CLA-2-94:OT:RR:NC:N4:433
Tamela B. Ferguson
Customs Manager
LZB Manufacturing, Inc.
1284 North Telegraph Road
Monroe, MI 48162
RE: The tariff classification of cut and sewn to shape textile fabric furniture kits from Mexico; the North American Free Trade Agreement (NAFTA) eligibility for the cut and sewn to shape textile fabric furniture kits from Mexico; the country of origin for the cut and sewn to shape textile fabric furniture kits from Mexico; and the marking for the cut and sewn to shape textile fabric furniture kits from Mexico.
Dear Ms. Ferguson:
In your letter dated February 7, 2014, you requested: a tariff classification ruling for furniture kits, NAFTA eligibility for those furniture kits, country of origin determination for those furniture kits, and proper marking for those furniture kits.
LZB Manufacturing, Inc. (LZB) has a related manufacturing facility in Mexico that produces cut and sewn to shape textile fabric furniture kits. After importation the textile fabric furniture kits will be sent to the United States, where they will be further sewn together with cut to shape leather to make textile fabric and leather combination furniture kits. No background profiles, country of origin details and process descriptions were provided on the yarns and/or fabrics used to make the cut and sewn to shape textile fabric components for these kits. Photos were provided on the cut and sewn to shape textile fabric components, a cut kit for the 023.040.040B (chair), and on finished furniture pieces for style numbers 024.031B (ottoman), 024.040B (ottoman) and 023.040.040B (chair).
Subheading 9401.90.5021, HTSUS, provides for parts of seats made of textile materials, cut to shape. Since the subheading does not breakdown the textile materials by their composition, but rather includes all textile materials within its designation, there is no need to identify the nature of the yarns and/or fabrics at time of import used in the production of the furniture kits from Mexico. Provided the textile fabric components of the furniture kits are cut and sewn to shape in Mexico, regardless of origin of the yarns and/or fabrics, the proper classification for the furniture kits is 9401.90.5021, HTSUS.
The applicable subheading for the cut and sewn to shape textile fabric furniture kits from Mexico will be 9401.90.5021, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Seats (other than those of heading 9402), whether or not convertible into beds, and parts thereof: Parts: Other: Other; Other of textile material, cut to shape.” The rate of duty will be free.
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/.
To be eligible for tariff preferences under NAFTA, goods, must be “originating goods” within the rules of origin in General Note 12 (b), HTSUS. In this instance, to be an “originating good” the cut and sewn to shape textile fabric furniture kits must be transformed in the territory of Mexico pursuant to General Note 12 (b) (ii) (A), HTSUS, which states: (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.
In examining whether or not the cut and sewn to shape textile fabric furniture kits are transformed in the territory of Mexico, the NAFTA tariff shift rule of origin, as provided in General Note 12 (t), Chapter 94, Note 2 to the HTSUS, is applicable. The rule states: A change to subheading 9401.90 from any other heading. As the yarns and/or fabrics of unknown origin are classified in Section XI (Textile and Textile Articles), HTSUS, outside of Section XX (Miscellaneous Manufactured Articles), HTSUS, with its heading of 9401 (Seats….), and are further transformed in Mexico by cutting and sewing to shape components used in the manufacture of ottomans and a chair, the furniture kits from Mexico are eligible for NAFTA preferential duty treatment.
Part 134, Customs Federal Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. In Section 134.1 (b), the country of origin of an article is defined as the country of manufacture, production, or growth of any article of foreign origin entering the United States. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the country of origin for country of origin marking purposes. 19 CFR 134.1 (b) is not applicable for NAFTA goods, as country of origin will be determined in accordance with 19 CFR 102 – Rules of Origin.
19 CFR, Section 102.20, “specific rule by tariff classification” states: for 9401.90 – A change to subheading 9401.90 from any other heading, except from subheading 9403.90. Because the yarns and/or fabrics of unknown origin are classifiable in Section XI (Textile and Textile Articles) which are outside the furniture provisions of Section XX (Miscellaneous Manufactured Articles) with its headings of 9401 to 9403, and its subheading of 9403, we find that the cutting and sewing operations performed in Mexico resulting in furniture components to be used in the manufacture of ottomans and a chair undergo the “applicable change in tariff classification” as specified in 102.11 (a) (3), thereby qualifying the furniture kits for country of origin Mexico.
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), and placed into regulations by 19 CFR 134, cite 134.11, provides that unless excepted, every article of foreign origin imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. While 19 CFR 102 governs the “Rules of Origin” of NAFTA goods, it is 19 CFR 134 “Country of Origin Marking” that governs the marking of those goods. Congressional intent in enacting 19 U.S.C. 1304 was “that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will.” See United States v. Friedlander & Co., 27 C.C.P.A. 297 at 302; C.A.D. 104 (1940).
The “ultimate purchaser” is generally the last person in the United States who will receive the article in the form in which it was imported; however, for a good of a NAFTA country, the “ultimate purchaser” is the last person in the United States who purchases the good in the form in which it was imported – see cite 19 CFR 134.1 (d). Based on the stated circumstances as presented by LZB, we are satisfied that they are the last person to have purchased the furniture kits in the form in which they were imported, and hence are the ultimate purchaser of the NAFTA furniture kits imported from Mexico. Consequently, 19 CFR 132.32 (h) is implicated, in that the furniture kits fall under one of the exceptions from marking of country of origin, resulting in the individual components not having to be marked with country of origin Mexico. However, the outermost containers or holders in which the furniture kits ordinarily reach the ultimate purchaser shall be marked to indicate the country of origin of the kits – see 19 CFR 134, Subpart C: Marking of Containers or Holders. In accordance with the {exceptions to marking requirements} at 19 CFR 132, LZB’s marking of the reusable plastic totes with “Contents Made in Mexico,” for the kits packaged inside, fulfills the provisions and requirements of 19 CFR 134, Subpart C.
It is stipulated in 19 CFR 134.22 (d) (2) that the usual containers and holders of a NAFTA country are not required to be marked with their own country of origin, whether or not disposable and whether or not imported empty or filled. Furthermore, if goods are determined to be articles of U.S. origin, which is LZB’s claim for its containers, they are not subject to the country of origin marking requirements of 19 U.S.C. §1304. Whether articles may be marked with the phrase “Made in the USA,” or similar words denoting U.S. origin, such as “Made in U.S.” or “Made in US,” is an issue under the authority of the Federal Trade Commission (FTC). We suggest that you contact the FTC Division of Enforcement, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580 on the propriety of proposed markings indicating that an article is made in the U.S.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
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 Neil H. Levy at (646) 733-3036.
Sincerely,
Gwenn Klein Kirschner
Acting Director
National Commodity Specialist Division