OT:RR:CTF:VS H290258 EE
Elise Shibles
Sandler, Travis & Rosenberg, P.A.
505 Sansome Street, Suite 1475
San Francisco, CA 94111
RE: Modification of NY N287930; NAFTA country of origin marking; pillows
Dear Ms. Shibles:
This is in response to your letter dated September 13, 2017, in which you request, on behalf of your client Spencer N Enterprises, Inc. (“Spencer N Enterprises”), reconsideration of New York Ruling Letter (“NY”) N287930, dated August 3, 2017. NY N287930, issued to you by U.S. Customs and Border Protection (“CBP”) concerns the tariff classification of certain decorative pillows and eligibility for preferential tariff treatment under the North American Free Trade Agreement (“NAFTA”). We have reviewed NY N287930 and determined that it is partially incorrect with respect to the country of origin marking.
On May 9, 2018, 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, notice of the proposed action was published in the Customs Bulletin Vol. 12, No. 19. No comments were received in response to that notice.
FACTS:
Spencer N Enterprises is an importer and distributor of soft décor products. The subject merchandise consists of decorative pillows. In NY N287930, the importer presented the following eight scenarios to CBP where pillow components were processed in Mexico and subsequently imported into the United States as finished decorative pillows.
Scenario 1 – decorative pillows constructed from polyester shells (containing a zipper closure) of Chinese origin sent to Mexico for stuffing with inserts of feathers of Chinese origin. The only processing in Mexico is the stuffing of the feathers in the polyester shells and closing the zipper. Both the polyester shells (China) and inserts of feathers (China) are sent in-bond into Mexico.
Scenario 2 – decorative pillows (no attached closure) constructed from polyester shells of Chinese origin sent to Mexico for stuffing with polyester fiber of Chinese origin. In Mexico, the polyester fiber is blown into the polyester shells and the shells are finished by sewing the opening closed. Both the polyester shells (China) and polyester fiber (China) are sent in-bond into Mexico.
Scenario 3 – decorative pillows constructed from polyester shells (containing a zipper closure) of Chinese origin sent to Mexico for stuffing with inserts of feathers of Chinese origin. The only processing in Mexico is the stuffing of the feathers in the polyester shells and closing the zipper. We note that the only difference between Scenario 1 and Scenario 3 is that the polyester shells (China) in Scenario 3 entered the United States before being sent to Mexico, versus in Scenario 1 both the polyester shells (China) and inserts of feathers (China) were sent together in-bond into Mexico.
Scenario 4 – decorative pillows (no attached closure) constructed from a polyester shells of Chinese origin sent to Mexico for stuffing with polyester fiber of Chinese origin. In Mexico, the polyester fiber is blown into the polyester shells and the shells are finished by sewing the opening closed. We note that the only difference between Scenario 2 and Scenario 4 is that the polyester shells (China) in Scenario 4 entered the United States before being sent to Mexico, versus in Scenario 2 both the polyester shells (China) and polyester fiber (China) were sent together in-bond into Mexico.
Scenario 5 – decorative pillows constructed from cotton shells (containing a zipper closure) from India are sent to Mexico for stuffing with inserts of feathers of Chinese origin. The only processing in Mexico is the stuffing of the feathers in the cotton shells and closing the zipper. Both the cotton shells (India) and feathers (China) are sent in-bond to Mexico.
Scenario 6 – decorative pillows (no attached closure) constructed from cotton shells of Indian origin sent to Mexico for stuffing with polyester fiber of Chinese origin. In Mexico, the polyester fiber is blown into the cotton shells and the shells are finished by sewing the opening closed. Both the cotton shells (India) and polyester fiber (China) are sent in-bond to Mexico.
Scenario 7 – decorative pillows constructed from cotton shells (containing a zipper closure) from India are sent to Mexico for stuffing with inserts of feathers of Chinese origin. The only processing in Mexico is the stuffing of the feathers in the cotton shells and closing the zipper. We note that the only difference between Scenario 5 and Scenario 7 is that the cotton shells (India) in Scenario 7 entered the United States before being sent to Mexico, versus in Scenario 5 both the cotton shells (India) and feathers (China) were sent together in-bond into Mexico.
Scenario 8 – decorative pillows constructed from cotton shells (no attached closure) from India are sent to Mexico for stuffing with polyester fiber of Chinese origin. In Mexico, the polyester fiber is blown into the cotton shells and the shells are finished by sewing the opening closed. We note that the only difference between Scenario 6 and Scenario 8 is that the cotton shells (India) in Scenario 8 entered the United States before being sent to Mexico, versus in Scenario 6 both the cotton shells (India) and polyester fiber (China) were sent together in-bond into Mexico.
In its submission, the importer provided that the polyester shells from China are classified under heading 6304, Harmonized Tariff Schedule of the United States (“HTSUS”); polyester fiber from China is classified under heading 5503, HTSUS; feather insert from China is classified under heading 5503, HTSUS; and the cotton shell from India is classified under heading 6304, HTSUS.
CBP noted that illustrative literature or photographs of the decorative pillows were not presented. Additionally, for purposes of the ruling, “feathers” were not considered of down, either from goose or duck. CBP determined that the applicable subheading for the decorative pillows having cotton shells stuffed with feathers or polyester fiber, in scenarios 5 through 8, was 9404.90.1000, HTSUS, which provides for “[m]attress supports; articles of bedding and similar furnishing (for example, mattresses, quilts, eiderdowns, cushions, pouffes and pillows) fitted with springs or stuffed or internally fitted with any material or of cellular rubber or plastics, whether or not covered: [o]ther: [p]illows, [c]ushions and similar furnishings: [o]f cotton.” The applicable subheading for the decorative pillows having polyester shells stuffed with feathers or stuffed with polyester fiber, in scenarios 1 through 4, was 9404.90.2000, HTSUS, which provides for “[m]attress supports; articles of bedding and similar furnishing (for example, mattresses, quilts, eiderdowns, cushions, pouffes and pillows) fitted with springs or stuffed or internally fitted with any material or of cellular rubber or plastics, whether or not covered: [o]ther: [p]illows, cushions and similar furnishings: [o]ther.” Additionally, CBP determined that the decorative pillows classified under subheadings 9404.90.1000 and 9404.90.2000, HTSUS, were not eligible for preferential tariff treatment under NAFTA.
ISSUES:
Whether the decorative pillows classified under subheadings 9404.90.1000 and 9404.90.2000, HTSUS, imported into the United States are eligible for preferential tariff treatment under the NAFTA.
What is the country of origin of the decorative pillows for purposes of country of origin marking?
LAW AND ANALYSIS:
General Note (“GN”) 12, HTSUS, incorporates Article 401 of the NAFTA into the HTSUS. GN 12(a)(ii), HTSUS, provides that goods are eligible for the NAFTA rate of duty if they originate in the territory of a NAFTA party and qualify to be marked as goods of Mexico. GN 12(b), HTSUS, sets forth the various methods for determining whether a good originates in the territory of a NAFTA party. Specifically, these provisions provide, in relevant part, as follows:
(a) Goods originating in the territory of a party to the North American Free Trade Agreement (NAFTA) are subject to duty as provided herein. For the purposes of this note--
* * * *
(ii) Goods that originate in the territory of a NAFTA party under the terms of subdivision (b) of this note and that qualify to be
marked as goods of Mexico under the terms of the marking rules set forth in regulations issued by the Secretary of the Treasury
(without regard to whether the goods are marked), and goods enumerated in subdivision (u) of this note, when such goods
are imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appears
in the "Special" subcolumn followed by the symbol "MX" in parentheses, are eligible for such duty rate, in accordance with
section 201 of the North American Free Trade Agreement Implementation Act.
(b) 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.
Counsel for the importer provided us with an additional submission for the reconsideration request, elaborating on the production processes of the decorative pillows. Counsel for the importer also provided us with photos and samples of the merchandise.
Counsel for the importer states that in scenarios 1 & 3, pillow components include: chief weight polyester woven pillow covers of Chinese origin with a zipper closure on one edge (heading 6304, HTSUS); chief weight polyester woven internal pillow shells of Chinese origin with one edge partially unfinished (heading 6307, HTSUS); feathers of Chinese origin (heading 0505, HTSUS); and sewing thread of unknown origin (headings 5204, 5401, 5402, 5508, HTSUS). Counsel states that in Mexico, the feathers are stuffed into the unfinished pillow shells and the edge is sewn closed forming a feather insert. The feather inserts are inserted into the pillow covers and the zippers are closed.
Counsel for the importer states that in scenarios 2 & 4, pillow components include: chief weight polyester woven pillow shells of Chinese origin with one edge partially unfinished (heading 6307, HTSUS); polyester staple fiber of Chinese origin (heading 5503, HTSUS); and sewing thread of unknown origin (headings 5204, 5401, 5402, 5508, HTSUS). Counsel claims that in Mexico, the polyester fiber is blown into the pillow shells and the shells are finished by sewing the unfinished portion of the edge closed.
Counsel for the importer states that in scenarios 5 & 7, pillow components include: chief weight cotton woven pillow covers of Indian origin with a zipper closure on one edge (heading 6304, HTSUS); chief weight cotton woven internal pillow shells of Indian origin with one edge partially unfinished (heading 6307, HTSUS); feathers of Chinese origin (heading 0505, HTSUS); and sewing thread of unknown origin (headings 5204, 5401, 5402, 5508, HTSUS). Counsel claims that in Mexico, the feathers are stuffed into the unfinished pillow shells and the edge is sewn closed forming a feather insert. The feather inserts are inserted into the pillow covers and the zippers are closed.
Counsel for the importer states that in scenarios 6 & 8, pillow components include: chief weight cotton woven pillow shells of Indian origin with one edge partially unfinished (heading 6307, HTSUS); polyester staple fiber of Chinese origin (heading 5503, HTSUS); and sewing thread of unknown origin (headings 5204, 5401, 5402, 5508, HTSUS). Counsel claims that in Mexico, the polyester fiber is blown into the pillow shells and the shells are finished by sewing the unfinished portion of the edge closed.
Since the decorative pillows contain non-originating materials, they are not considered goods wholly obtained or produced entirely in a NAFTA party under GN 12(b)(i). We must next determine whether the decorative pillows qualify under GN 12(b)(ii). There is no dispute as to the classification of the pillows in subheadings 9404.90.1000 and 9404.90.2000, HTSUS. The applicable rule of origin for the decorative pillows classified under subheadings 9404.90.1000 and 9404.90.2000, HTSUS, is in GN 12(t)/94.7, HTSUS. Chapter rule 1 provides: “[f]or the purposes of the subdivisions pertaining to this chapter, whenever the subdivision designation is underscored, the provisions of subdivision (d) of this note may apply to goods for use in a motor vehicle of chapter 87.” Chapter rule 1 does not apply since the applicable tariff shift rule, GN 12(t)/94.7, HTSUS, is not underscored. Similarly, the subheading rule which provides that “[t]he underscoring of the designations in subdivision 1 pertains to goods provided for in subheading 9401.20 for use in a motor vehicle of chapter 87” does not apply since the applicable tariff shift rule is not underscored. GN 12(t)/94.7, HTSUS, provides: “[a] change to subheading 9404.90 from any other chapter, except from headings 5007, 5111 through 5113, 5208 through 5212, 5309 through 5311, 5407 through 5408 or 5512 through 5516.” In its submission for the reconsideration of NY N287930, the counsel for the importer states that the pillow covers are classified under heading 6304, HTSUS; the pillow shells are classified under heading 6307, HTSUS; the polyester stable fiber is classified under heading 5503, HTSUS; the feathers are classified under heading 0505, HTSUS; and the sewing thread is classified under headings 5204, 5401, 5402, 5508, HTSUS. Since these non-originating materials are classified in a chapter other than chapter 94 and in headings which are not excepted, the tariff shift rule is met. Accordingly, we agree with NY N287930 that the decorative pillows classified under subheadings 9404.90.1000 and 9404.90.2000, HTSUS, qualify as NAFTA originating goods.
GN 12(a)(ii), HTSUS, provides that NAFTA-originating goods must also qualify to be marked as products of Mexico under the NAFTA Marking Rules to be eligible for preferential treatment. In this regard, 19 C.F.R. § 134.1(j) provides that “[t]he ‘NAFTA Marking Rules’ are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country.” 19 C.F.R. § 134.1(j) defines a “good of a NAFTA country” as “an article for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules.”
Chapter 94 Note to 19 C.F.R. § 102.20 (NAFTA Marking Regulations) explicitly provides that the country of origin of goods classified in subheading 9404.90.10, HTSUS, will be determined under the provisions of 19 C.F.R. § 102.21. However, the Chapter Note does not address merchandise classified in subheading 9404.90.20, HTSUS, and a rule for subheading 9404.90.20, HTSUS, is provided for in 19 C.F.R. § 102.20. NY N287930 applied 19 C.F.R. § 102.20 to the decorative pillows classified under subheading 9404.90.2000, HTSUS, to determine their country of origin for marking purposes. However, we find that Section 102.21, Customs Regulations (19 C.F.R. § 102.21) which pertains to textile and apparel products, should have been applied.
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. A “textile or apparel product” for purposes of these rules of origin is defined in 19 C.F.R. § 102.21(b)(5), in part, as any good classifiable in a number of headings including subheading 9404.90, HTSUS. As such, a good classifiable in subheading 9404.90, HTSUS, should be analyzed to determine if it is a “textile or apparel product” of 19 C.F.R. § 102.21 or other product of 19 C.F.R. § 102.20.
In Headquarters Ruling Letter (“HQ”) 962122, dated October 1, 1998, the importer claimed that because cushions were classified under subheading 9404.90.20, HTSUS, they were not “textile products” as that term was defined in 19 C.F.R. § 102.21(b)(5), and thus were subject to different rules of origin. CBP stated that the statute pertaining to the rules of origin, 19 U.S.C. § 3592, explicitly includes subheading 9404.90, HTSUS, and that the statute takes precedence over the regulation. Accordingly, in determining the country of origin of cushions classified under subheading 9404.90.20, HTSUS, the 19 C.F.R. § 102.21 rules of origin were applicable. As HQ 962122 provides, a pillow classified under subheading 9404.90.20, HTSUS, with a polyester outershell would be considered a textile product which would require the application of 19 C.F.R. § 102.21 rules of origin; however, a pillow classified under subheading 9404.90.20, HTSUS, with a leather or plastic outershell would not be considered a textile product and therefore 19 C.F.R. § 102.20 rules of origin would apply. In the instant case, since the merchandise at issue are decorative pillows with a polyester outershell, they are considered textile products and the 19 C.F.R. § 102.21 rules of origin are applicable.
The country of origin of a textile or apparel product is determined by hierarchical application of the general rules set forth in 19 C.F.R. § 102.21(c)(1) through (c)(5). 19 C.F.R. § 102.21(c)(1) provides: “[t]he 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 decorative pillows at issue are not wholly obtained or produced in a single country, territory, or insular possession, 19 C.F.R. § 102.21(c)(1) is not applicable.
19 C.F.R. § 102.21(c)(2) provides: “[w]here 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 foreign material 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.”
As previously noted, the decorative pillows are classified under subheadings 9404.90.1000 and 9404.90.2000, HTSUS. The applicable tariff shift rule in 19 C.F.R. § 102.21(e) for merchandise classified under subheading 9404.90, HTSUS, is as follows:
9404.90 Except for goods of subheading 9404.90 provided for in paragraph (e)(2) of this section, the country of origin of a good classifiable under subheading 9404.90 is the country, territory, or insular possession in which the fabric comprising the good was formed by a fabric-making process.
19 C.F.R. § 102.21(e)(2) is not applicable since it does not cover
subheadings 9404.90.1000 and 9404.90.2000, HTSUS. In the instant case, the fabric making process occurs where the polyester and cotton fabric is formed. See 19 C.F.R. 102.21(b)(2). Therefore, according to 19 C.F.R. § 102.21(c)(2) and (e)(1), the country of origin for the decorative pillows is the same as the origin of the polyester and cotton fabric, which is China and India, respectively.
However, 19 C.F.R. § 102.19(a) contains a “NAFTA preference override”.
Except in the case of goods covered by paragraph (b) of this section, if a good which is originating within the meaning of § 181.1(q) of this chapter is not determined under § 102.11(a) or (b) or § 102.21 to be a good of a single NAFTA country, the country of origin of such good is the last NAFTA country in which that good underwent production other than minor processing, provided that a Certificate of Origin . . . has been completed and signed for the good.
19 C.F.R. § 102.19(a).
In HQ 960854, dated April 22, 1998, which involves similar facts as this case, CBP considered four scenarios to determine whether a certain buckwheat hull filled neck pillow, classified under subheading 9404.90.1000, HTSUS, was eligible for preferential tariff treatment under NAFTA and the country of origin of the pillow. Under the first scenario, the buckwheat hulls were sourced in China, and the fabric for the pillow shell and the pillow case were woven, cut and assembled in China. In Mexico, the pillow was filled and packed. CBP found that the pillow shell and cover from China, classified under headings 6307 and 6304, HTSUS, underwent the requisite change in tariff classification and that the pillow was eligible for preferential tariff treatment under NAFTA. The country of origin analysis under 19 C.F.R. § 102.21(e) indicated that since the fabric comprising the merchandise was formed in a single country, China, the country of origin of the pillow would be China. However, in accordance with the NAFTA override (19 C.F.R. § 102.19), CBP determined that the country of origin of the buckwheat hull filled neck pillow was Mexico. See also HQ H019439, dated September 5, 2008 (by virtue of the NAFTA override, the bed-in-bag set, classified under subheading 9404.90, HTSUS, must be marked country of origin Mexico in order to receive preferential tariff treatment under NAFTA as claimed).
In the instant case, as determined in NY N287930, the decorative pillows are originating goods under 19 C.F.R. § 181.1(q). Additionally, the decorative pillows are not goods of a single NAFTA country under 19 C.F.R. § 102.21. As such, the decorative pillows are a product of Mexico under the “NAFTA preference override” since they undergo more than “minor processing.” Pursuant to 19 C.F.R. § 102.19(a), the decorative pillows are products of Mexico.
HOLDING:
The decorative pillows having cotton shells stuffed with feathers or polyester fiber in scenarios 5 through 8, are classified under subheading 9404.90.1000, HTSUS, which provides for “[m]attress supports; articles of bedding and similar furnishing (for example, mattresses, quilts, eiderdowns, cushions, pouffes and pillows) fitted with springs or stuffed or internally fitted with any material or of cellular rubber or plastics, whether or not covered: [o]ther: [p]illows, [c]ushions and similar furnishings: [o]f cotton.” The applicable subheading for the decorative pillows having polyester shells stuffed with feathers or stuffed with polyester fiber in scenarios 1 through 4 is 9404.90.2000, HTSUS, which provides for “[m]attress supports; articles of bedding and similar furnishing (for example, mattresses, quilts, eiderdowns, cushions, pouffes and pillows) fitted with springs or stuffed or internally fitted with any material or of cellular rubber or plastics, whether or not covered: [o]ther: [p]illows, cushions and similar furnishings: [o]ther.”
Decorative pillows classified under subheadings 9404.90.1000 and 9404.90.2000, HTSUS, are eligible for preferential tariff treatment under NAFTA. The country of origin of the decorative pillows is Mexico for purposes of the marking requirements.
EFFECT ON OTHER RULINGS:
NY N287930, dated August 3, 2017, is hereby MODIFIED with respect to the country of origin of the decorative pillows classified under 9404.90.2000, HTSUS, for marking purposes.
In accordance with 19 U.S.C. 1625(c), this ruling will become effective 60 days after publication in the Customs Bulletin.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division