CLA-2 OT:RR:CTF:TCM H140998 AS
Mary Delaquis
Area Port Director
Area Port of Pembina
112 West Stutsman Street
Pembina, ND 58271
ATT: Barbara Hassler
RE: Request for Internal Advice concerning the Classification of Window
Shade Fabric; NAFTA eligibility of window shades
Dear Ms. Delaquis:
This is in response to your internal advice request of November 3, 2010, initiated by a letter, dated September 27, 2010, submitted by Akin, Gump, Strauss, Hauer & Feld, LLP, on behalf of Nysan Shading Systems, Ltd. (“Nysan”) requesting internal advice concerning classification of five fabrics used to construct window shades under the Harmonized Tariff Schedule of the United States (HTSUS) and whether the merchandise qualifies for preferential treatment under the North American Free Trade Agreement (NAFTA).
The request, along with samples was forwarded to this office for our response. Per Nysan’s request, a meeting was held on August 28, 2012.
FACTS: The subject merchandise consists of five different fabrics which are described as follows:
GreenScreen Eco is warp knit, 100% polyester yarns, Polyurethane (PU) coating is 4% by weight
GreenScreen Balance is woven, 100% polyester yarns, PU coating is 2% by weight
GreenScreen DualTone is knit, of polyester yarns, PU coating is 4% by weight
GreenScreen Spectra is warp knit of polyester yarns, PU coating is 4% by weight
GreenScreen Vista is warp knit, 100% polyester yarns, PU coating is 4% by weight
The finished shades, classifiable in heading 6303, HTSUS, will have hardware and some will have motors installed. The Nysan website indicates that the shades will “… allow light (and views) to pass through the shade”.
With respect to the woven fabric identified as “GreenScreen Balance”, we note that in correspondence dated September 27, 2010,Nysan asserted, in the alternative, that the “GreenScreen Balance” woven fabric would be classified in subheading 5407.10.0090, HTSUSA, which provides for “Woven fabrics of synthetic filament yarn, including woven fabrics obtained from materials of heading 5404: Woven fabrics obtained from high tenacity yarn of nylon or other polyamides or of polyesters, Other”. However, Nysan has failed to provide sufficient evidence which would allow us to determine whether or not the “GreenScreen Balance” is woven of high tenacity yarn. In addition, we have insufficient information as to whether or not the fabric identified as “GreenScreen Dual Tone” is a “warp” or “weft” knit. The description provided by Nysan merely indicates that the “GreenScreen Dual Tone” is a “knit” fabric.
ISSUE: 1. What is the classification of the fabrics under the HTSUS?
2. Whether the finished window shades are eligible for preferential treatment under the NAFTA.
LAW AND ANALYSIS:
Classification
Classification under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) is made in accordance with the General Rules of Interpretation (GRI). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative Section or Chapter Notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the heading and legal notes do not otherwise require, the remaining GRI may then be applied. The Harmonized Commodity Description and Coding System Explanatory Notes ("ENs") constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The following headings of the HTSUS are under consideration for the classification of these textile fabrics:
Woven fabrics of synthetic filament yarn, including woven
fabrics obtained from materials of heading 5404.
Textile fabrics impregnated, coated, covered or laminated
with plastics, other than those of heading 5902.
6005 Warp knit fabrics (including those made on galloon knitting
Machines), other than those of headings 6001 to 6004.
All five styles of fabric are purported to be made of 100 % polyester yarn and each has received a polyurethane plastics coating of 2% or 4% by weight. As such, we first consider heading 5903, HTSUS, which provides for “Textile fabrics impregnated, coated, covered or laminated with plastics, other than those of heading 5902”.
Note 2(a) to Chapter 59 excludes certain articles from classification in heading 5903, and provides in relevant part as follows:
Heading 5903 applies to:
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:
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
purpose of this provision, no account should
be taken of any resulting change of color[.]
The EN to heading 5903 (EN 59.03(1)) affirm this exclusion by providing that “. . . textile fabrics in which the impregnation, coating or covering cannot be seen with the naked eye or can be seen only by reason of a resulting change in color usually fall in Chapters 50 to 55, 58 or 60”.
Since classification is governed not just by the terms of the headings, but by the relevant section and chapter notes, we must also consider the Legal Notes at
Section XI, Textiles and Textile Articles, that provide in relevant part as follows:
1. This section does not cover:
* * *
Woven, knitted or crocheted fabrics, felt or nonwovens,
impregnated, coated, covered or laminated with plastics,
or articles thereof, of chapter 39;
* * *
For the purposes of chapters 50 to 60:
* * *
(b) Chapters 50 to 55 and 60 do not apply to goods of chapters
56 to 59.
Chapter 54, covers “Man-made Filaments; Strip and the Like of Man-Made Textile Materials”. However, the General ENs to Chapter 54 specifically provide that “The General Explanatory Note to Section XI should be taken into account in reading the Explanatory Note to this Chapter.” The General EN to Section XI reiterates the exclusion of certain materials and products such as those which have been previously mentioned in Section XI, Note 1(h), i.e., “Woven, knitted or crocheted fabrics, felt or nonwovens, impregnated, coated, covered or laminated with plastics, or articles thereof, of chapter 39”.
In finding which of the competing headings correctly classifies the subject fabrics, it is first necessary to determine whether the fabric is classifiable as a “coated fabric”, within the meaning of the tariff. As set forth above, CBP determines whether fabric is coated for purposes of classification under heading 5903, HTSUS, based on whether the plastic coating is visible to the naked eye.
Counsel for Nysan has asserted that the window shade fabrics are classified as “coated fabrics;” under subheading 5903.20, HTSUSA, citing two Court of International Trade (CIT) cases which found that fabric was “coated” according to the terms of Note 5(a), Ch. 59, HTSUS, i.e., Foxfire, Inc. v. United States, 941 F. Supp. 1258 (October 8, 1996), and Verosol USA, Inc. v. United States, 941 F. Supp. 139 (October 8, 1996).
In Foxfire (Id.), the CIT classified certain outerwear garments marketed in the U.S. as “oilskins”, i.e., raincoats, anoraks and vests. The garments were made of a cotton fabric treated with petrolatum which waterproofed the merchandise and gave it a rugged, durable look. In considering whether or not the garments were classifiable in heading 5907, HTSUS, as “Textile fabrics otherwise impregnated, coated or covered” the court noted the ENs for Heading 5907, which describe fabrics excluded by Note 5, to Chapter 59, as those “in which the impregnation, coating or covering cannot be seen with the naked eye or can be seen only by reason of a resulting change in colour . . . Examples of these . . . are those [fabrics] impregnated with size, starch or similar dressings . . . or with substances designed solely to render them creaseproof, moth-proof, unshrinkable or waterproof (e.g., waterproof gabardines or poplins).” The Court noted that the treated fabric possessed a sheen not apparent on the untreated fabric. Relative to the untreated sample, the treated sample and the representative heavyweight duster coat looked waxy, wetter, heavier, and, to a certain degree, darker. The Court commented on the approach used by CBP to determine visible coatings, i.e., filling of the fabric’s interstices, smoothing of the fabric’s fibers or weave, as being an “effects test”. The Court further noted that “These are all effects of the coating or impregnation on the fabric; they are not visible attributes of the coating or impregnation itself.” Applying a strict visibility test, the Court found that the impregnation on the garments was visible to the naked eye, the fabric having both a waxy appearance and a sheen that was not visible on the untreated fabric. The Court held that the impregnation is visible in the manner intended by heading 5907 concluding that the waxy appearance and sheen weren’t merely effects of the impregnation, but visible attributes of the impregnation itself.
The Verosol case (Id.), involved certain metallized fabric used in the construction of energy efficient pleated shades. The shades were constructed of fabric that consisted of woven polyester that had undergone a vacuum vapor-deposition process that coated one side of the fabric with aluminum. The question presented was whether the metallized fabric at issue constituted a “coated fabric” as that term is defined in 5907.00.90, HTSUSA. The Court determined that the coated side of the fabric was visibly different from the side which was not coated and that the aluminum coating gave the fabric a metallic sheen or luster. In addition, the aluminum coating was extremely fine, less than 10 microns thick; it neither filled the interstices nor obscured the pattern or texture of the fabric. Rather, it was held that the “reflectivity” of the aluminum tended to emphasize the fabric’s texture. Therefore, the Court found that a coating which imparts sheen and is proven to be a direct result of the coating process, may be a factor in determining if a coating is “visible” to the naked eye. However, the Court further noted that the presence of a sheen, without more, is not enough to prove that a fabric is coated. In comparing treated and untreated samples of Verosol’s fabric, several other visible effects of the coating process were revealed, i.e., one side of the individual threads or fibers were obscured so that the individual polyester threads on that side were not clearly defined. However, it was held that the “texture” of the weave was emphasized by the reflectivity of the coating. Since both parties acknowledged that the metallization process had imparted sheen, obscured individual fabric fibers, and enhanced the fabric texture, the Court held that the fabric had a visible coating for purposes of Chapter 59, HTSUS.
In evaluating the factors examined by the CIT in the Foxfire and Verosol cases for determining whether a fabric has received a coating visible to the naked eye within the meaning of the HTSUS, we may compare the treated and untreated samples submitted by the Nysan Shading Systems, Ltd. After careful examination under natural and artificial lighting of both the coated and uncoated samples, we noted that all the uncoated samples exhibited a reflective “sheen” that was comparable to that of the coated sample. Therefore, we were unable to discern with the naked eye a marked difference between the coated and uncoated samples. More specifically, there was no evidence that the coated sample had a visible “sheen” or greater “reflectivity” as a result of the coating when compared to the uncoated samples. Rather, some of the coated samples only appeared slightly darker than the uncoated samples which is possibly the result of the application of a Polyurethane coating. However, as specifically provided in Note 2(a)(1), Chapter 59, there should be no account taken of any resulting change of color as a result of the fabric having received a coating.
Finally, with respect to all five of the coated fabric samples, we note that there are no other “effects” to the fabric that are directly attributed to the coating, i.e., filled interstices, obscured fibers/threads, or an enhancement of the texture of the weave.
CBP Headquarters Ruling Letter (HQ) W968436, dated January 11, 2007, involved the classification of a twill woven nylon fabric that had been dipped in resorcinol formaldehyde latex. In making a determination as to whether or not the fabric was classifiable in heading 5903, HTSUS, it was noted that while the coated fabric was somewhat stiffer and had changed color, such effects of the coating may not be taken into account pursuant to Note 2(a)(1), Ch. 59, HTSUS. It was further noted that while there was a change in sheen (from shiny to dull), this alone was insufficient to establish a visible coating based on the findings in Verosol. Thus, the fabric was found to be distinguishable from the fabrics at issue in Verosol and Foxfire. In addition, we note that the following CBP Rulings found that the plastic coating wasn’t visible to the naked eye and classified fabric in heading 5407, HTSUS: HQ 089545, dated August 30, 1991; W968391, dated March 7, 2008.
In view of the foregoing, we disagree with Counsel’s assertion that Verosol and Foxfire support a finding that the window shade fabrics are classified as “coated fabrics” under subheading 5903.20, HTSUSA, because there are no visible changes or effects to the subject fabric that are the direct result of the application of the coating making them distinguishable from the fabric in those cases.
NAFTA Eligibility
General Note (GN) 12, HTSUS, incorporates Article 401 of the NAFTA into the HTSUS. GN 12(t), Chapter 63, Note 3, HTSUS, provides, in pertinent part, that:
Chapter 63.
Chapter rule 1: For purposes of determining the origin of a good
of this chapter, the rule applicable to that good shall only apply to
the component that determines the tariff classification of the good
and such component must satisfy the tariff change requirements
set out in the rule for that good.
* * *
3. 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.
Inasmuch as we have already determined that the subject merchandise has no visible coating and cannot be classified as “coated fabric” under subheading 5903.20, HTSUSA, and have found the correct classification of the fabric to be in headings 5407 (woven fabric) and 6005 (knit fabric), HTSUS, we now find that the finished window shades have not met the tariff shift requirements set forth above. Therefore, the merchandise is ineligible for NAFTA treatment.
HOLDING:
The sample identified as “Green Screen Balance”, is a woven fabric that is properly classified in heading 5407, HTSUSA, which provides for “Woven fabrics of synthetic filament yarn, including woven fabrics obtained from materials of heading 5404”. Since we have insufficient information with which to determine whether or not this fabric is constructed with high tenacity yarn or what percentage of the fabric is textured/non-textured polyester filament, we are unable to provide classification at the ten-digit level.
The samples identified as “GreenScreen Eco”, “GreenScreen DualTone”(assuming warp knit construction), “GreenScreen Spectra”, and “GreenScreen Vista”, are knit fabrics that are properly classified in subheading 6005.32, HTSUSA, which provides for “Warp Knit fabrics (including those made on galloon knitting machines), other than those of headings 6001 to 6004: Of synthetic fibers: Dyed”. The current general column one rate of duty is 10 percent ad valorem.
The window shades manufactured from the five subject fabrics as identified herein are ineligible for NAFTA treatment.
Sincerely,
Myles Harmon, Director
Commercial & Trade Facilitation Division