The tariff classification, status under the North American Free Trade Agreement (NAFTA), country of origin determination and Marking for bedding sets from Mexico; 19 CFR 102.21(d); sets; 19 CFR 102.21(c)(1); wholly obtained or produced in a single country; 19 CFR 102.21(c)(4); most important assembly or manufacturing process; 19 CFR 102.19(a); NAFTA Preference Override; Article 509

N055922 April 15, 2009 CLA-2-94:OT:RR:E:NC:TA:349 CATEGORY: Classification TARIFF NO.: 9404.90.8020; 9404.90.8505; 9404.90.8522 Mr. Juan Jose Alvarado Alvarado Brokerage & Dispatch, Inc. 12122 Jef Drive Laredo, TX 78045 RE: The tariff classification, status under the North American Free Trade Agreement (NAFTA), country of origin determination and Marking for bedding sets from Mexico; 19 CFR 102.21(d); sets; 19 CFR 102.21(c)(1); wholly obtained or produced in a single country; 19 CFR 102.21(c)(4); most important assembly or manufacturing process; 19 CFR 102.19(a); NAFTA Preference Override; Article 509 Dear Mr. Alvarado: In your letter dated March 25, 2009 you requested a ruling on the country of origin marking and the status of four bedding sets from Mexico under the NAFTA. This request is made on behalf of Kaltex Home, S.A. DE C.V. The merchandise consists of four bedding sets. Samples were not submitted. The first set, referred to as “Bed in a Bag,” will contain a comforter, pillow shams, bed skirt and a sheet set consisting of pillowcases, flat sheet and fitted sheet. The second item, “Comforter Set,” contains a comforter, bed skirt and pillow shams. A comforter and pillow shams make up the “Mini Comforter Set” while the “Mini Set” will contain the same items as the first set. All sets are stated to be made from either a 100 percent cotton woven fabric or a 50 percent polyester and 50 percent cotton woven fabric. These fabrics may be printed or dyed a solid color. The comforters will be stuffed with a polyester batting and quilted. The comforters may or may not contain embroidery, lace, braid, edging, trimming, piping or appliqué work. Each set will be packed together for retail sale. The manufacturing operations for the bedding sets are stated to be as follows: CHINA, INDIA or PAKISTAN: -cotton or polyester/cotton fabrics are woven. -fabrics are printed or dyed and finished. -fabrics are cut to size and shape. -components are sewn on 3 sides creating the comforter shell. -components are sewn creating the finished shams, bed skirt, sheets and pillowcases. -comforter shells, shams, bed skirts, sheets and pillowcases are shipped to Mexico. MEXICO: -polyester batting fabric is formed from Mexican and Taiwanese fibers. -batting is cut to size and stuffed into the comforter shell. -comforter is sewn closed and quilted. -comforter, shams, bed skirt, sheets and pillowcases are packed for retail sale in the appropriate quantities creating the Bed in a Bag Set, Comforter Set, Mini Comforter Set and Mini Set. -the sets are shipped. You note in your request that each set will only be made from a single type of woven fabric which will be sourced from a single country. Classification of merchandise under the Harmonized Tariff Schedule of the United States (HTSUS) is in accordance with the General Rules of Interpretation (GRI's), taken in order. GRI 1 provides that classification shall be determined according to the terms of the headings and any relative section or chapter notes. The comforter is classifiable in subheading 9404.90 as articles of bedding and similar furnishing that are stuffed or fitted. The fitted sheet, flat sheet and pillowcases are classifiable in heading 6302 as bed linen; the bed skirt is classifiable under the provision for curtain and bed valances in heading 6303 and the pillow shams under the provision for other furnishing articles in 6304. Since classification of the submitted merchandise in a single heading cannot be determined by applying GRI 1, we must apply the other GRI's. GRI 3 provides for goods that are, prima facie, classifiable in two or more headings. GRI 3(b) provides that goods put up in sets for retail sale shall be classified as if they consisted of the material or component which gives them their essential character. According to the Explanatory Notes, the official interpretation of the HTSUS at the international level, “goods put up in sets for retail sale” refers to goods which: (a) consist of at least two different articles which are, prima facie, classifiable in different headings; (b) consist of products or articles put up together to meet a particular need or carry out a specific activity; and (c) are put up in a manner suitable for sale directly to users without repacking. The Bed in a Bag Set, Comforter Set, Mini Comforter Set and Mini Set meet the qualifications of “goods put up in sets for retail sale”. The components of the sets consist of different articles which are, prima facie, classifiable in different headings. They are put up together to carry out the specific activity of furnishing a bed and they are packaged for sale directly to users without repacking. It is our opinion that the comforter is the component that gives each set their essential character. Please note, due to the fact that the some of the comforters are to be constructed of a 50/50 blend of fibers, they will be classified using Section XI Subheading Note 2(A) and Section Note 2(A). Additional U.S. Rule of Interpretation 1(d) states that the principles of Section XI regarding mixtures of two or more textile materials shall apply to the classification of goods in any provision in which a textile material is named. The comforters will be classified as if they consisted wholly of that one textile material which is covered by the heading which occurs last in numerical order among those which equally merit considerations. Even a slight change in the fiber content may result in a change of classification. The comforters may be subject to Customs & Border Protection laboratory analysis at the time of import and if the fabric is other than a 50/50 blend they may be reclassified by Customs & Border Protection at that time. The applicable subheading for the 100 percent cotton bedding sets that contain a non-decorated comforter will be 9404.90.8020, HTSUS, which provides for mattress supports; articles of bedding and similar furnishing (for example, mattresses, quilts, eiderdowns, cushions, pouffes and pillows) fitted with springs or stuffed or internally fitted with any material or of cellular rubber or plastics, whether or not covered: other: other: of cotton, not containing any embroidery, lace, braid, edging, trimming, piping exceeding 6.35 mm or appliqué work… quilts, eiderdowns, comforters and similar articles. The general rate of duty will be 4.4 percent ad valorem. The applicable subheading for the 100 percent cotton bedding sets that contain a decorated comforter will be 9404.90.8505, HTSUS, which provides for mattress supports; articles of bedding and similar furnishing (for example, mattresses, quilts, eiderdowns, cushions, pouffes and pillows) fitted with springs or stuffed or internally fitted with any material or of cellular rubber or plastics, whether or not covered: other: other: other: quilts, eiderdowns, comforters and similar articles… with outer shell of cotton. The general rate of duty will be 12.8 percent ad valorem. The applicable subheading for the 50/50 blend bedding sets will be 9404.90.8522, HTSUS, which provides for mattress supports; articles of bedding and similar furnishing (for example, mattresses, quilts, eiderdowns, cushions, pouffes and pillows) fitted with springs or stuffed or internally fitted with any material or of cellular rubber or plastics, whether or not covered: other: other: other: quilts, eiderdowns, comforters and similar articles… with outer shell of man-made fibers. The general rate of duty will be 12.8 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, HTSUS, incorporates Article 401 of NAFTA into the HTSUS. General Note 12(a)(ii) provides, in pertinent part: (ii) 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 Mexico 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), 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 "MX" in parentheses, are eligible for such duty rate, in accordance with section 201 of the North American Free Trade Agreement Implementation Act. 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 comforters undergo processing operations in Mexico. Additionally, the comforters are packaged with various combinations of shams, bed skirts, sheets and pillowcases in Mexico to make up the different bedding sets. Mexico 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 Mexico and if they are wholly obtained or produced in the NAFTA territories or transformed in Mexico so that the non-originating materials undergo a change in tariff classification described in subdivision (t) to General Note 12, HTSUS. In addition, all of the components of the four sets, not just the item that imparts the essential character to the set, must meet the terms of General Note 12(b). For heading 9404, HTSUS, the appropriate subdivision (t) 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. When the non-originating comforter shells from China, India or Pakistan enter Mexico, they are classified in heading 6307, HTSUS. As heading 6307, HTSUS is not excepted by subdivision (t), the merchandise undergoes the requisite change in tariff classification and the comforters qualify for the NAFTA preference. The bed skirts, pillow shams, sheets and pillowcases are finished products when they leave China, India or Pakistan and are imported into Mexico. The bed skirts are classifiable under heading 6303, HTSUS, the pillow shams are classifiable under heading 6304, HTSUS, and the sheets and pillowcases under heading 6302, HTSUS. As none of these headings are excepted by subdivision (t), each of these items undergoes the requisite change in tariff classification and they qualify for NAFTA preference. The fact that the bed skirts, pillow shams, sheets and pillowcases are merely packaged together with the originating comforter in Mexico does not disqualify the bedding sets from being considered as originating goods. The issue was addressed in Headquarters Ruling letter (HQ) 561326, dated April, 26, 1999. In that ruling, Customs and Border Protection explained that there is no language in General Note 12, HTSUS, which would disqualify a good from obtaining originating status by virtue of merely having undergone simple packaging or combining operations. Thus, non-originating items may undergo the requisite tariff shift under General Note 12 (t), HTSUS, when packaged in Mexico with originating items. Pursuant to the analysis set forth above, all of the items in the Bed in a Bag Set, Comforter Set, Mini Comforter Set and Mini Set qualify as originating goods. Accordingly, they 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. Section 102.21(d) addresses the treatment of sets for country of origin purposes. Section 102.21(d) provides the following: Where a good classifiable in the HTSUS as a set includes one or more components that are textile or apparel products and a single country of origin for all of the components of the set cannot be determined under paragraph (c) of this section, the country of origin of each component of the set that is a textile or apparel product shall be determined separately under paragraph (c) of this section. The classification of the subject bedding sets, as per an essential character determination, is based on the comforter, however, per the terms of Section 102.21(d), one must determine whether or not a single country of origin exists for the entire set. 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." The bed skirts, pillow shams, sheets and pillowcases were wholly obtained or produced in China, India or Pakistan. Thus the country of origin initially appears to be China, India or Pakistan for those items. Since the comforters were not wholly obtained or produced in a single country, territory or insular possession, paragraph (c)(1) of Section 102.21 is inapplicable for those items. 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. Parts of subheading 9404.90 are included in the paragraph (e)(2) exception to the above tariff shift rule. The decorated cotton comforters and the 50/50 blend comforters fall under a subheading that is included in (e)(2) however, goods classified in that included subheading as of cotton or which consist of blends containing 16 percent or more by weight of cotton are excepted. The non-decorated cotton comforters are not included in the (e)(2) exception. You have indicated that the comforters in all sets are made from a shell fabric and a batting fabric. As the fabrics comprising the comforters in all sets 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:” (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. As the comforters 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 subject merchandise, 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 subject comforters, the fabric making process of the outer shell constitutes the most important manufacturing process. The outer shells of the comforters are made from fabrics formed in a single country. Accordingly, the fabric making process in China, India or Pakistan, where the fabric for the outer shell is formed, constitutes the most important manufacturing process and the country of origin for the comforters is China, India or Pakistan. However, the four bedding sets qualify as NAFTA originating goods. As stated in Section 102.19(a): Except in the case of goods covered by paragraph (b) of this section, if a good which is originating within the meaning of §181.1(q) of this chapter is not determined under §102.11(a) or (b) or §102.21 to be a good of a single NAFTA country, the country of origin of such good is the last NAFTA country in which that good underwent production other than minor processing, provided that a Certificate of Origin (see §181.11 of this chapter) has been completed and signed for the good. We have previously determined that the items in the bedding sets are “originating” for purposes of the NAFTA preference rule applicable to the sets. It is the belief of Customs and Border Protection that Section 102.19(a) operates as an override for all of the items in the set and that all of the items are entitled to be marked as country of origin Mexico. Although packing is considered a non-qualifying operation under Section 102.17, the assembly of the comforter in Mexico meets the requirement that the good underwent production other than minor processing. Customs and Border Protection has previously stated that as long as one item in the set undergoes production other than minor processing, the remaining items in the set will receive the benefit of the NAFTA override. See HQ 559421, dated September 16, 1996; HQ 560577, dated August 4, 1997; HQ 560456, dated September 26, 1997; and HQ 560992, dated July 6, 1998. Thus, each item in the four bedding sets qualifies to be marked as country of origin Mexico. As each item in the Bed in a Bag Set, Comforter Set, Mini Comforter Set and Mini Set have been found to be originating and qualify to be marked Mexico, the Bed in a Bag Set, Comforter Set, Mini Comforter Set and Mini Set are entitled to the special “MX” duty rate, provided that all other requirements of the NAFTA are met. You have also inquired as to the correct country of origin marking for these sets. A similar manufacturing scenario was recently addressed in HQ H019439 dated September 5, 2008. That ruling concerned the country of origin marking for bed in a bag sets which contain the same components as the instant “Bed in a Bag” set. In that case the fabric was formed in Pakistan and was cut and sewn in Pakistan to make the comforter shell, pillow shams, bed skirt, pillowcases, flat sheet and fitted sheet. They were shipped to Mexico where the shell was stuffed and sewn closed. The set was then packaged for retail sale. Following the same analysis as in this ruling, that set was also determined to be originating under the NAFTA and qualified to be marked as a good of Mexico by virtue of the NAFTA preference override, Section 102.19(a). Concerning the origin marking, that ruling stated: “Nowhere in 19 C.F.R. §102.19 does it state that the NAFTA preference override is applicable only with respect to the eligibility of merchandise to receive preferential tariff treatment. In fact, section 102.19 serves as the rule of origin where NAFTA preferential tariff treatment is at issue. Thus, by virtue of being incorporated into a set, and thus undergoing a tariff shift, the subject sheets, pillowcases and pillow shams become products of Mexico by application of 19 C.F.R. §102.19, and must be marked accordingly. Indeed, marking these components as products of Pakistan while marking the entire set as a product of Mexico would serve to confuse the ultimate purchaser. We agree with counsel for Revman that if the sheets, pillowcases and pillow shams were imported separately, they would be considered products of Pakistan. However, by virtue of being incorporated into the subject bed-in-a-bag set, the components become products of Mexico by application of 19 C.F.R. §102.19, the terms of which clearly indicate that it applies to the country of origin of certain items, not just to eligibility for favorable tariff treatment under NAFTA. Consequently, the subject sheets, pillowcases and pillow shams are considered to be products of Mexico for both marking and NAFTA preference purposes. See also HQ 562498, dated November 13, 2002; HQ 964960, dated September 4, 2002; and HQ 963904, dated May 30, 2002 (holding that "[b]y virtue of the NAFTA override, each item in the [comforter] set must be marked country of origin Canada in order to receive preferential treatment under NAFTA as claimed").” Following HQ H019439 and by application of 19 C.F.R. §102.19, each bedding item in the instant Bed in a Bag Set, Comforter Set, Mini Comforter Set and Mini Set, when entered as a set under subheading 9404.90, HTSUS, must be marked country of origin Mexico in order to receive preferential treatment under the NAFTA. 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