CLA-2-60:OT:RR:NC:N3:352
Ms. Diane L. Weinberg
Meeks, Sheppard, Leo & Pillsbury
570 Lexington Avenue, 24th Floor
New York, NY 10022
RE: The tariff classification, country of origin and status under the United States - Korea Free Trade Agreement (UKFTA) of a polyester/spandex foil-printed knit fabric from Korea.
Dear Ms. Weinberg:
In your letter dated July 27, 2015, on behalf of your client Nipkow & Kobelt, Inc., you requested a ruling on the status of a knit fabric from Korea, Style Varsiflex Mystique, under the United States-Korea Free Trade Agreement (UKFTA). A sample of the fabric was provided.
FACTS:
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.
In your letter and subsequent communications you described the manufacturing operations as follows:
Polyester yarns are imported into Korea from Taiwan.
Elastomeric yarns are extruded in Korea from resin chips from Korea or China.
Fabric is knitted in Korea.
Greige fabric is piece-dyed.
Fabric is foil-printed with polyester plastic dots.
All subsequent finishing operations are performed in Korea.
Fabric is exported directly to the United States.
ISSUES:
What are the classification, status under the UKFTA, and country of origin of the subject merchandise?
CLASSIFICATION:
Note 2 to Chapter 59, Harmonized Tariff Schedule of the United States (HTSUS), defines the scope of heading 5903, under which textile fabrics which are coated, covered, impregnated, or laminated with plastics are classifiable. In addition, it provides guidance on the classification of combinations of textile and plastics. Note 2 states in part that heading 5903, HTSUS, applies to:
(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); […]
In your submission you suggest classification as a fabric coated with plastics, under subheading 5903.90.2500, HTSUS, asserting that the foil-printed dots are closely spaced, thereby giving an overall shine to the fabric and not forming a design or pattern. However, the deliberate placement of the dots in the swirling pattern does result in a visible design, which precludes classification in Chapter 59, as per Note 2(a)(4) to Chapter 59, cited above.
The applicable subheading for the foil-printed weft knit fabric Style Varsiflex Mystique will be 6004.10.0085, HTSUS, which provides for 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. The general rate of duty will be 12.3% ad valorem.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at http://www.usitc.gov/tata/hts/.
UKFTA ELIGIBILITY – LAW AND ANALYSIS:
General Note 33, HTSUS, sets forth the criteria for determining whether a good is originating under the UKFTA. General Note 33(b), HTSUS, (19 U.S.C. § 1202), states that
For the purposes of this note, subject to the provisions of subdivisions (c), (d), (n) and
(o) thereof, a good imported into the customs territory of the United States is eligible for treatment as an originating good of a UKFTA country under the terms of this note if-
(i) the good is wholly obtained or produced entirely in the territory of Korea or of the United States, or both;
(ii) the good is produced entirely in the territory of Korea or of the United States or both, and -
(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; 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
(iii) the good is produced entirely in the territory of Korea or the United States,
or both, exclusively from materials described in subdivisions (i) or (ii), above.
For the purposes of this note, the term “UKFTA country” refers only to Korea or to the United States.
For goods classified in heading 6004, General Note 33(o)/60.1 requires:
A change to headings 6001 through 6006 from any other chapter, except from headings 5106 through 5113, chapter 52, headings 5307 through 5308, 5310 through 5311 or 5401 through 5402, subheadings 5403.33 through 5403.39 or 5403.42 through heading 5408, headings 5501 through subheading 5503.20, subheadings 5503.40 through 5503.90 or headings 5505 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 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 instant fabric is knitted in South Korea from polyester yarns produced in Taiwan and elastomeric yarns produced in South Korea. The origin of the resin chips used to produce the elastomeric yarns is Korea or China; melting the chips to produce the elastomeric yarns would meet the above requirements for the elastomeric yarns.
However, the polyester yarn from Taiwan, classifiable in heading 5402, does not undergo the tariff shift required by the tariff specific rule for heading 6004. Therefore, the fabric described above does not qualify for preferential treatment under the UKFTA, as it does not meet the requirements of HTSUS General Note 33(b), and the fabric will not be entitled to a free rate of duty under the UKFTA.
COUNTRY OF ORIGIN – LAW AND ANALYSIS: Section 334 of the Uruguay Round Agreements Act (codified at 19 U.S.C. 3592), enacted on December 8, 1994, provided rules of origin for textiles and apparel entered, or withdrawn from warehouse for consumption, on and after July 1, 1996. Section 102.21, Customs Regulations (19 C.F.R. 102.21), published September 5, 1995 in the Federal Register, implements Section 334 (60 FR 46188). Section 334 of the URAA was amended by section 405 of the Trade and Development Act of 2000, enacted on May 18, 2000, and accordingly, section 102.21 was amended (68 Fed. Reg. 8711). Thus, the country of origin of a textile or apparel product shall be determined by the sequential application of the general rules set forth in paragraphs (c)(1) through (5) of Section 102.21.
Paragraph (c)(1) states, "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 not wholly obtained or produced in a single country, territory or insular possession, paragraph (c)(1) of Section 102.21 is inapplicable.
Paragraph (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 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:" Paragraph (e) in pertinent part 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:
6001-6006: (2) …a change to heading 6001 through 6006 from any heading outside that group, provided that the change is the result of a fabric-making process.
As the fabric is knitted in Korea, country of origin is conferred in Korea.
HOLDING:
The applicable subheading for fabric Style Varsiflex Mystique will be 6004.10.0085, HTSUS, which provides for 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. The general rate of duty will be 12.3% ad valorem.
Based on the facts provided, this merchandise does not qualify for preferential treatment under the United States-Korea Free Trade Agreement because the requirements for originating status under the UKFTA found in HTSUS General Note 33(b)(ii) are not met.
Pursuant to 19 CFR §102.21, the country of origin for marking purposes is Korea.
This ruling is being issued under the assumption that the subject goods, in their condition as imported into the United States, conform to the facts and the description as set forth both in the ruling request and in this ruling. In the event that the facts or merchandise are modified in any way, you should bring this to the attention of Customs and you should resubmit for a new ruling in accordance with 19 CFR 177.2. You should also be aware that the material facts described in the foregoing ruling may be subject to periodic verification by Customs.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
Should you wish to request an administrative review of this ruling, submit a copy of this ruling and all relevant facts and arguments within 30 days of the date of this letter, to the Director, Commercial Rulings Division, Headquarters, U.S. Customs and Border Protection, Regulations & Rulings, 90 K Street, N.E. – 10th floor, Washington, DC 20229-1177.
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Maribeth Dunajski at Maribeth.Dunajski @cbp.dhs.gov.
Sincerely,
Gwenn Klein Kirschner
Director
National Commodity Specialist Division