OT:RR:CTF:FTM H270911 JER
Mr. Robert Leo
Meeks, Sheppard, Leo & Pillsbury
570 Lexington Avenue, 24th Floor
New York, NY 10022
RE: Modification of NY N267195; classification of foil print fabric
Dear Mr. Leo:
This is in response to your request of October 12, 2015, for reconsideration of New York Ruling Letter (“NY”) N267195, issued on September 10, 2015, to your client, Nipkow & Kolbelt, Inc., concerning the classification of certain merchandise under the Harmonized Tariff Schedule of the United States (“HTSUS”) and the eligibility of the merchandise for preferential tariff treatment under the United States-Korea Free Trade Agreement (“UKFTA”). In NY N267195, U.S. Customs and Border Protection (“CBP”) classified the imported fabric under heading 6004, HTSUS, in particular, under subheading 6004.10.8500, HTSUS, as, “Knitted or crocheted fabrics of a width exceeding 30 cm, containing by weight 5 percent or more of elastomeric yarn or rubber thread, other than those of heading 6001: Containing by weight 5 percent or more of elastomeric yarn but not containing rubber thread, Other.” CBP also determined that the merchandise was not eligible for preferential tariff treatment under the UKFTA and found that the country of origin of fabric was the Republic of Korea (“South Korea”).
It is your contention that heading 6004, HTSUS, is not the proper heading because it does not describe the merchandise at issue. You contend that the merchandise is properly classified under heading 5903, HTSUS, as a textile fabric, which has been coated or covered with plastics. Upon additional review, we have found the classification under heading 6004, HTSUS, to be incorrect. In reaching our decision, we considered the information presented in your October 12, 2015 submission as well as the sample submitted to our office on March 19, 2020. For the reasons set forth below, we hereby revoke NY N267195 with respect to the classification of the foil-printed fabric and the eligibility of the subject merchandise for the preferential tariff treatment under the UKFTA and modify NY N267195 with respect to the analysis of the country of origin, utilizing the correct classification.
Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. § 1625(c)(1)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act, Pub. L. No. 103-182, 107 Stat. 2057, 2186 (1993), notice of the proposed action was published on October 14, 2020, in Volume 54, Number 40, of the Customs Bulletin. No comments were received in response to this notice.
FACTS:
In NY N267195, CBP described the subject merchandise, referred to as the Variflex Mystique fabric, as follows:
Style Varsiflex Mystique is a heavy knit fabric, foil-printed on one surface with a pattern of small dots arranged in a series of concentric semi-circles in a swirling design reminiscent of a fingerprint’s whorl inside a loop. According to the information provided, this fabric is of weft knit construction, composed of 88% polyester and 12% spandex (elastomeric) yarns and weighing 306 g/m2. You state that this fabric will be imported into the United States in widths of 58 to 60 inches, and will be used for apparel.
NY N267195 described the manufacturing process of the Variflex Mystique fabric as follows: (1) Polyester yarns are imported into South Korea from Taiwan; (2) Elastomeric yarns are extruded in South Korea from resin chips from South Korea or China; (3) Fabric is knitted in South Korea; (4) Greige fabric is piece-dyed in South Korea; (5) Fabric is foil-printed with polyester plastic dots in South Korea; (6) All subsequent finishing operations are performed in South Korea; and, (7) Fabric is exported directly to the United States.
In your 2015 submission the Variflex Mystique fabric is described as being piece dyed and then coated with foil on one side with small closely spaced dots, approximately 0.25 millimeters (mm), which are composed of polyester plastic. The plastic application comprises approximately less than 70 percent by weight of the total weight of the material.
ISSUES:
1) Whether the subject merchandise is classifiable under heading 5903, HTSUS, as a textile fabric coated with plastic, or whether the subject merchandise is precluded from heading 5903, HTSUS, by application of Note 2(a)(4) to Chapter 59 and therefore classifiable under heading 6004, HTSUS.
2) Whether the subject merchandise qualifies for preferential tariff treatment under the UKFTA.
3) What is the country of origin of foil print fabric?
LAW AND ANALYSIS:
1) Whether the subject merchandise is classifiable under heading 5903, HTSUS, as a textile fabric coated with plastic, or whether the subject merchandise is precluded from heading 5903, HTSUS, by application of Note 2(a)(4) to Chapter 59 and therefore classifiable under heading 6004, HTSUS.
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (“GRIs”). 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 headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order.
The 2020 HTSUS provisions under consideration are as follows:
5903 Textile fabrics impregnated, coated, covered or laminated with plastics, other than those of heading 5902:
* * *
5903.90 Other:
Of man made fibers:
Other…
5903.90.25.00 Other…
* * *
6004 Knitted or crocheted fabrics of a width exceeding 30 cm, containing by weight 5 percent or more of elastomeric yarn or rubber thread, other than those of heading 6001:
6004.10.00 Containing by weight 5 percent or more of elastomeric yarn but not containing rubber thread…
6004.10.0085 Other…
* * *
U.S. Note 2(a)(4) to Chapter 59, HTSUS, provides, in pertinent part, as follows:
(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); […]
* * *
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 or 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 (August 23, 1989).
The EN to 5903, HTSUS, states, in relevant part, that:
This heading covers textile fabrics which have been impregnated, coated, covered or laminated with plastics (e.g., poly(vinyl chloride)).
Such products are classified here whatever their weight per m2 and whatever the nature of the plastic component (compact or cellular), provided:
(1) That, in the case of impregnated, coated or covered fabrics, the impregnation, coating or covering can be seen with the naked eye otherwise than by a resulting change in colour.
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 colour usually fall in Chapters 50 to 55, 58 or 60. Examples of such fabrics are those impregnated with substances designed solely to render them crease proof, moth proof, unshrinkable or waterproof (e.g., waterproof gabardines and poplins). Textile fabrics partially coated or partially covered with plastics and bearing designs resulting from these treatments are also classified in Chapters 50 to 55, 58 or 60.
* * *
In your request for reconsideration of NY N267195, you contend that the subject Variflex Mystique fabric is classifiable under heading 5903, HTSUS, because it is substantially similar to other fabrics, which CBP previously classified under heading 5903, HTSUS. In particular, you argue that the subject Variflex Mystique fabric is substantially similar to the Mystique fabric of NY N095385, dated March 9, 2010, wherein CBP classified the Mystique fabric under heading 5903, HTSUS, and specifically under subheading 5903.90.2500, HTSUS. In this regard, you maintain the decision in NY N267195 incorrectly determined that the placement of plastic dots in the swirling pattern of the fabric resulted in a visible design which precluded it from classification in heading 5903, HTSUS, pursuant to Note 2(a)(4) to Chapter 59.
Note 2(a)(4) to Chapter 59, precludes fabrics which are partially coated or partially covered with plastic and bearing designs which result from the partial coating or covering treatment of the plastic; such fabrics are usually classified in Chapters, 50, 55, 58 or 60. In NY N267195, CBP determined that the plastic coating of the subject Variflex Mystique fabric constituted dots, which formed a pattern.
According to our research, a pattern is a repeating of an element or motif used to create a unique decoration on fabrics. An example of an easily identifiable pattern is a checkered pattern or striped pattern. Fabric & Textile Pattern Encyclopedia & Textile, Ivy & Pearl Boutique (August 27, 2018), at https://www.ivyandpearlboutique.com/fashion-and-news/fashion-school/fabric-and-textile-pattern-encyclopedia-complete-pattern-dictionary-illustrating-the-various-types-of-patterns-used-in-fabric-textile-and-clothing-design/. All patterns can be categorized as geometric or organic. Geometric patterns can be further categorized as abstract patterns or a pattern of repeated shapes and sizes with no relationship to natural objects. Examples of geometric patterns include geometric shapes and plaids. Id. See also, Fabric Patter: 100 Plus Different Prints and Patterns, Sew Guide, at https://sewguide.com/fabric-patterns/.
Based upon a review of the sample submitted, the subject Variflex Mystique does not present characteristics, which remotely satisfy the definition of a pattern. There are no individually apparent or visible dots, which form a motif, repeated design or pattern. Instead, the Variflex Mystique presents as a foil printed fabric with a shiny metallic coating on one side. This shiny plastic coating is better described as having a solid lamé effect. The French term “lamé” once translated, means “metal plate.” In the textile industry, lamé fabric is defined as being a knit fabric with metallic coating on the surface. Lamé, Fabric.com, https://www.fabric.com/fabric-type/lame. Lamé fabric is also defined as being a shiny fabric with metallic threads, often gold or silver. Freedictionary.com, https://www.thefreedictionary.com/lam%C3%A9. In the instant case, the foil print coating consists of polyester plastic dots, which are approximately 0.25 mm in size, which are closely spaced on the surface area of the fabric. The 0.25 mm dots present as sprayed on glitter, creating a solid lamé effect or the visual effect of shiny metal or foil.
In previous rulings, CBP has consistently classified substantially similar fabric with a shiny metallic surface coating (i.e., lamé effect) under heading 5903, HTSUS. For example, in NY B83935, dated April 17, 1997, certain foil printed fabrics coated with 1mm dots were classified under heading 5903, HTSUS. Likewise, in NY N095385, CBP classified foil printed fabric identified as “Mystique” under heading 5903, HTSUS. The decision in NY N095385 stated that the fabric was being coated, foil printed, on one side with small closely spaced dots composed of polyester plastic. Moreover, in NY N095385, CBP noted that the “Mystique” dots did not form any kind of design or pattern, but rather created a solid lamé type effect across the surface. See also, NY E80224, dated April 19, 1999 (CBP classified fabric described as Slinky Fog Foil under heading 5903, HTSUS, as it was plastic coated, (foil printed) with a uniform silvery appearance on the surface area).
Much like, the fabric of NY N095385 and NY B83935, the surface side of the subject Variflex Mystique is coated with a shiny metallic coating which is uniform and visible. This shiny metallic coating (of .25mm plastic dots) does not create a pattern or design but instead, consists of features which are consistent with terms of heading 5903, HTSUS, as the subject fabric is coated with plastic or is otherwise foil printed. Therefore, the Variflex Mystique fabric is classified in subheading 5903.90.2500, HTSUS, which provides for: “Textile fabrics impregnated, coated, covered or laminated with plastics, other than those of heading 5902: Other: Of man-made fibers: Other: Other.”
2) Whether the subject merchandise qualifies for preferential tariff treatment under the UKFTA.
The requirements for eligibility for preferential tariff treatment under the UKFTA are set forth in General Note (GN) 33 of the HTSUS (19 U.S.C. § 1202). Under GN 33(b), HTSUS, and subject to the provisions of subdivisions (c), (d), (n), and (o) thereof, goods imported into the U.S. are eligible for duty-free treatment under the UKFTA if:
the good is wholly obtained or produced entirely in the territory of Korea or of the United States, or both;
the good is produced entirely in the territory of Korea or of the United States, or both, and— (A) each of the non-originating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (o) of this note; or (B) the good otherwise satisfies any applicable regional value-content or other requirements set forth in such subdivision (o); and satisfies all other applicable requirements of this note and of applicable regulations; or
the good is produced entirely in the territory of Korea or of the United States, or both, exclusively from materials described in subdivisions (i) or (ii), above.
With respect to textile and apparel articles, GN 33(d), HTSUS, states as follows:
(i) For purposes of this note, a textile or apparel good provided for in subheadings 4202.12, 4202.22, 4202.32 or 4202.92, chapters 50 through 63, heading 7019 or subheading 9404.90 of the tariff schedule is an originating good if:
(A) each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (o) of this note as a result of production occurring entirely in the territory of Korea or of the United States, or both, or the good otherwise satisfies the applicable requirements of this note where a change in tariff classification for each nonoriginating material is not required, and
(B) the good satisfies any other applicable requirements of this note.
The provisions of subdivision (o) of this note shall not apply in determining the country of origin of a textile or apparel good for nonpreferential purposes.
As referenced above, the Variflex Mystique fabric is classified in subheading 5903.90, HTSUS. The applicable rule set forth in GN 33(o) for goods classified under Chapter 59 of the HTSUS provides:
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.
Under the UKFTA there is another requirement that must be satisfied for a fabric to be originating. Elastomeric yarn is required to be wholly formed and finished in South Korea or the United States. General Note 33(d) provides in relevant part:
(iii) For purposes of this note, the expression “wholly formed and finished” means:
[…]
(B) when used in reference to yarns, all production processes and finishing operations, beginning with the extrusion of filaments, strips, film or sheets, and including drawing to fully orient a filament or slitting a film or sheet into strip, or the spinning of all fibers into yarn, or both, and ending with a finished yarn or plied yarn.
(iv) A textile or apparel good may be considered to be an originating good if—
(A) the total weight of all fibers and yarns that are used in the production of the component of the good that determines the tariff classification of the good and that do not undergo an applicable change in tariff classification is not more than 7 percent of the total weight of that component;
[…]
Notwithstanding the provisions of subdivision (d)(iv)(A), a good containing elastomeric yarns in the component of the good that determines the tariff classification of the good shall be considered to be an originating good only if such yarns are wholly formed and finished in the territory of Korea or of the United States.
(v) For purposes of this note, in the case of a good that is a yarn, fabric or fiber, the term “component of the good that determines the tariff classification of the good” means all of the fibers in the good.
Based on the facts provided, the non-originating polyester yarn meets the requisite tariff shift requirement of GN 33(o), as it is classified in heading 5402, HTSUS, and the finished foil print fabric is classified in subheading 5903.90, HTSUS.
However, a textile or apparel good containing elastomeric yarn in the component of the good that determines the tariff classification of the good shall be considered to be an originating good only if such yarns are wholly formed in the territory of a party to the UKFTA. Under our facts, the origin of the resin chips used to produce the elastomeric yarn by melting is either South Korea or China. The elastomeric yarn meets the above requirements of GN 33(d)(iii) because it is extruded (and thus wholly formed) in South Korea.
3) What is the country of origin of foil print fabric?
Section 334 of the Uruguay Round Agreements Act, codified at 19 U.S.C. § 3592, provides rules of origin for textiles and apparel entered, or withdrawn from warehouse, for consumption, on and after July 1, 1996. 19 C.F.R. § 102.21 implements section 334, and 19 C.F.R. § 102.0 refers to 19 C.F.R. § 102.21 for determining the country of origin of textile and apparel products. Pursuant to 19 C.F.R. § 102.21(c) the country of origin of a textile or apparel product will be determined by sequential application of the general rules set forth in paragraphs (c)(1) through (5).
Section, 102.21 (c)(1) provides 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 Variflex Mystique fabric is not wholly obtained or produced in a single country, territory, or insular possession, paragraph (c)(1) is inapplicable.
Paragraph (c)(2) provides, “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.”
Section 102.21(e)(1) in pertinent part provides, “The following rules will 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
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.
Pursuant to 19 C.F.R. § 102.21 (b)(2), 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.
In this case, the fabric is knitted in South Korea from polyester yarn produced in Taiwan and the elastomeric yarn, extruded and produced in South Korea from resin of South Korean or Chinese origin, which confers a tariff shift to heading 5903, HTSUS. Moreover, during the fabric making process the fabric is foil-printed with polyester plastic dots (which stem from the resin) in South Korea and all subsequent finishing operations occur in South Korea. Hence, because the change to subheading 5903.90, HTSUS, is a result of a fabric making process, the merchandise complies with the requisite tariff shift rule for heading 5903, HTSUS. Accordingly, the country of origin of the instant Variflex Mystique fabric is the country in which the fabric-making process occurs, that is, South Korea.
HOLDING:
By application of GRI 1 and Note 2(a)(4) to Chapter 59, HTSUS, we find that the instant Variflex Mystique fabric is provided for in heading 5903, HTSUS, specifically, under subheading 5903.90.2500, HTSUS, which provides for: “Textile fabrics impregnated, coated, covered or laminated with plastics, other than those of heading 5902: Other: Of man-made fibers: Other: Other.” The 2020 column one, general rate of duty is 7.5% ad valorem. We further find that, the subject merchandise qualifies for preferential tariff treatment under the UKFTA pursuant to GN 33(b). Finally, pursuant to 19 C.F.R. § 102.21(c)(2), the country of origin of the Variflex Mystique fabric is the Republic of Korea.
EFFECT ON OTHER RULINGS:
NY N267195, dated September 10, 2015, is hereby MODIFIED.
In accordance with 19 U.S.C. § 1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.
Sincerely,
For Craig T. Clark, Director
Commercial and Trade Facilitation Division