CLA-2-57:OT:RR:NC:TA:349
Mr. Jason M. Waite
Alston & Bird LLP
950 F Street, NW
Washington, DC 20004-1404
RE: The tariff classification, status under the North American Free Trade Agreement (NAFTA) and country of origin determination for Wilton rugs from Canada; de minimis; 19 CFR 102.21(c)(2); tariff shift; 19 CFR. 24.23; Merchandise Processing Fee; Article 509
Dear Mr. Waite:
In your letter dated May 11, 2009 you requested a ruling on the classification and status of Wilton rugs from Canada under the NAFTA. This request is made on behalf of Mohawk Home, a Division of Aladdin Manufacturing Corporation.
The submitted sample is a machine made rug referred to as style number 9570, the “Bartley.” The woven pile rug is made using a “face to face” Wilton construction. The warp pile yarns are 100 percent polyolefin. The foundation or nonpile portion of the rug consists of 100 percent jute yarns in the weft and 100 percent polyester filament and staple yarns in the warp. The sample measures 21 x 34 inches and all of the edges are bound. The “Bartley” will be imported in various sizes.
The rugs in this prospective transaction will be woven in Canada using both originating and non-originating yarns. You have stated that the polyolefin pile yarns are NAFTA originating. The jute yarns, polyester filament yarns and polyester staple yarns are non-originating. Source countries were not disclosed. The polyolefin pile yarns constitute 75.85 percent of the weight of the rug while the jute yarns account for 21.25 percent. The polyester 2-ply filament yarn is 1.56 percent and the 3-ply polyester staple yarn is 1.34 percent of the weight.
The applicable tariff provision for the “Bartley” will be 5702.42.1000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for carpets and other textile floor coverings, woven, not tufted or flocked, whether or not made up, including "Kelem", "Schumacks", "Karamanie" and similar hand-woven rugs: other, of pile construction, made up: of man-made textile materials: Wilton (including Brussels) and velvet (including tapestry) floor coverings and floor coverings of like character or description. The general 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/.
You have also requested a determination under the NAFTA. 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 Wilton rugs undergo processing operation in Canada which is a country provided for under the NAFTA. These products will be eligible for the NAFTA preference if they qualify to be marked as a good of Canada and if they are wholly obtained or produced in the NAFTA territories or transformed in Canada so that the non-originating materials undergo a change in tariff classification described in subdivision (t) to General Note 12, HTSUS. For heading 5702, HTSUS, the appropriate subdivision (t) rule states that:
A change to headings 5701 through 5705 from any other chapter, except from headings 5106 through 5113, 5204 through 5212, 5308 or 5311, chapter 54, or headings 5508 through 5516; provided that for purposes of trade between the United States and Mexico, a good of chapter 57 shall be treated as an originating good only if any of the following changes in tariff classification were satisfied within the territory of one or more of the parties:
(a) A change to subheadings 5703.20 or 5703.30 or heading 5704 from any heading outside chapter 57 other than headings 5106 through 5113, 5204 through 5212, 5308, 5311 or any headings of chapters 54 or 55; or
(b) A change to any other heading or subheading of chapter 57 from any heading outside that chapter other than headings 5106 through 5113, 5204 through 5212, 5308, 5311, any heading of chapter 54 or headings 5508 through 5516.
When the non-originating jute yarns enter Canada they are classifiable in heading 5307, HTSUS. As heading 5307, HTSUS is not excepted by subdivision (t), the jute yarns undergo the requisite change in tariff classification. The non-originating polyester filament and polyester staple yarns are classifiable under headings 5402 and 5509, HTSUS. As yarns of headings 5402 and 5509, HTSUS, are excepted from meeting the tariff change to heading 5702, HTSUS, the non-originating material does not undergo the requisite change in tariff classification. It would appear that the merchandise is not eligible for the NAFTA preference. However, the non-originating polyester yarns account for less than 3 percent of the weight of the rugs.
General Note 12(f), HTSUS, sets out the terms of De Minimis for NAFTA. As the subject merchandise is classified in subheading 5702, HTSUS, General Note 12(f)(vi) provides:
A good provided for in chapters 50 through 63, inclusive, of this schedule that does not originate because certain fibers or yarns used in the production of the component of the good that determines the tariff classification of the good do not undergo an applicable change in tariff classification, provided for in subdivisions (r), (s) and (t) of this note, shall nonetheless be considered to originate if the total weight of all such fibers or yarns in that component is not more than 7 percent of the total weight of that component.
The non-originating polyester yarns weigh less than 7 percent of the total weight of the rugs. Accordingly, the rugs qualify as “goods originating in the territory of a NAFTA party.”
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
5701-5705 A change to heading 5701 through 5705 from any other chapter.
The change to heading 5702 occurs in Canada when the various yarns are woven to form the Wilton rugs. As per the terms of the tariff shift requirement, country of origin is conferred in Canada.
A final issue to be addressed concerns whether the merchandise processing fee (MPF) is applicable to the imported rugs. Section 24.23(b)(1)(i)(A), Customs Regulations (19 C.F.R. 24.23(b)(1)(i)(A)), states in part:
Except as provided in paragraph (c) of this section, merchandise that is formally entered or released is subject to the payment to CBP of an ad valorem fee of 0.21 percent. The 0.21 ad valorem fee is due and payable to CBP by the importer of record of merchandise at the time of presentation of the entry summary and is based on the value of the merchandise as determined under 19 U.S.C. 1401a.
Section 24.23(c), Customs Regulations (19 C.F.R. 24.23(c)), contains the exemptions and limitations to the aforementioned MPF. Specifically, 19 C.F.R. 24.23(c)(3) states in part:
The ad valorem, surcharge and specific fees provided for under paragraphs (b)(1) and (b)(2) of this section shall not apply to goods originating in Canada or Mexico within the meaning of General Note 12, HTSUS (see also 19 U.S.C. 3332), where such goods qualify to be marked, respectively, as goods of Canada or Mexico pursuant to Annex 311 of the North American Free Trade Agreement and without regard to whether the goods are marked.
Since the rugs are NAFTA originating products and qualify to be marked as a product of Canada, they will be exempt from the MPF.
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