CLA-2 CO:R:C:T 956936 GG
Margaret R. Polito, Esq.
Neville, Peterson & Williams
80 Broad Street
Suite 3400
New York, New York 10004
RE: Eligibility of featherbeds for preferential duty treatment
under NAFTA; country of origin marking under NAFTA; Article 509
Dear Ms. Polito:
This is in response to your ruling request of September 8,
1994, regarding the eligibility of a featherbed for preferential
duty treatment under the North American Free Trade Agreement
(NAFTA). Your client is Pillowtex Corporation of Dallas, Texas
("Pillowtex").
FACTS:
Pillowtex is a manufacturer and importer of bedding
products. The company plans to produce featherbeds at its
Torfeaco facility in Canada. The featherbeds will be constructed
from a 100% cotton woven shell that is filled with feathers.
They will contain no embroidery, lace, braid, edging, trimming,
piping exceeding 6.35 mm or appliques. Although no sample was
submitted, counsel for the importer states that the featherbeds
will be identical to those classified under subheading
9404.90.8040 of the Harmonized Tariff Schedule of the United
States (HTSUSA) in New York Ruling Letter (NY) 895597, dated June
1, 1994. NY 895597 was upheld upon reconsideration in
Headquarters Ruling Letter (HRL) 956409, dated December 22, 1994.
The actual manufacturing operation will consist of washed
and processed feathers being blown into the shells, which will
then be closed. The feathers will be washed and processed either
in Canada after importation, or in the United States prior to
being sent to Canada. Both the shells and the feathers will be
imported by Pillowtex into Canada as non-originating materials.
At the time of importation into Canada, the feathers and cotton
shells reportedly are classifiable under subheadings 0505.10 and
6307.90 of the Customs Tariff. (The Customs Tariff is the
Canadian implementation of the Harmonized System).
ISSUE:
Do the featherbeds qualify for NAFTA duty preference and
what is the country of origin for NAFTA marking purposes?
LAW AND ANALYSIS:
The North American Free Trade Agreement (NAFTA) eliminates
tariffs on most goods originating in Canada, Mexico, and the
United States over a maximum transition period of fifteen years.
Generally, tariffs only will be eliminated on goods that
"originate", as defined in Article 401 of the NAFTA and General
Note 12, HTSUSA. Article 401 defines "originating" in four ways:
(a) goods wholly obtained or produced in the NAFTA region; (b)
goods produced in the NAFTA region wholly from originating
materials; (c) goods meeting the Annex 401 origin rule; and (d)
unassembled goods and goods classified with their parts which do
not meet the Annex 401 rule of origin but contain 60 percent
regional value content using the transaction value method (50
percent using the net cost method).
The components which comprise the assembled featherbeds,
i.e., the cotton shells and the feathers, are imported into
Canada as non-originating materials. Therefore, the featherbed
is not an originating good through methods (a) or (b) above.
Article 401(b) of the NAFTA indicates that goods may "originate"
in Canada, Mexico, or the United States, even if they contain
non-originating materials, if the materials satisfy the rules of
origin specified in Annex 401 of the NAFTA. The Annex 401 rules
of origin, as implemented by General Note 12 of the HTSUSA, are
based on a change in tariff classification under the Harmonized
Tariff Schedule, a regional value content requirement, or both.
The featherbeds are classifiable under subheading
9404.90.8040, HTSUSA. To secure preferential duty treatment
under the NAFTA, General Note 12(t)/94.7 requires 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. At the time of
importation into Canada, the feathers are classifiable in heading
0505, and the cotton shells in heading 6307, of the Customs
Tariff. This merchandise, therefore, undergoes the required
tariff shift to be considered an originating good. Consequently,
duty preference under the NAFTA is granted.
You have also requested a country of origin marking
determination. Part 102 of the Customs Regulations (19 CFR Part
102), published in the Federal Register on January 3, 1994 (59 FR
110), establishes marking rules to determine when a good should
be marked as a good of a NAFTA country, i.e., the United States.
Canada, or Mexico.
Section 102.11 of the Customs Regulations sets out general
rules of origin. Section 102.11(a) states 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 of the Customs Regulations.
Clearly, methods (1) and (2) are not satisfied in Canada for
the subject featherbeds. Therefore, an examination of the third
method is necessary. Section 102.20 requires a change to
subheading 9404.90 from any other heading for goods classifiable
under subheading 9404.90, HTSUSA, to be considered goods of a
NAFTA party for country of origin marking purposes. At the time
of their importation into Canada, the feathers and cotton shells
are classifiable in headings 0505 and 6307 of the Customs Tariff,
respectively. The featherbeds thus undergo the required tariff
shift under Section 102.20 of the Customs Regulations to be
considered goods of Canada for country of origin marking
purposes.
HOLDING:
The merchandise at issue is eligible for duty preference
under the NAFTA. The featherbeds qualify for marking under 19
CFR Part 102 as goods of a NAFTA country, i.e., Canada.
This ruling letter is being issued pursuant to Article 509
of the NAFTA and Section 181, Subpart I, of the Customs
Regulations.
A copy of this ruling letter should be attached to the entry
documents filed at the time this merchandise is imported. If the
documents have been filed without a copy, this ruling should be
brought to the attention of the Customs officer handling the
transaction.
Sincerely,
John Durant
Director, Commercial
Rulings Division