CLA-2-94:OT:RR:NC:N4:433
Rachael Goding
International Automated Brokers
1655 Saint Andrews CV
San Diego, CA 92154-8213
RE: The United States-Mexico-Canada Trade Agreement (USMCA) and country of origin marking of bundled upholstery kits.
Dear Ms. Goding:
In your letter dated January 29, 2021, you requested a USMCA and country of origin marking ruling on behalf of Pacific Motion, LLC. In lieu of samples, illustrative literature, a product description, and manufacturing processes were provided.
The item subject of this ruling request is constructed of foreign and domestically sourced raw materials. A description of the item immediately follows.
Item 1 identified as the “Bundled Upholstery Kit,” consists of several woven textile cut to shape components that are specifically formed and fitted to the size and shape of seat frames. The 100% polyester seat components are part of a manufacturing process to be performed that will result in a final article ready for retail sale. Specifically, the cut to shape components will be placed onto the frames of furniture. They are components to unfinished furniture that will be exhausted in the manufacture of finished goods, in this case upholstered seats. These items are not placed over a finished article, but are permanently incorporated into the finished article itself. A kit that fits one seat frame will not fit another because the dimensions of the components are specific to the frame. Based on the information provided, the kits do not include stuffing.
You identify subheading 9401.90.5021, Harmonized Tariff Schedule of the United States, (HTSUS), as the applicable classification. We agree.
Further, the ruling request outlines a scenario where rolls of fabric, welt cords, zipper chains, zipper sliders, and other material components are sourced from China. Additional material components are sourced from the United States. These components are shipped and exported to Mexico. In Mexico, cutting, sewing, and assembly of the raw materials to specific fabric shapes and dimensions take place. In Mexico, the completed upholstery kit is inspected, packed, and then exported to the United States. Photos of these processes were provided.
Eligibility for preferential treatment under the USMCA
The USMCA was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018. The USMCA was approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act. General Note (GN) 11 of the HTSUS implements the USMCA. GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA. GN 11(b) states: For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, is eligible for the preferential tariff treatment provided for in the applicable subheading and quantitative limitations set forth in the tariff schedule as a “good originating in the territory of a USMCA country” only if -
the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries;
the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials;
the good is a good produced entirely in the territory of one or more USMCA countries using nonoriginating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o)); or…
The upholstery kit contains non-originating materials, therefore it is not considered a good wholly obtained or produced entirely in a USMCA country under GN 11(b)(i). Moreover, under GN 11(b)(ii), the upholstery kit is not a good produced entirely in Mexico, exclusively from originating materials. Therefore, we must next determine whether the non-originating materials undergo the tariff shift and other requirements provided for in GN 11(b)(iii) and GN 11(o).
The applicable rule of origin for merchandise under subheading 9401.90. HTSUS, is in GN 11(o), HTSUS, which provides, in relevant part:
Chapter 94
…2. A change to subheading 9401.90 from any other heading.
Since the foreign origin Chinese material components are classified in subheadings other than subheading 9401.90, HTSUS, the requisite tariff shift rule under GN 11(o), Rule 2 to Chapter 94, HTSUS, is met. Based upon the preceding analysis, the subject material components are originating goods under the USMCA.
Country of Origin Marking
The marking statute, Section 304(a), Tariff Act of 1930, as amended (19 U.S.C. § 1304(a)), provides that unless excepted, every article of foreign origin imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit in such manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article. 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 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.”
To allow for a more seamless transition period, at this time, CBP continues to utilize the marking rules set forth in 19 C.F.R. Part 102, with the exception of 19 C.F.R. § 102.19, for purposes of country of origin marking with respect to goods from Canada and Mexico. Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes, with the exception of textile goods which are subject to the provisions of 19 C.F.R. § 102.21. Applied in sequential order, the required hierarchy establishes that:
The country of origin of a good is the country in which:
(a)(1) The good is wholly obtained or produced;
(a)(2) The good is produced exclusively from domestic materials; or
(a)(3) Each foreign material incorporated in that good undergoes an applicable change in
tariff classification set out in section 102.20 and satisfies any other applicable
requirements of that section, and all other requirements of these rules are satisfied.
As the upholstery kit is not wholly obtained or produced in a single country, Rule (1) of § 102.11(a)(1) is inapplicable.
As the upholstery kit is not produced exclusively from domestic materials, Rule (2) of § 102.11(a)(2) is inapplicable. Accordingly, Rule (3) applies.
Section 102.20 sets forth specific rules by tariff classification. The pertinent tariff shift rule for subheading 9401.90, states:
A change to subheading 9401.90 from any other heading, except from subheading 9403.90.
As the non-originating (foreign origin) Chinese material components undergo the applicable tariff shift, the requesite specific rule by tariff classification for the upholstery kit is met, 19 C.F.R. § 102.11(a)(3). Accordingly, Mexico is the country of origin for marking purposes.
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 the World Wide Web at https://hts.usitc.gov/current.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. § 177).
The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in 19 C.F.R. § 177.9(b)(1). In the event that the facts or merchandise are modified in any way, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and you should resubmit for a new ruling in accordance with 19 C.F.R. § 177.2.
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 Dharmendra Lilia at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division