Country of Origin Marking of an Artist Canvas; Modification of New York Ruling (NY) L89513

HQ H007440 November 9, 2007 CLA-2 OT:RR:CTF:TCM H007440 ADK CATEGORY: Classification and Marking TARIFF NO.: 5901.90.40 Mr. R. Kevin Wiliams Rodriguez O'Donnell Ross Fuerst Gonzalez Williams & England, P.C. 1211 Connecticut Avenue, N.W. Washington, DC 20036 RE: Country of Origin Marking of an Artist Canvas; Modification of New York Ruling (NY) L89513 Dear Mr. Williams: On December 12, 2006, the Bureau of Customs and Border Protection (CBP) received a ruling request for merchandise substantially similar to your artist canvas classified in NY Ruling Letter (NY) L89513. We have since reviewed NY L89513, dated December 27, 2005, and although the classification determination in that ruling was correct, we find the country of origin determination to be in error. Pursuant to section 625(c), Tariff Act of 1930 (19 U.S.C. §1625(c)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act, Pub. L. 103-182, 107 Stat. 2057, 2186 (1993), notice of the proposed modification was published on May 30, 2007, in the Customs Bulletin, Volume 41, No. 23. Three comments were received in response to this notice and are addressed in the Law and Analysis section of this ruling. FACTS: The subject article, imported by Design Ideas, Ltd, is a prepared, framed artist canvas. The manufacturing process is as follows: India The 100% cotton fabric is woven from Indian yarn and is produced in two weights: 225 grams per square meter and 310 grams per square meter. The fabric canvas is then primed with gesso1 to make the material suitable for painting. The primed canvas is shipped to China for further fabrication. China The primed rolls of canvas are cut to the appropriate size for framing. The cut canvas is then stretched over a wooden frame which is produced in China. The edges of the canvas are folded into a groove on the back of the frame and a spline2 is inserted to hold the stretched canvas in place. The canvas and spline are then stapled to hold them in place. The completed canvas is finally labeled and packaged for shipment to the United States. ISSUE: What is the country of origin of the artist canvas? LAW AND ANALYSIS: Section 334 of the Uruguay Round Agreements Act (URAA) (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at 19 U.S.C. §3592), enacted on December 8, 1994, provided rules of origin for textiles and apparel entered, or withdrawn from warehouse for consumption, on or after July 1, 1996. Section 102.21, CBP 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, §102.21 was amended (68 FR 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 §102.21. The relevant provisions are set forth below. We will consider each of these rules in turn: (c) General rules. Subject to paragraph (d) of this section, the country of origin of a textile or apparel product shall be determined by sequential application of paragraphs (c) (1) through (5) of this section and, in each case where appropriate to the specific context, by application of the additional requirements or conditions of §§ 102.12 through 102.19 of this part. (1) 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. (2) 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 foreign material 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. (3) Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) or (2) of this section: (i) 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 (ii) 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. (4) 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 NY L89513, CBP concluded that the country of origin could not be determined by application of paragraphs §102.21 (c) (1) to (c) (3). With respect to paragraph (c)(3) specifically, CBP determined that the artist canvas component pieces did not exist in essentially the same condition as found in the finished good. As a result, the country of origin was found to be "the single country in which the most important assembly or manufacturing process occurred." §102.21 (c)(4). We now find that the analysis of the term "wholly assembled," as it pertains to paragraph (c)(3), was in error. The general rules set forth in paragraphs (c)(1) through (5) of §102.21 must be applied sequentially. Applying paragraph (c)(1), we agree with the conclusion in NY L89513 that it is inapplicable. The subject canvas was neither wholly obtained nor wholly produced in a single country. Paragraph (c)(2) is similarly inapplicable. According to (c)(2), the country of origin is the single country in which the good underwent a tariff change specified in 19 C.F.R. §102.21(e). The relevant tariff change rules are as follows: 5901-5903 (1) Except for fabric of wool or of fine animal hair, a change from greige3 fabric of heading 5901 through 5903 to finished fabric of heading 5901 through 5903 by both dyeing and printing when accompanied by two or more of the following finishing operations: bleaching, shrinking, fulling4, napping5, decating6, permanent stiffening, weighting, permanent embossing, or moireing7; or (2) If the country of origin cannot be determined under (1) above, a change to heading 5901 through 5903 from any other heading, including a heading within that group, except from heading 5007, 5111 through 5113, 5208 through 5212, 5309 through 5311, 5407 through 5408, 5512 through 5516, 5803, 5806, 5808, and 6002 through 6006, and provided that the change is the result of a fabric making process. (Emphasis added) The canvas was not subjected to any of the processes detailed in subsection (1) in either India or China. It is not dyed and printed, nor does it undergo any of the processes listed. Furthermore, the canvas did not undergo a tariff shift, as mandated by subsection (2). When exported from India to China, the 100% cotton fabric is classifiable under heading 5901, HTSUS, which provides for "[t]extile fabrics coated with gum or amylaceous substances, of a kind used for the outer covers of books or the like; tracing cloth; prepared painting canvas; buckram and similar stiffened textile fabrics of a kind used for hat foundations." Through the processing in China, the fabric becomes the artist canvas. There is no tariff shift at all because the fabric and finished artist canvas are classifiable in the same heading. As a result, the country of origin cannot be determined according to (c)(2). We next consider (c)(3). As a threshold matter, we note that subsection (i) is prima facie inapplicable because the cotton canvas was not knit to shape. Only subsection (ii) is potentially applicable to the subject artist canvas. Subsection (ii) identifies the country of origin for goods which are "wholly assembled" in a single country. The term "wholly assembled" is defined in §102.21(a)(6), which provides, in pertinent part: The term "wholly assembled" when used with reference to a good means that all components, of which there must be at least two, preexisted in essentially the same condition as found in the finished good and were combined to form the finished good in a single country, territory, or insular possession.... (Emphasis added). The subject merchandise is comprised of a one-piece cotton canvas and a wooden frame. It therefore satisfies the §102.21(a)(6) requirement that there be at least two preexisting components. At issue is whether these components exist in essentially the same condition as found in the finished good. Counsel for the importer, argues that "the two or more preexisting components do not exist in this situation. The gesso primed canvas is imported into China in bulk rolls and is cut to the proper shape in China8." Counsel misinterprets the relevant test. With regards to "wholly assembled," CBP looks to the condition of the component pieces immediately prior to completion. Stated differently, the test requires that if the completed merchandise were disassembled, the disassembled components would exist in the same condition as they did immediately prior to assembly. See Headquarters Ruling Letter (HQ) 968229, dated July 18, 2006 (holding that the components of an imported two-layer fabric laminate consisting of a face fabric with a membrane laminated to its back would preexist in essentially the same condition before and after the lamination process, although permanently joined). Applying this test, we find that the component pieces - the canvas, the wooden frame, the spline and the staples - preexisted in essentially the same condition as found in the finished good. Prior to assembly, the primed canvas was cut and stretched and the wooden frame was fully formed. If disassembled, the component pieces would consist of a primed, cut and stretched piece of canvas, and a fully formed wooden frame. As a result, the subject article meets the definition of "wholly assembled," and the country of origin may be determined according to (c)(3). Three comments were received in response to publication of the proposed revocation. The first two commenters argue that the 19 CFR §102.21 was incorrectly applied to the present matter. Instead, they claim that CBP should have utilized the rules of origin for textile and apparel products, set forth in section 334 of the Uruguay Round Agreements Act, and codified in 19 USC §3592. As with 19 CFR §102.21, the §3592 rules are applied sequentially. They provide, in pertinent part: §3592. Rules of origin for textile and apparel products (b) Principles (1) In general. Except as otherwise provided for by statute, a textile or apparel product, for purposes of the customs laws and administration of quantitative restrictions, originates in a country, territory, or insular possession, and is the growth, product, or manufacture of that country, territory, or insular possession, if - (A) the product is wholly obtained or produced in that country, territory, or possession; (B) the product is a yarn, thread, twine, cordage, rope, cable, or braiding and - i. the constituent stable fibers are spun in that country, territory, or possession, or ii. the continuous filament is extruded in that country, territory or possession; (C) the product is a fabric, including a fabric classified under chapter 59 of the HTS, and the constituent fibers, filaments, or yarns are woven, knitted, needled, tufted, felted, entangled, or transformed by any other fabric-making process in that country, territory, or possession; or (D) the product is any other textile or apparel product that is wholly assembled in that country, territory, or possession from its component pieces. (Emphasis added) All parties concede that the subject canvas does not meet the terms of (b)(1)(A) or (b)(1)(B). It was not "wholly obtained or produced" in one country, nor is it a "yarn, thread, twine, cord, rope, cable, or braid." The commenters instead contend that section (b)(1)(C) should be used to determine origin because the artist canvas is a "fabric." Specifically, the first comment states that "the artist canvases are 'fabrics' as defined under the Harmonized Tariff Schedule of the United States (HTSUS). They are classified in HTSUS chapter 59, which covers 'impregnated, coated, covered, or laminated textile fabrics that are impregnated or coated with primer." Classification under chapter 599, however, does not necessitate a determination that an article is a simple fabric. The term "fabric" is not specifically defined in the HTSUS or its legislative history. When a tariff term is not defined, the term's correct meaning is presumed to be its common meaning in the absence of evidence to the contrary. See Rohm & Haas Co. v. United States, 727 F.2d 1095 (CAFC 1984). The first commenter argues that the term "fabric" is defined by 19 CFR §102.21(b)(5). That provision10, however, identifies the meaning of the term "textile and apparel products," not "fabric." At issue is the correct meaning of the specific term "fabric." The Court of International Trade has defined the term fabric as "a cloth produced [especially] by knitting, weaving, or felting fibers." Pac Fung Feather Company and Natural Feather & Textiles v. United States, 19 CIT 1451, 1459 (1995) citing The American Heritage Dictionary 484 (2d 1982)11. This definition applies only to the cotton component of the subject article, prior to its assembly with the wooden frame. The cotton itself is a "cloth produced...by weaving...." Contrary to counsel's assertion, however, the completed artist canvas is not a mere "fabric." After assembly, the woven cotton loses its individual identity as a fabric and becomes an integral part of the completed article - the framed artist canvas. The exact point in the processing at which the fabric became an integral part of the finished article occurred when the canvas was permanently stapled to its wooden frame. Coraggio Design, Inc. v. United States, 12 CIT 143, 145 (1988) (The point in the processing at which material becomes a partly finished article must be determined on the basis of the circumstances of each case). From that point, the identity of the cotton fabric is permanently altered because it has only one potential application - its use as a framed painting surface. See HQ 956965, December 13, 1994. Because the artist canvas does not meet the definition of the term "fabric," §3592 (b)(1)(C) is inapplicable. The country of origin for the artist canvas cannot be determined by the country in which the fabric was produced. The second commenter asserts that the application of §102.21 (c)(3) is inconsistent with our conclusion in HQ 96822912. In that ruling, CBP determined the country of origin of certain laminated fabrics. We noted: We recognize that if 19 C.F.R. §102.21, as it currently stands, is applied to the certain laminated fabrics at issue, their country of origin would not be Taiwan. Rather, if the general rules of the Regulation (19 C.F.R. §102.21(c)) are applied in sequential order, 19 C.F.R. §102.21(c)(3)(ii) would be applicable to the fabrics.... We recognize the inconsistency between 19 U.S.C. §3592(b)(1)(C) and 19 C.F.R. §102.21(c) and intend to take necessary action to make the Regulation consistent with the statute in regard to laminated fabrics like those at issue. According to the commenter, the "same inconsistency between statute and regulation arises from the proposed modification of New York Ruling Letter L89513 and must be resolved by following the statute." We disagree. Unlike the subject artist canvas, the merchandise under consideration in HQ 968229 was composed entirely of fabric. For the reasons stated above, §3592 (b)(1)(C) was therefore applicable. Section 3592 (b)(1)(C) cannot be utilized in this instance, however, because the artist canvas is not a fabric. The inconsistency between 19 U.S.C. §3592(b)(1)(C) and 19 C.F.R. §102.21(c) is not relevant to the subject consideration. As with §102.21, the rules of §3592 are applied sequentially. Based on the above analysis, subsections (b)(1)(A), (b)(1)(B), and (b)(1)(C) are inapplicable to the subject article. If §3592 is to be applied, we must next consider subsection (b)(1)(D), which identifies the country of origin as the country, territory, or possession in which a textile or apparel product was "wholly assembled." In the proposed revocation, CBP determined that the manufacturing process in China satisfied the definition of "wholly assembled" as applied to §102.21 (c)(3). The component pieces of the artist canvas, of which there were more than two, "preexisted in essentially the same condition as found in the finished good and were combined to form the finished good in a single country...." The same analysis applies to the term "wholly assembled" in §3592 (b)(1)(D). Under §3592 (b)(1)(D), the country of origin of the subject artist canvas would also be China. The second commenter suggests that the term "wholly assembled," as used in §102.21 (c)(3) and §3592(b)(1)(D) applies only to "textile components and disregards non textile components." Counsel notes that: ...the strict application of 19 CFR 102.21(c)(3)(ii) would result in the country of assembly being the country of the products assembled from textile and non-textile components. This result is inconsistent with the statute....This inconsistency...can only be eliminated by interpreting the definition of 'wholly assembled' to encompass only textile components. As a threshold matter, CBP does not concur that this country of origin result is inconsistent with the statute. Furthermore, there is no justification for the conclusion that the term "wholly assembled" encompasses only textile components. The tariff shift rules of §102.21 specify that the term "wholly assembled" is not limited to textile components. For example, the rule for heading 5909, HTSUS, provides, in pertinent part: A change to textile hosepiping with...accessories of nontextile material, of heading 5909, from any heading, including a change from another good of heading 5909, provided that the change is the result of the good being wholly assembled in a single country, territory, or insular possession. (Emphasis added) As shown by this rule, the term "wholly assembled," as used in §102.21 applies to both textile and non-textile components of finished merchandise. In addition, CBP has previously determined that the assembly of textiles with non-textile components confers origin under the §102.21 rules. In NY K86934, dated July 7, 2004, CBP issued a country of origin determination for certain polypropylene belts. The belts at issue were manufactured from polypropylene made in Taiwan. The fabric was then shipped to China where it was cut to length and attached to metal grommets and a metal buckle. The relevant tariff shift rule for the subject belt was as follows: 6215-6217 (1) If the good consists of two or more component parts, a change to an assembled good of heading 6215 through 6217 from unassembled components, provided that the change is the result of the good being wholly assembled in a single country, territory, or insular possession. (Emphasis added) CBP determined that the belt satisfied this rule because it was "assembled in a single country, that is China, as per the terms of the tariff shift requirement." CBP reached the same conclusion in NY G84367, dated December 11, 2000. In that ca