CLA-2-94:OT:RR:NC:N3:349
Ms. Elise Shibles
Sandler, Travis & Rosenberg, P.A.
505 Sansome Street, Suite 1475
San Francisco, CA 94111
RE: The tariff classification, status under the North American Free Trade Agreement (NAFTA) and country of origin determination for cushions; General Note 12; Appendix to Part 181, Part II, Section 4(8); Self Produced Materials; 19 CFR 102.21(c)(2); tariff shift; NAFTA Preference Override; Article 509
Dear Ms. Shibles:
In your letter dated May 16, 2011 you requested a ruling on the classification and status of cushions from Mexico under the NAFTA. This request is made on behalf of Easy Way Products Co.
The subject merchandise consists of four cushions. Samples of two finished cushions and a cushion shell were submitted. Cushion A is rectangular and measures approximately 17 x 18 inches. The outer cover is made from 100 percent acrylic woven fabric. It is stuffed with a combination of plastic foam and polyester batting fabric. You state that the batting is wrapped around the foam however the sample is made with a layer of batting glued to the top and bottom of the foam. There is a zipper closure along one side and self-fabric ties at two corners. Cushion B is similar in size and has an acrylic woven fabric cover. It is stuffed with polyester batting fabric. It has a zipper closure and self-fabric ties.
A sample of Cushion C was not submitted. It is described as being similar in appearance to Cushion B. The outer cover will be made from 100 percent cotton woven fabric and it will be stuffed with an internal pillow form. The form will have an outer shell of woven cotton fabric and will be filled with loose polyester fiber. The outer cover will have a zipper closure and self-fabric ties. Cushion D is represented by a cushion shell measuring approximately 19 inches in diameter. It is made from a brushed 100 percent polyester woven fabric and will be stuffed with a loose polyester fill and sewn closed.
You have proposed a different manufacturing scenario for each cushion. The manufacturing operations for the cushions are as follows:
Cushion A – Scenario 1:
CHINA:
-staple acrylic fabric is woven.
-polyester batting fabric is formed.
-plastic foam is formed.
-acrylic fabric is cut and sewn to form a cushion cover
(in China or another non-NAFTA country)
-cover, foam and batting shipped to Mexico.
MEXICO:
-batting fabric wrapped around or glued to plastic foam.
-cover stuffed with batting and foam combination.
-cushion cover zippered closed.
-cushion packaged and shipped to the U.S.
Cushion B – Scenario 2:
CHINA:
-staple acrylic fabric is woven.
-polyester batting fabric is formed.
-fabrics are shipped.
UNITED STATES:
-acrylic fabric is cut and sewn to form the cushion cover.
-cover is shipped to Mexico.
MEXICO:
-batting fabric is stuffed into cushion cover.
-cushion cover zippered closed.
-cushion packaged and shipped to the U.S.
Cushion C – Scenario 3:
CHINA:
-cotton fabric for cover is woven.
-cotton fabric for internal form is woven.
-cotton fabric is cut and sewn to form a cushion cover
(in China or another non-NAFTA country)
-cotton fabric is cut and sewn to form the shell of the internal form.
(in China or another non-NAFTA country)
-polyester fiber fill formed.
(in China or another non-NAFTA country)
-cover, shell and fill shipped to Mexico.
MEXICO:
-shell for internal form stuffed with polyfill.
-shell sewn closed completing internal cushion form.
-cushion form stuffed into cushion cover.
-cushion cover zippered closed.
-cushion packaged and shipped to the U.S.
Cushion D – Scenario 4:
CHINA:
-polyester fabric is woven and brushed.
-polyester fiber fill formed.
(in China or another non-NAFTA country)
-fabric and fill shipped to Mexico.
MEXICO:
-polyester fabric cut to size and shape.
-cut components sewn to form the cushion shell.
-shell stuffed with fiber fill and sewn closed.
-cushion packaged and shipped to the U.S.
The applicable tariff provision for Cushions A, B and D will be 9404.90.2000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for mattress supports; articles of bedding and similar furnishing (for example, mattresses, quilts, eiderdowns, cushions, pouffes and pillows) fitted with any material or of cellular rubber or plastics, whether or not covered: other: pillows, cushions and similar furnishings: other. The general rate of duty will be 6 percent ad valorem.
The applicable tariff provision for Cushion C will be 9404.90.1000, HTSUS, which provides for mattress supports; articles of bedding and similar furnishing (for example, mattresses, quilts, eiderdowns, cushions, pouffes and pillows) fitted with any material or of cellular rubber or plastics, whether or not covered: other: pillows, cushions and similar furnishings: of cotton. The general rate of duty will be 5.3 percent 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/.
General Note 12, HTSUS, incorporates Article 401 of NAFTA into the HTSUS. General Note 12(a)(ii) provides, in pertinent part:
(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), 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.
General Note 12(b), HTSUS, sets forth the criteria for determining whether a good is originating under the NAFTA. General Note 12(b), HTSUS, (19 U.S.C. § 1202) states, in pertinent part, that
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;
The cushions undergo processing operations in Mexico and in one scenario, the United States and Mexico. Mexico and the United States are countries provided for under the North American Free Trade Agreement. These products will be eligible for the NAFTA preference if they qualify to be marked as a good of Mexico and if they are wholly obtained or produced in the NAFTA territories or transformed in Mexico so that the non-originating material undergoes a change in tariff classification described in subdivision (t) to General Note 12, HTSUS. For heading 9404, HTSUS, the appropriate subdivision (t) rule states that:
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.
When the cushion covers enter Mexico in scenarios 1, 2 and 3, they are classified in heading 6304, HTSUS. The batting fabric in scenarios 1 and 2 is classified in Chapter 56, the plastic foam of scenario 1 is classified in Chapter 39 and the scenario 3 and 4 loose polyester fill falls under heading 5503, HTSUS. The shell for the internal pillow form in scenario 3 is classified in heading 6307, HTSUS. As all of these items are not excepted by subdivision (t), the merchandise undergoes the requisite change in tariff classification and the cushions in scenarios 1, 2 and 3 qualify for NAFTA preference.
When the brushed polyester woven fabric for the cushion shells in scenario 4 leaves China it is classified in heading 5512, HTSUS. As fabrics of headings 5512, HTSUS, are excepted from meeting the tariff change to subheading 9404.90, HTSUS, it would initially appear that the non-originating material from China does not undergo the requisite change in tariff classification. However, you have indicated that the producer in Mexico will claim the Mexican made cushion shells to be their “self-produced material.”
The Appendix to Part 181 of the Customs Regulations (19 CFR Part 181), which sets forth the NAFTA rules of origin regulations, specifies rules for determining whether certain non-originating materials undergo an applicable change in tariff classification when used in self- made goods. The Appendix to Part 181, Part II, Section 4 ("Originating Goods")(8), states:
For purposes of determining whether non-originating materials undergo an applicable change in tariff classification, a self-produced material may, at the choice of the producer of the good into which the self-produced material is incorporated, be considered as an originating material or non-originating material, as the case may be, used in the production of that good.
The cushion shells, which are manufactured in Mexico prior to the completed cushions, are considered a “self-produced material.” On the basis of the foregoing, the producer of the cushions ("the good") has the option of identifying the cushion shells ("the self-produced material") as non-originating materials. When this choice is made, the shells (classifiable under subheading and 6307.90, HTSUS) fall within a tariff provision that is not excepted by the tariff shift rule set forth in subdivision (t). Accordingly, the cushions would be deemed as undergoing the requisite change in tariff classification.
Pursuant to the analysis set forth above, the cushions in all four scenarios qualify as an originating good. Accordingly, they will be entitled to the special "MX" rate of duty if they qualify to be marked as a good of Mexico and provided that all other NAFTA requirements are met.
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 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 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 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 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 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:"
HTSUS Tariff shift and/or other requirements
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.
Subheadings 9404.90.10 and 9404.90.20 are not included in the paragraph (e)(2) exception to the above tariff shift rule. The cushions are made from combinations of plastic foam, batting fabric, poly fill, an internal form (fabric and poly fill) and an outer textile cover. All of the fabrics were formed in a single country. As the fabrics comprising the cushions are formed in a single country, that is, China, as per the terms of the tariff shift requirement, country of origin is conferred in China.
However, the cushions qualify as a NAFTA originating good. As stated in Section 102.19(a):
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 (see §181.11 of this chapter) has been completed and signed for the good.
As the four cushions qualify as a NAFTA originating good, applying the terms of Section 102.19(a), the country of origin of Cushions A, B, C and D is Mexico. All four cushions will be entitled to the special "MX" duty rate, provided that all other requirements of the NAFTA are met.
This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 C.F.R. 181).
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 John Hansen at (646) 733-3043.
Sincerely,
Robert B. Swierupski
Director
National Commodity Specialist Division