CLA-2-94:OT:RR:NC:N3:349
Ms. Gloria I. Saenz
Ureblock S.A. de C.V.
Calle 4 Num 300, Fracc Los Robles
Zapopan, Jalisco 45134
Mexico
RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of a two-piece cushion set from Mexico; Article 509
Dear Ms. Saenz:
In your letter dated August 2, 2013 you requested a ruling on the status of a two-piece cushion set from Mexico under the NAFTA.
The subject merchandise is a two-piece cushion set consisting of a back cushion and a seat cushion. Photographs of the cushions were submitted. The cushions are made from a 100 percent acrylic woven fabric covers with a zippered opening. The seat cushion is stuffed with two layers of plastic foam separated by a layer of polyester batting fabric. An additional layer of batting fabric is placed on top of the plastic foam. These four layers are contained within an inner cover made from a man-made fiber nonwoven fabric. The back cushion is stuffed with a pillow form consisting of a polyester fiber filling and a nonwoven fabric cover. The cushions measure approximately 26 inches square and are finished with a corded piping in the edge seams.
The manufacturing operations for the cushions are as follows:
NON-NAFTA COUNTRY:
-zippers are made and shipped to Mexico.
-polyester fiber for loose fill and batting fabric is formed.
-batting fabric is made (or batting fabric may be formed in Mexico from the non-NAFTA
fibers).
-acrylic fiber is extruded and cut.
-polyester fiber or polyester fiber and batting fabric are shipped to Mexico.
-acrylic staple fibers are shipped to the United States.
UNITED STATES:
-acrylic staple fibers are spun into a yarn.
-yarns are woven into a fabric.
-nonwoven polypropylene fabric for inner covers is formed.
-acrylic fabric and polypropylene fabric are shipped to Mexico.
MEXICO:
-sewing thread is made.
-cording for piping is made.
-polyester batting is formed from non-NAFTA fiber.
-polyurethane foam cushions are formed.
-fabrics are cut to size and shape.
-components are sewn forming the seat and back cushion covers.
-plastic foam is layered with batting, sealed into the nonwoven inner cover and stuffed into the
outer acrylic seat cushion cover.
- inner nonwoven cover is stuffed with fiber fill and then inserted into the outer acrylic back
cushion cover.
-cushions are packaged and shipped to the United States.
The applicable tariff provision for the cushions 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.
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(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 the United States and Mexico which are countries provided for under the North American Free Trade Agreement. The cushions at issue will be eligible for the NAFTA preference if they qualify to be marked as a good of Mexico and if they are 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), Chapter 94 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.
The non-originating acrylic staple fibers of heading 5503, HTSUS, are spun into a yarn and woven into a fabric in the United States. The acrylic yarn is classified in heading 5509, HTSUS, while the woven fabric is classified in heading 5512, HTSUS. For heading 5512, HTSUS, the appropriate subdivision (t) Change in Tariff Classification Rules states that:
A change to headings 5512 through 5516 from any heading outside that group, except from headings 5106 through 5110, 5205 through 5206, 5401 through 5404 or 5509 through 5510.
As heading 5503, HTSUS is not excepted by subdivision (t), the non-originating staple fibers undergo the requisite change in tariff classification in the United States and the woven fabric qualifies as an originating material.
The non-originating zippers, polyester fiber and the polyester batting fabric when formed in a non-NAFTA country undergo the tariff shift. Accordingly, the cushions 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.
The acrylic cushions are not included in the paragraph (e)(2) exception. The back cushions are made from a shell fabric and a nonwoven fabric. As both fabrics were formed in a single country, that is, the United States, as per the terms of the tariff shift requirement, the country of origin of the back cushions is conferred in the United States.
The seat cushions are made from a shell fabric, nonwoven fabric and a batting fabric. As the fabrics comprising the seat cushions are formed in more than one country, Section 102.21 (c)(2) is inapplicable.
Section 102.21(c)(3) states that, “Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) or (2) of this section:”
If the good was knit to shape, the country of origin of the good is the single country, territory, or insular possession in which the good was knit; or
Except for goods of heading 5609, 5807, 5811, 6213, 6214, 6301 through 6306, and 6308, and subheadings 6209.20.5040, 6307.10, 6307.90, and 9404.90, if the good was not knit to shape and the good was wholly assembled in a single country, territory, or insular possession, the country of origin of the good is the country, territory, or insular possession in which the good was wholly assembled.
As the cushions are not knit and subheading 9404.90, HTSUS, is excepted from provision (ii), Section 102.21 (c)(3) is inapplicable.
Section 102.21 (c)(4) states, “Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1), (2) or (3) of this section, the country of origin of the good is the single country, territory or insular possession in which the most important assembly or manufacturing process occurred.” In the case of the cushion, the most important manufacturing process occurs at the time of fabric making. Basing the country of origin determination on the fabric making process as opposed to the assembly process carries out the clear intent of Section 334 as expressed in Section 334 (b)(2) and Part 102.21(c)(3)(ii). In the case of the cushions, the fabric making process of the outer shell constitutes the most important manufacturing process. The outer shell of the cushion is made from fabrics formed in a single country. Accordingly, the fabric making process in the United States, where the fabric for the outer shell is formed, constitutes the most important manufacturing process and the country of origin for the seat cushion is the United States.
However, the back and seat cushions qualify as a NAFTA originating good. As stated in Section 102.19(b):
If, under any provision of this part, the country of origin of a good which is originating within the meaning of § 181.1(q) of this chapter is determined to be the United States and that good has been exported from, and returned to, the United States after having been advanced in value or improved in condition in another NAFTA country, the country of origin of such good for Customs duty purposes is the last NAFTA country in which that good was advanced in value or improved in condition before its return to the United States.
Based on the facts presented, the cushions are an originating good under NAFTA and have been determined under section 102.21(c)(2) and (c)(4) to be a good of U.S. origin. Because the articles were returned to the U.S. after having been advanced in value or improved in condition in Mexico by virtue of cutting and sewing into finished cushions the country of origin of the cushions for Customs duty purposes is Mexico, pursuant to Section 102.19(b). Accordingly, the “MX” NAFTA rate of FREE will be applicable to the cushions.
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,
Myles B. Harmon
Acting Director
National Commodity Specialist Division