CLA-2 RR:TC:TE 959443 CAB
F. Gordon Lee, Esq.
O'Connor & Hannan, L.L.P.
1919 Pennsylvania Avenue, N.W.
Suite 800
Washington, D.C. 20006-3483
RE: Classification and country of origin determination for
curtains; Section 102.21(c)(2); NAFTA; Section 12.130(c)
Dear Mr. Lee:
This is in response to your inquiry of June 5, 1996,
requesting a country of origin and tariff classification for
curtains pursuant to Section 102.21, Customs Regulations, and the
Harmonized Tariff Schedule of the United States Annotated,
(HTSUSA). This request is on behalf of your client, Max Kahn
Curtain Corporation. No sample was submitted for examination.
FACTS:
The curtains at issue will be made from various fabrics
which may be of natural fibers such as cotton, man-made fibers
such as polyester, or a blend of natural and man-made fibers.
The fabrics will be manufactured in the United States from yarns
and fibers which originate in the United States. The finishing
and dyeing of the fabric will also occur in the United States.
The fabric will then be exported to Mexico where it will be cut,
sewn, and fully assembled into finished curtains.
ISSUES:
1. What is the proper tariff classification for the subject
curtains?
2. Whether the subject curtains are eligible for preferential
duty treatment under the North American Free Trade Agreement
(NAFTA)?
3. What is the country of origin for the subject curtains?
4. What documentation is required to be maintained by Max Kahn,
as importer of record, for purposes of confirming NAFTA
preferential duty treatment, if the
goods are determined to be eligible
for NAFTA preferential treatment?
LAW AND ANALYSIS:
TARIFF CLASSIFICATION
Heading 6303, HTSUSA, is the provision for curtains
(including drapes). As the curtains at issue fit squarely within
the purview of Heading 6303, HTSUSA, this is the appropriate
heading. The specific subheading cannot be determined without a
sample or an exact fabric construction and fiber content.
NAFTA ELIGIBILITY
Article 401 of the NAFTA is incorporated into General Note
12 of the HTSUSA. General Note 12(a) provides, in pertinent
part:
* * *
(ii) Goods that originate in the territory of a NAFTA party
under subdivision (b) of this note and that qualify to
be marked as goods of Mexico 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 "MX" in parentheses, are
eligible for such duty rate...
Accordingly, the curtains at issue will be eligible for the
"Special" "MX" rate of duty provided they are NAFTA "originating"
goods under General Note 12(b), HTSUSA, and they qualify to be
marked as goods of Mexico. 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.
As the curtains at issue are wholly obtained or produced in
the United States and Mexico, they meet the eligibility
requirements of General Note 12(b)(i). Thus, pursuant to General
Note 12(b)(i), the curtains qualify as goods originating in the
territory of a NAFTA party. Assuming they qualify to be marked
as goods of Mexico, they are entitled to the special "MX" duty
rate, provided a Certificate of Origin is completed and submitted
in accordance with 19 CFR 181.11.
COUNTRY OF ORIGIN
Pursuant to the Uruguay Round Agreements Act (codified at 19
USC Section 3592), rules of origin were effective for textile
products entered, or withdrawn from warehouse, for consumption on
or after July 1, 1996. These rules were published in the Federal
Register, 60 Fed. Reg. 46188 (September 5, 1995). Section
102.21, Customs Regulations (19 CFR Section 102.21), sets forth
the general rules to determine country of origin. Thus, the
country of origin of a textile product will be determined by a
hierarchy of rules set forth in paragraphs (c)(1) through (c)(5)
of Section 102.21.
In order to determine the proper country of origin for NAFTA
marking purposes, Section 102.21 is applicable. Customs
specifically referred to this application in the Federal
Register, June 6, 1996 (61 FR 28932, 28933), which contains the
rules for determining the country of origin of a good for
purposes of the Annex 311 of the NAFTA. Customs stated the
following:
New Section 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 (b)), general origin rules...Of
particular note for purposes of the present document is the
definition of "textile or apparel product" in Section
102.21(b)(5) which delineates the class of goods covered by
the Section 102.21 rules. That definition identifies those
goods with reference to classification in the HTSUS...Thus,
if a good is classifiable in an HTSUS provision listed in
Section 102.21(b)(5), precedence must be given to the
Section 102.21 rules over any other regulatory origin
provision with regard to that good, including any origin
rules contained elsewhere in part 102.
Section 102.21(b)(5) states that a textile or apparel
product is any good classifiable in Chapters 50 through 63,
HTSUS. As the subject curtains are classifiable under Heading
6303, HTSUSA, reference to Section 102.21 takes precedence over
any other rules of origin to determine the appropriate country of
origin.
Section 102.21(c)(1) sets forth the general rule for
determining the country of origin of a textile or apparel product
in which the good is wholly obtained or produced in a single
country, territory, or insular possession. As the subject
curtain is not wholly obtained or produced in a single country,
territory, or insular possession, Section 102.21(c)(1) is
inapplicable.
Section 102.21(c)(2) provides for instances where the
country of origin of a textile or apparel product cannot be
determined under paragraph (c)(1) of this section. Section
102.21(c)(2) states:
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 "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:"
6301-6306 The country of origin of a good classifiable
under heading 6301 through 6306 is the
country, territory, or insular possession in
which the fabric comprising the good was
formed by a fabric-making process.
As the curtains are not wholly obtained or produced in a
single country, we must apply Section 102.21(c)(2) and the
applicable requirement of Section 102.21(e) to the proposed
scenario to determine the country of origin of the subject goods.
The curtains are classifiable in Heading 6303, HTSUSA. Pursuant
to the applicable provisions of Section 102.21(e), the country of
origin of the curtains is the United States, the country where
the fabric was formed by a fabric-making process.
However, there is an exception for products from the
United States that are sent abroad for processing. Section
12.130(c), Customs Regulations, provides that any product of the
United States which is returned after having been advanced in
value or improved in condition abroad, or assembled abroad, shall
be a foreign article.
Section 12.130 which remains in effect was originally
intended to be used to determine the country of origin of
textiles and textile products for quota/visa requirements. In
Treasury Decision ("T.D.") 90-17, issued February 23, 1990,
Customs announced a change in practice and position. This change
resulted in Customs using Section 12.130 for quota, duty, and
marking purposes when making country of origin determinations for
textile goods. Therefore, in accordance with T.D. 90-17 and
Section 12.130(c), the country of origin of the subject curtains
is Mexico for quota, marking, and duty purposes.
With respect to your request as to advice on the country of
origin labeling requirements for the subject merchandise, Customs
recently ruled in Headquarters Ruling Letter (HRL) 559625, dated
January 19, 1996, that the origin rules set forth in 19 USC
Section 3592 govern the labeling requirements of textile and
apparel products for purposes of the country of origin marking
requirements of 19 USC 1304. Also as noted above, Section
12.130(c) is still considered to be applicable for quota,
marking, and duty purposes. As a result, the country of origin
of the subject curtains is Mexico and they must be marked
pursuant to 19 USC 1304, accordingly. However, it is important
to note that the holding in HRL 559625 is currently under review
regarding the manner and specificity of the marking requirements.
MAINTENANCE OF RECORDS
You request guidance as to the proper documentation required
to be maintained on behalf of the importer, Max Kahn. You
specifically ask whether Certificates of Origin will be required
for fiber, yarn and fabric or will a statement from the fabric
manufacturer confirming that the fiber, yarn and fabric
originated in the United States satisfy Max Kahn's record keeping
requirements as to those components of the curtains?
Pursuant to Section 181.22, Customs Regulations, Max Kahn,
as the importer claiming preferential tariff treatment for a good
imported into the United States shall maintain in the United
States, for five years after the date of importation of the good,
all documentation relating to the importation of the good. Such
documentation shall include a copy of the Certificate of Origin
and any other relevant documents specified in Section 162.1a(a),
Customs Regulations. A specific Certificate of Origin is not
required for each component of the curtains. Instead, a
Certificate of Origin which confirms that the finished product,
the curtains, qualify as originating goods will be sufficient. A
statement from the exporter confirming the originating status of
the good will not meet the requirements of Section 181.22,
Customs Regulations. However, the exporter's signature on the
Certificate of Origin will satisfy the cited requirements.
HOLDING:
The curtains are eligible for the NAFTA "MX" special duty
rate. Also, in accordance with Section 102.21(c)(2), the country
of origin of the curtains is Mexico for marking purposes.
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.
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 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