The tariff classification, status under the North American Free Trade Agreement (NAFTA) and country of origin determination for a cushion cover from Mexico; General Note 12(b)(ii)(A); General Note 12(b)(iii); 19 CFR 102.21(c)(2); tariff shift; 19 CFR 102.19(b); NAFTA Preference Override; Article 509

N065304 July 9, 2009 CLA-2-63:OT:RR:NC:TA:349 CATEGORY: Classification TARIFF NO.: 6304.93.0000 Mr. Larry Ordet Sandler, Travis & Rosenberg, P.A. 5200 Blue Lagoon Drive Miami, FL 33126-2022 RE: The tariff classification, status under the North American Free Trade Agreement (NAFTA) and country of origin determination for a cushion cover from Mexico; General Note 12(b)(ii)(A); General Note 12(b)(iii); 19 CFR 102.21(c)(2); tariff shift; 19 CFR 102.19(b); NAFTA Preference Override; Article 509 Dear Mr. Ordet: In your letters dated May 12 and June 1, 2009 you requested a ruling on the status of a cushion cover from Mexico under the NAFTA. This request is made on behalf of Easyway Products Co. The subject merchandise consists of a cushion cover. It is made from 100 percent acrylic woven fabric. The submitted sample is approximately 19 inches square and has a 2 inch wide side gusset. The top and bottom seams contain a corded piping. There is a zippered opening along one end. The opening extends a few inches down each side. Two sets of hook and loop tabs are sewn to the zippered end. After importation a plastic foam and polyester fiber filling will be inserted and the cover will be zippered closed. In your letter this cover is referred to as a shell however, for tariff purposes it is considered a finished cover rather than an unfinished shell. The manufacturing operations for the cushion cover are as follows: NON-NAFTA COUNTRY: -acrylic fiber is extruded and cut. -acrylic staple fibers are shipped to the United States. UNITED STATES: -staple fibers are spun into a yarn. -yarns are woven into a fabric. -fabric is shipped to Mexico. MEXICO: -fabric is cut to size. -components are sewn forming the cushion cover. The sewing thread and zippers may or may not be originating materials. The applicable tariff provision for the cushion cover will be 6304.93.0000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for other furnishing articles, excluding those of heading 9404: other: not knitted or crocheted, of synthetic fibers. The general rate of duty will be 9.3 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 cushion cover undergoes processing operations in the United States and Mexico which are countries provided for under the North American Free Trade Agreement. The cushion cover 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 6304, HTSUS, the appropriate subdivision (t), Chapter 63 rule states that: A change to headings 6304 through 6310 from any other chapter, except from headings 5106 through 5113, 5204 through 5212, 5307 through 5308 or 5310 through 5311, chapters 54 through 55, or headings 5801 through 5802 or 6001 through 6002, provided that the good is both cut (or knit to shape) and sewn or otherwise assembled in the territory of one of more of the NAFTA parties. When the acrylic staple fibers leave the non-NAFTA country they are classified in subheading 5503.30, HTSUS. As products of chapter 55, HTSUS, are excepted from meeting the tariff change to heading 6304, HTSUS, it would initially appear that the non-originating material does not undergo the requisite change in tariff classification. It is noted however, that the non-originating staple fibers 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. In the case where the sewing thread and zippers are non-originating, the cushion cover would qualify for the NAFTA preference following General Note 12(b)(ii)(A), HTSUS. Subdivision (t), Chapter rule 1 for Chapter 63 states that the rule applicable to the good shall only apply to the component that determines the tariff classification, in this case, the acrylic fabric that has been determined to be an originating material. The sewing thread and zipper therefore do not need to meet the change in tariff classification rule, notwithstanding the fact that the zipper would make the shift and the thread would probably be de minimis. In the case where the sewing thread and zipper are originating goods, the cushion cover is made exclusively from originating materials and following General Note 12(b)(iii), HTSUS, qualifies for the NAFTA preference. Accordingly, in either case the cushion cover will be entitled to the special "MX" rate of duty if it qualifies 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 6301-6306 Except for goods of heading 6302 through 6304 provided for in paragraph (e)(2) of this section, the country of origin of a good classifiable under heading 6301 through 6306 is the country, territory, or insular possession in which the fabric comprising the good was formed by a fabric-making process. Subheading 6304.93 is included in the paragraph (e)(2) exception to the above tariff shift rule. Paragraph (e)(2)(i) is not applicable as the fabric comprising the cushion cover is not dyed and printed. Paragraph (e)(2)(ii) states that "If the country of origin cannot be determined under (i) above, except for goods of HTSUS subheading 6117.10 that are knit to shape or consist of two or more component parts, the country of origin is the country, territory, or insular possession in which the fabric comprising the good was formed by a fabric-making process." The fabric comprising the cushion cover was formed in a single country. As per the terms of the tariff shift requirement, country of origin of the cushion cover is conferred in the United States. However, the cushion cover qualifies 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 cushion cover is an originating good under NAFTA and has been determined under section 102.21(c)(2) 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 cushion covers, the country of origin of the cushion cover for Customs duty purposes is Mexico, pursuant to Section 102.19(b). Accordingly, the “MX” NAFTA rate of FREE will be applicable to the cushion cover. 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