Modification of New York Ruling Letter N068477; Tariff Classification of a Dry Suit; NAFTA status of Dry Suits from Canada

HQ H073928 May 6, 2013 CLA–2 OT:RR:CTF:TCM H073928 AMM CATEGORY: Classification TARIFF NO.: 6210.50.50 Mr. Craig Fisher Mustang Survival Corp. 7525 Lowland Drive Burnaby, BC V5J 5L1 RE: Modification of New York Ruling Letter N068477; Tariff Classification of a Dry Suit; NAFTA status of Dry Suits from Canada Dear Mr. Fisher, This is in reference to New York Ruling Letter (NY) N068477, dated August 6, 2009, regarding the classification under the Harmonized Tariff Schedule of the United States (HTSUS) and NAFTA eligibility of a certain Dry Suit, identified as the “Style MSD577vSR Tactical Operations Dry Suit” (Style MSD577vSR). In that ruling, Customs and Border Protection (CBP) classified the Style MSD577vSR product under heading 6211, HTSUS, which provides in pertinent part for “[O]ther garments”, and found that the product was not eligible for NAFTA preferential treatment. We have reviewed NY N068477 and found it to be incorrect with respect to the above identified product. For the reasons set forth below, we are modifying that ruling. 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 of treatment relating to the tariff classification of a certain dry suit was published on February 27, 2013, in the Customs Bulletin, Volume 47, Number 10. No comments were received in connection to this proposal. FACTS: The Style MSD577vSR product is a unisex coverall garment designed for over-water and waterborne tactical operation teams. It is described as follows: Style MSD577vSR features a stand up neoprene collar with a draw cord and cord locks, neoprene shoulder gussets, long sleeves with a hook and loop closure at the wrist and a neoprene inner cuff, reflective bands on each sleeve near the cuff, padded elbow patches, an interior draw cord and cord lock at the waist, an interior suspender system with buckles, a diagonal zipper across the chest, a horizontal zipper below the waist, an interior coccyx pad, a lining on the lower body and legs, a neoprene mid-section, a web belt with a plastic buckle closure at the waist, wide belt loops, abrasion fabric on the hip and seat, adjustable thigh straps, padded overlays at the knees, ankle zippers, elasticized cuffs with hook and loop closures and attached boots. See NY N068477. The Style MSD577vSR product is constructed from the following components: a three-layer woven nylon/ePTFE/woven polyester fabric manufactured in the United States, a neoprene/nylon laminated fabric manufactured in the United States, a nylon/spandex knit fabric manufactured in the United States, a nylon/Kevlar/PET/PU fabric manufactured in Taiwan, and internal foam pads manufactured in Taiwan. The nylon/ePTFE/polyester fabric is both breathable and waterproof, and comprises the outer shell of the product. The nylon/spandex knit fabric is a small component used as a “waist drainage patch.” The neoprene/nylon fabric is used as trim around the neck and wrists to provide a watertight seal, and is also used in the elbow patches. The nylon/Kevlar/PET/PU fabric is used for abrasion resistance at the knees and seat. These fabrics are cut, sewn, and assembled into a finished garment in Canada. CBP classified the Style MSD577vSR product under heading 6211, HTSUS, which provides in pertinent part for “[O]ther garments”. Furthermore, CBP determined that this product was not eligible for NAFTA preferential treatment, because it did not satisfy the required tariff shift. ISSUE: What is the proper classification of the instant MSD577vSR Tactical Operations Dry Suit under the HTSUS? LAW AND ANALYSIS: In NY N068477, CBP considered the classification and NAFTA eligibility of two dry suits manufactured by Mustang. The first, identified as the Style MSD575 Water Rescue Dry Suit (Style MSD575), was classified under heading 6210, HTSUS, specifically under subheading 6210.50.50, HTSUS, which provides for “Garments, made up of fabrics of heading … 5903 [or] 5906 …: Other women’s or girls’ garments: Of man-made fibers: Other”. This product was found to be eligible for NAFTA preferential treatment. Mustang does not dispute the classification or eligibility determination of the Style MSD575 product. The second product, identified as the Style MSD577vSR Tactical Operations Dry Suit (Style MSD577vSR), was classified under heading 6211, HTSUS, specifically under subheading 6211.43.00, HTSUS, which provides for “[O]ther garments: Other garments, women’s or girls’: Of man-made fibers”. This product was found not to qualify for NAFTA preferential treatment. Mustang disputes both the classification and the eligibility determination of the Style MSD577vSR product. I. Classification Classification of goods under the HTSUS is governed by the General Rules of Interpretation (GRI). GRI 1 provides that classification shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRI may then be applied. The 2013 HTSUS provisions at issue are as follows: 5407 Woven fabrics of synthetic filament yarn, including woven fabrics obtained from materials of heading 5404: ------------------------- 5903 Textile fabrics impregnated, coated, covered or laminated with plastics, other than those of heading 5902: ------------------------- 6210 Garments, made up of fabrics of heading 5602, 5603, 5903, 5906 or 5907: 6210.50 Other women’s or girls’ garments: Of man-made fibers: 6210.50.50 Other ------------------------- 6211 Track suits, ski-suits and swimwear; other garments: Other garments, women’s or girls’: 6211.43.00 Of man-made fibers ------------------------- GRI 3, HTSUS, states, in pertinent part: When, by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: * * * (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable. * * * Note 2 to Chapter 59, HTSUS, states, in pertinent part: Heading 5903 applies to: (a) Textile fabrics, impregnated, coated, covered or laminated with plastics, whatever the weight per square meter and whatever the nature of the plastic material (compact or cellular), other than: (1) Fabrics in which the impregnation, coating or covering cannot be seen with the naked eye (usually chapters 50 to 55, 58 or 60); for the purpose of this provision, no account should be taken of any resulting change of color; * * * Note 8 to Chapter 62, HTSUS, states, in pertinent part: “[G]arments which cannot be identified as either men’s or boys’ garments or as women’s or girls’ garments are to be classified in the headings covering women’s or girls’ garments.” The Harmonized Commodity Description and Coding System Explanatory Notes (ENs), constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of the headings. It is CBP’s practice to consult, whenever possible, the terms of the ENs when interpreting the HTSUS. See T.D. 89–80, 54 Fed. Reg. 35127, 35128 (August 23, 1989). EN 59.03 states, in pertinent part: This heading covers textile fabrics which have been impregnated, coated, covered or laminated with plastics (e.g., poly(vinyl chloride)). Such products are classified here whatever their weight per m² and whatever the nature of the plastic component (compact or cellular), provided: (1) That, in the case of impregnated, coated or covered fabrics, the impregnation, coating or covering can be seen with the naked eye otherwise than by a resulting change in colour. Textile fabrics in which the impregnation, coating or covering cannot be seen with the naked eye or can be seen only by reason of a resulting change in colour usually fall in Chapters 50 to 55, 58 or 60. Examples of such fabrics are those impregnated with substances designed solely to render them crease-proof, moth-proof, unshrinkable or waterproof (e.g., waterproof gabardines and poplins). Textile fabrics partially coated or partially covered with plastics and bearing designs resulting from these treatments are also classified in Chapters 50 to 55, 58 or 60. * * * The laminated fabrics of this heading should not be confused with fabrics which are simply assembled in layers by means of a plastic adhesive. These fabrics, which have no plastics showing in crosssection, generally fall in Chapters 50 to 55. * * * In NY N068477, CBP classified the Style MSD577vSR under heading 6211, HTSUS, which provides, in pertinent part for “other garments.” Mustang asserts in their request for reconsideration that the product is properly classified under heading 6210, HTSUS, which provides, in pertinent part for “Garments, made up of fabrics of heading … 5903 …”. The Style MSD577vSR product is constructed from the following components: a three-layer woven nylon/ePTFE/woven polyester fabric, a neoprene/nylon laminated fabric, a nylon/spandex knit fabric, a nylon/Kevlar/ PET/PU fabric and internal foam pads. The nylon/ePTFE/polyester fabric is both breathable and waterproof, and comprises the outer shell of the product. The nylon/spandex knit fabric is a small component used as a “waist drainage patch.” The neoprene/nylon fabric is used as trim around the neck and wrists to provide a watertight seal. The nylon/Kevlar/PET/PU fabric is used for abrasion resistance at the knees and seat. It is a well accepted maxim of Customs law that a garment will ordinarily be classified according to the material of its outer shell. See Headquarters Ruling Letter (HQ) H042543, dated November 30, 2009; HQ 087527, dated October 21, 1992; HQ H087157, dated October 21, 1992; HQ H087156, dated October 21, 1992; HQ H086504, dated December 27, 1990; HQ 080817, dated August 31, 1987. See also HQ 959732, dated April 28, 1997 (classifying firefighter’s protective garments according to the outer shell fabric). Furthermore, CBP has previously stated, in “Classification of Garments Composed in Part of Linings or Interlinings of Specialized Fabrics or Nonwoven Insulating Layers,” T.D. 91-97, 56 Fed. Reg. 46372 (Sep. 12, 1991), that: [I]t is usually the outer shell which imparts the essential character to the garment because the outer shell normally creates the garment. * * * Garments which have outer shells of fabrics specified in Headings 6113 and 6110, HTSUS, are classifiable, pursuant to GRI 3(b), under those headings. * * * The outer shell of the Style MSD577vSR product is composed of a laminated fabric consisting of a top layer of nylon woven fabric, a middle layer of ePTFE, and a bottom layer of polyester knit fabric. You assert that, because this outer shell fabric is properly classified under heading 5903, HTSUS, as a coated fabric that the instant product is properly classified under heading 6210, HTSUS, which provides, in pertinent part for “Garments, made up of fabrics of heading … 5903 …”. However, in NY N068477, CBP stated that this outer shell fabric was excluded from heading 5903, HTSUS, by Note 2(a)(1) to Chapter 59, HTSUS, because the plastic could not be seen with the naked eye. CBP also found that the outer shell fabric was properly classified under heading 5407, HTSUS, which provides for “Woven fabrics of synthetic filament yarn …”. When reviewing fabrics assembled in layers under Note 2(a)(1) to Chapter 59, HTSUS, CBP examines the fabrics to ascertain whether the plastics layer is visible in the cross-section to the naked eye. See HQ H005538, dated November 30, 2007; HQ W968304, dated December 1, 2006; NY M82475, dated August 29, 2006; NY L80809, dated December 28, 2004. Additionally, CBP examines whether the plastics layer is visible through one of the assembled layers of fabric. In situations where one of the fabrics is of a loosely knitted or woven construction that allows the coating to be seen through that layer of fabric, CBP has considered such coating to be "visible to the naked eye." See HQ H005538; NY L89462, dated January 13, 2006; NY K87940, dated July 23, 2004 (both in which CBP found plastic film to be visible through a knit layer). Upon further review of the samples you submitted on February 8, 2011, CBP has determined that the ePTFE plastic layer is visible to the naked eye through the knit polyester layer. Therefore, because the outer shell fabric is a plastic laminated textile fabric, in which the plastic layer is visible to the naked eye, it is properly classified under heading 5903, HTSUS. See also EN to heading 59.03; HQ H005538. Furthermore, in accordance with T.D. 91-97 and GRI 3(b), the Style MSD577vSR product is properly classified under heading 6210, HTSUS, which provides for “Garments, made up of fabrics of heading … 5903 …”, because its outer shell is classifiable under heading 5903, HTSUS. See also HQ H042543; HQ 080817. Since the garments are described as “unisex,” they are classified in subheadings covering women’s or girls’ garments. See Note 8 to Chapter 62, HTSUS. Therefore, the Style MSD577vSR product is properly classified under subheading 6210.50.50, HTSUS, which provides for “Garments, made up of fabrics of heading 5602, 5603, 5903, 5906 or 5907: Other women’s or girls’ garments: Of man-made fibers: Other”. II. NAFTA Eligibility General Note (GN) 12, HTSUS, incorporates Article 401 of the North American Free Trade Agreement (NAFTA) into the HTSUS. GN 12(a)(i), HTSUS, provides, in pertinent part, that: Goods that originate in the territory of a NAFTA party under the terms of subdivision (b) of this note and that qualify to be marked as goods of Canada under the terms of the marking rules set forth in regulations issued by the Secretary of the Treasury (without regard to whether the goods are marked), and goods enumerated in subdivision (u) of this note, when such goods are imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appears in the "Special" subcolumn followed by the symbol "CA" in parentheses, are eligible for such duty rate, in accordance with section 201 of the North American Free Trade Agreement Implementation Act. Accordingly, the Style MSD577vSR product will be eligible for the “Special” “CA” rate of duty provided: (1) it is deemed to be NAFTA originating under the provisions of GN 12(b), HTSUS; and, (2) it qualifies to be marked as a product of Canada under the NAFTA Marking Rules that are set forth in Part 102 of the Code of Federal Regulations (19 C.F.R. §102). A. NAFTA Originating under GN 12(b) In order to determine whether the Style MSD577vSR product is NAFTA-originating, we must consult GN 12(b), HTSUS, which provides, in pertinent part, as follows: 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— * * * (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 * * * GN 12(t), HTSUS, states, in pertinent part: (t) Change in Tariff Classification Rules. * * * Chapter 62. * * * Chapter rule 3: For purposes of determining the origin of a good of this chapter, the rule applicable to that good shall only apply to the component that determines the tariff classification of the good and such component must satisfy the tariff change requirements set out in the rule for that good. If the rule requires that the good must also satisfy the tariff change requirements for visible lining fabrics listed in chapter rule 1 for this chapter, such requirement shall only apply to the visible lining fabric in the main body of the garment, excluding sleeves, which covers the largest surface area, and shall not apply to removable linings. * * * 32C. A change to headings 6208 through 6210 from any other chapter, except from headings 5106 through 5113, 5204 through 5212, 5307 through 5308 or 5310 through 5311, chapter 54, or headings 5508 through 5516, 5801 through 5802 or 6001 through 6006, provided that the good is both cut and sewn or otherwise assembled in the territory of one or more of the NAFTA parties. * * * 35. A change to subheadings 6211.32 through 6211.49 from any other chapter, except from headings 5106 through 5113, 5204 through 5212, 5307 through 5308 or 5310 through 5311, chapter 54 or headings 5508 through 5518, 5801 through 5802 or 6001 through 6006, provided that the good is both cut and sewn or otherwise assembled in the territory of one or more of the NAFTA parties. * * * In NY N068477, CBP determined that the Style MSD577vSR product was classified in subheading 6211.43, HTSUS, and that the outer shell fabric was classified in heading 5407, HTSUS. CBP also determined that the Style MSD577vSR product did not satisfy GN 12(t)/62.35, HTSUS, because the change to subheading 6211.43, HTSUS, from Chapter 54, HTSUS, does not meet the required tariff shift. However, the Style MSD577vSR product was not correctly classified in NY N068477. As discussed above, this product is properly classified in heading 6210, HTSUS, and its outer shell fabric is properly classified under heading 5903. Therefore, the requirements of GN 12(t)/62.32C, HTSUS, are satisfied, because the component which determines the tariff classification of the good (the outer shell fabric) shifts from heading 5903, HTSUS, to heading 6210, HTSUS. See also GN 12(t)/62, Chapter Rule 3, HTSUS. The Style MSD577vSR product satisfies the requirements of GN 12(t), HTSUS. As such, it also satisfies the requirements of GN 12(b)(ii)(A), HTSUS, and is deemed to be NAFTA originating. B. Country of Origin Marking Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. §1304), requires that, unless excepted, every article of foreign origin (or its container) 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 manner as to indicate to the ultimate purchaser the English name of the country of origin of the article. The regulations implementing the requirements and exceptions to 19 U.S.C. §1304 are set forth in Part 134, CBP Regulations (19 C.F.R. §134). Section 134.1(b), CBP Regulations (19 C.F.R. §134.1(b)), defines "country of origin" as: [T]he 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" within the meaning of [the marking requirements] … Title 19, Section 3592, of the United States Code (19 U.S.C. §3592) was promulgated to implement the Uruguay Round Agreements Act provisions concerning the classification of textiles. CBP published 19 C.F.R. §102.21 in response. See 60 FR 46188. In Pac Fung Feather Co. Ltd. v. United States, 911 F.Supp. 529 (Ct. Int’l. Trade 1995), aff’d 111 F.3d 114 (Fed. Cir. 1997), the Court of International Trade held that CBP’s promulgation of its final regulations concerning the rules of origin for textile and apparel products to be in accordance with the law. 19 C.F.R. §102.21 states, in pertinent part: (a) [T]he provisions of this section will control the determination of the country of origin of imported textile and apparel products for purposes of the Customs laws and the administration of quantitative restrictions. * * * (c) General rules … the country of origin of a textile or apparel product will be determined by sequential application of paragraphs (c)(1) through (5) of this section … (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. * * * (e) Specific rules by tariff classification. (1) The following rules will 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 * * * 6210-6212 (1) If the good consists of two or more component parts, a change to an assembled good of heading 6210 through 6212 from unassembled components, provided that the change is the result of the good being wholly assembled in a single country, territory, or insular possession. * * * To determine the country of origin of the instant merchandise, CBP must consider 19 C.F.R. §102.21(c)(1) through (5) in order. The instant product is made from: a laminated nylon/ePTFE/polyester fabric manufactured in the United States, a neoprene/nylon fabric manufactured in the United States, a nylon/spandex knit fabric manufactured in the United States, a nylon/Kevlar/PET/PU fabric manufactured in Taiwan, and foam padding manufactured in Taiwan. Because these components were made in two different countries, 19 C.F.R. §102.21(c)(1) does not apply. Next, we apply 19 C.F.R. §102.21(c)(2), which directs us to consider 19 C.F.R. §102.21(e). The Style MSD577vSR product consists of five (5) component parts, which are assembled into a good of heading 6210, HTSUS. All of the fabric is cut, sewn, and assembled into a finished garment in Canada. Therefore, Special Rule (1) for headings 6210-6212 of 19 C.F.R. §102.21(e)(1) apply, and the country of origin of the instant product is Canada, by application of 19 C.F.R. §102.21(c)(2). C. Conclusion Because the Style MSD577vSR product has been deemed to be NAFTA originating under the provisions of GN 12(b), HTSUS, and because it may be marked as a product of Canada in accordance with 19 C.F.R. §102, it is eligible for the “Special” “CA” rate of duty. HOLDING: The Style MSD577vSR product is properly classified under heading 6210, HTSUS, specifically under subheading 6210.50.50, HTSUS, which provides for “Garments, made up of fabrics of heading 5602, 5603, 5903, 5906 or 5907: Other women’s or girls’ garments: Of man-made fibers: Other”. The general, column one rate of duty is 7.1% 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 the internet at <www.usitc.gov/tata/hts/>. The Style MSD577vSR product is an originating good under NAFTA pursuant to the tariff shift rules set forth in GN 12(b) and (t)/62.32C, HTSUS. Pursuant to 19 CFR §102.21(c)(2) and (e)(1), the country of origin for marking purposes is Canada, provided a certificate of origin is completed and signed for the good. A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction. EFFECT ON OTHER RULINGS: New York Ruling Letter N068477, dated August 6, 2009, is hereby MODIFIED in accordance with the above analysis. In accordance with 19 U.S.C. §1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin. Sincerely, Myles B. Harmon, Director Commercial and Trade Facilitation Division