CLA-2 RR:TC:TE 959524 jb
Stephen W. Marlow
Tower Group International
205 West Service Road
Champlain, NY 12919
RE: Classification and country of origin determination for
eyeglass pouch; heading 4202, HTSUSA; Section 102.21(c)(2);
tariff shift; NAFTA; Article 509
Dear Mr. Marlow:
This is in reply to your letter dated July 10, 1996, on
behalf of your client, Itochu Canada Limited, requesting a
classification under the Harmonized Tariff Schedule of the United
States (HTSUS) and a country of origin determination for an
eyeglass pouch which will be imported into the United States. A
sample was submitted to this office for examination.
FACTS:
The subject merchandise consists of a drawstring pouch,
measuring 3-3/4 inches by 7-3/4 inches, and made of 50 percent
polyester and 50 percent nylon knit fabric. The purpose of the
pouch is to provide a container to secure sunglasses. The label
on the outside of the pouch states "This sunglass bag is ideal
for lens cleaning". The manufacturing operations are as follows:
JAPAN
- fabric is formed.
CANADA
- fabric is cut;
- fabric is turned over and hemmed creating a tunnel through
which the cord will be inserted; a loop is made and cord is
inserted;
- sewing to form the bag; printed tag is attached;
- bag is returned inside out;
- cord is cut, knot is made and extra cord is burned.
ISSUE:
1. What is the proper classification for the merchandise at
issue?
2. Whether the subject merchandise is eligible for duty
free treatment under the North American Free Trade
Agreement (NAFTA)?
3. What is the country of origin of the subject
merchandise?
LAW AND ANALYSIS:
Classification
Classification under the Harmonized Tariff Schedule of the
United States (HTSUS) is governed by the General Rules of
Interpretation (GRI). GRI 1 provides that classification is
determined in accordance with the terms of the headings and any
relative section or chapter notes. Where goods cannot be
classified solely on the basis of GRI 1, the remaining rules will
be applied in sequential order.
Heading 4202, HTSUS, provides for, among other things,
trunks, suit cases, vanity cases, attache cases, brief cases,
school satchels, spectacle cases and similar containers. The
Explanatory Notes to the Harmonized Commodity Description and
Coding System (EN) state that subheading 4202.32, HTSUSA, covers
articles of a kind normally carried in the pocket or in the
handbag and include spectacle cases, note cases (bill folds),
wallets, purses, key cases, cigarette cases, cigar cases, pipe
cases and tobacco pouches. Where a pouch is considered specially
designed to hold an article, and of adequate construction to be
used repeatedly (rather than discarded), it is classifiable under
heading 4202, HTSUS. If it is the kind of article to be carried
in the pocket or handbag, with an outer surface of textile
material, it is classifiable under subheading 4202.32, HTSUS.
The subject drawstring pouch is adequately constructed for
repeated use. The dimensions of the pouch, 3-3/4 inches by 7-3/4 inches, make clear that sunglasses will be accommodated
adequately therein. Furthermore, as indicated on the label, the
fabric construction imparts a special feature to the subject
merchandise, that is, as a cleaning cloth for the glasses.
Accordingly, the subject merchandise is properly classified in
subheading 4202.32.9550, HTSUSA, which provides for, among other
things, articles of a kind normally carried in the pocket or in
the handbag: with outer surface of sheeting of plastic or of
textile materials: with outer surface of textile materials:
other: other; of man-made fibers.
NAFTA Eligibility
The subject drawstring pouch undergoes processing operations
in Canada which is a country provided for under the North
American Free Trade Agreement (NAFTA). General Note 12, HTSUSA,
incorporates Article 401 of the North American Free Trade
Agreement (NAFTA) into the HTSUSA. Note 12(a) provides, in
pertinent part:
* * *
(i) 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 Canada under the terms
of the marking rules... and are entered under a subheading for
which a rate of duty appears in the "Special" subcolumn
followed by the symbol "CA" in parentheses, are eligible
for such duty rate... . [Emphasis added]
Accordingly, the drawstring pouch at issue will be eligible for
the "Special" "CA" rate of duty provided it is a NAFTA
"originating" good under General Note 12(b), HTSUSA, and it
qualifies to be marked as a good of Canada. Note 12(b) provides
in pertinent part,
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; or
* * *
Accordingly, the subject merchandise qualifies as a good of
Canada only if the good has been transformed in Canada such that
the non-originating material (fabric woven in Japan) undergoes
the applicable change in tariff classification.
The subject drawstring pouch is classified in subheading
4202.32, HTSUS. For merchandise classifiable in this heading
subdivision (t), chapter 42, rule 7 states that:
A change to subheading 4202.32 from any other chapter,
except from headings 5407, 5408, or 5512 through 5516 or
tariff items 5903.10.15, 5903.10.18, 5903.10.20, 5903.10.25,
5903.20.15, 5903.20.18, 5903.20.20, 5903.20.25, 5903.90.15,
5903.90.18, 5903.90.20, 5903.90.25, 5906.99.20, 5906.99.25,
5907.00.05, 5907.00.15 or 5907.00.60.
When the non-originating material from Japan enters Canada
it is classifiable in heading 6002, HTSUS. As this heading is
not excepted by subdivision (t), it undergoes the requisite
change in tariff. As such, the drawstring pouch qualifies for
the NAFTA preference.
Country of origin
On September 5, 1995, Customs published in the Federal
Register (60 FR 46188) T.D. 95-69 which set forth final
amendments to the Customs Regulations to implement the provisions
of section 334 (b) of the Uruguay Round Agreements Act ("the
Act"), Public Law 103-465, 108 Stat. 4809, codified at 19 U.S.C.
3592, regarding the country of origin of textile and apparel
products. These final regulations apply to goods entered, or
withdrawn from warehouse, for
consumption on or after July 1, 1996. The regulatory provisions
in T.D. 95-69 that implement the basic origin principles of
section 334(b) of the Act are contained in a new 102.21 of the
Customs Regulations (19 CFR 102.21).
The final rule for the rules for determining country of
origin of a good for purposes of Annex 311 of the NAFTA was
published by Customs on June 6, 1996, in the Federal Register (61
FR 28932). Therein it was stated, in pertinent part:
New 102.21 was modeled on the approach taken in the interim
Part 102 texts as published in T.D. 94-4 and thus
incorporates a general statement of applicability (paragraph
(a)), various definitions (paragraph (b)), general origin
rules (paragraphs (c) and (d)), and specific tariff shift
and/or other requirements (paragraph (e)) that apply under
the second general rule. Of particular note for purposes of
the present document is the definition of "textile or
apparel product" in 102.21(b)(5) which delineates the class
of goods covered by the 102.21 rules. That definition
identifies those goods with reference to classification in
the HTSUS and refers to Chapters 50 through 63 (that is, all
of Section XI) of the HTSUS as well as to specific headings
and 6-, 8- or 10-digit subheadings of the
HTSUS that fall outside Section XI. Thus, if a good is
classifiable in an HTSUS provision listed in 102.21(b)(5),
precedence must be given to the 102.21 rules over any other regulatory provision with regard to that good, including any
origin rules contained elsewhere in part 102.
Accordingly, as the subject merchandise is classified in
subheading 4202.32.95, HTSUS, a textile article identified by
102.21(b)(5), the 102.21 rules take precedence over any other
rules of origin to determine the appropriate country of origin.
Section 102.21(c)(1) states 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 merchandise is neither wholly obtained
or produced in a single country, territory or insular possession,
section 102.21(c)(1) is not applicable.
Section 102.21(c)(2) states that, "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 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."
Section 102.21(e) states that, "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":
4202.32.40- 4202.32.95 A change to subheading 4202.32.40
through 4202.32.95 from any other
heading, provided that the change is the
result of the good being wholly assembled in a single country, territory, or insular possession.
The subject merchandise is classified in subheading
4202.32.9550, HTSUSA. As the drawstring pouch is wholly
assembled in Canada, the country of origin is conferred in
Canada.
HOLDING:
The country of origin of the subject drawstring pouch is
Canada.
The subject merchandise is eligible for the NAFTA
preference.
The holding set forth above applies only to the specific
factual situation and merchandise identified in the ruling
request. This position is clearly set forth in section 19 CFR
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, either directly, by reference, or by implication,
is accurate and complete in every material respect.
Should it be subsequently determined that the information
furnished is not complete and does not comply with 19 CFR
177.9(b)(1), the ruling will be subject to modification or
revocation. In the event there is a change in the facts
previously furnished, this may affect the determination of
country of origin. Accordingly, if there is any change in the
facts submitted to Customs, it is recommended that a new ruling
request be submitted in accordance with 19 CFR 177.2.
Sincerely,
John Durant, Director
Tariff Classification Appeals
Division