 fabrics are also excepted from this category. Therefore, paragraph (c)(3) to Section 102.21 is inapplicable to the drawer liners. Paragraph (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. Subject to paragraph (c)(4) above, Customs and Border Protection has generally held that the most important assembly or manufacturing process, as it pertains to textiles, is the fabric-making process. Section 102.21(b)(2) defines the fabric-making process as: any manufacturing operation that begins with polymers, fibers, filaments (including strips), yarns, twine, cordage, rope or fabric strips and results in a textile fabric. Subject to paragraph (c)(4) above, the fabric-making process occurs in China. Accordingly, the country of origin of the drawer liners is the country in which the fabric-making process occurs, that is, 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-- (i) the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries; (ii) the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials; (iii) 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)) []

We next turn to subdivision (o) which provides for change in tariff classification rules.

The applicable rule of origin for merchandise under chapter 39 is located within GN 11(o), HTSUS, which provides in relevant part, the following tariff shift:

Chapter 39

2. A change to headings 3916 through 3926 from any other heading, including another heading within that group.

Again, we find that the plastic rails of heading 3926 make the needed tariff shift and would remain qualified as originating goods. As such, the plastic divider rails are eligible for preferential treatment under the USMCA. Since the drawer liner 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 liner 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 5903 is located within GN 11(o), HTSUS, which provides in relevant part, the following tariff shift: Chapter 59 3. A change to headings 5903 through 5908 from any other chapter, except from headings 5111 through 5113, 5208 through 5212, 5310 through 5311, 5407 through 5408 or 5512 through 5516. According to the requisite tariff shift rule under GN 11(o), Rule 3 to Chapter 59, HTSUS, a tariff shift must occur. In the case of the subject item, the fabric is classified in heading 5903. As the fabric is formed in China, it is considered a non-originating material. As the combined fabric is also classified under heading 5903 after the addition of the adhesive tape strips, it does not undergo the requisite change in tariff classification. Based upon the preceding analysis, the drawer liner does not qualify for preferential treatment under the USMCA.

HOLDING:

The applicable subheading for the drawer divider rails will be 3926.90.9985, HTSUS, which provides for Other articles of plastics and articles of other materials of headings 3901 to 3914: Other: Other: Other. The general rate of duty is 5.3 percent ad valorem.

The country of origin of the drawer divider rails is Canada.

The criteria required for preferential treatment of the drawer divider rails under the USMCA has been satisfied based upon an analysis of the facts provided. Therefore, the divider rails are eligible for preferential tariff treatment under the USMCA.

The applicable subheading for the drawer liner will be subheading 5903.10.2090, HTSUS, which provides for Textile fabric impregnated, coated, covered or laminated with plastics, other than those of heading 5902: With poly(vinyl chloride): Of man-made fibers: Other: Over 70 percent by weight of rubber or plastics: Other. The applicable rate of duty will be Free.

The country of origin of the drawer liner, 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 5903.10.2090, 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 5903.10.2090, 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 drawer liner 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 holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in Title 19, Code of Federal Regulations (CFR), Section 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, whether directly, by reference, or by implication, is accurate and complete in every material respect. In the event that the facts are modified in any way, or if the goods do not conform to these facts at time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and submit a request for a new ruling in accordance with 19 CFR 177.2. Additionally, we note that the material facts described in the foregoing ruling may be subject to periodic verification by CBP.

This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection 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, please contact National Import Specialist Michael Capanna at [email protected].

Sincerely,

Steven A. Mack
Director
National Commodity Specialist Division