The tariff classification and country of origin marking of textile upholstery cover kits from China.

N101033 May 6, 2010 CLA-2-94:OT:RR:NC:N4:433 CATEGORY: Classification TARIFF NO.: 9401.90.5020 Brett Ian Harris Pisani & Roll LLP Attorneys at Law 1629 K Street NW, Suite 300 Washington, DC 20006 RE: The tariff classification and country of origin marking of textile upholstery cover kits from China. Dear Mr. Harris: In your letter dated April 9, 2010, on behalf of Global Textile Alliance, Inc., you requested a tariff classification ruling. As requested, the sample upholstery cover kit submitted will be returned to you. A sample has been provided of a “textile upholstery cover kit” in its condition as imported. Each kit contains all of the fabric components necessary to manufacture the covering for one particular piece of upholstered furniture. Various kits will be imported for use in the manufacture of sofas, loveseats, chairs and ottomans The manufacturing process for this item has been described in detail: (1) In China, Chinese-origin fabric is delivered to a factory, where it is laid out on large tables in strips approximately 20 meters long and stacked. Patterns are then placed on top of the stacked fabric representing all of the cover parts of a given piece of furniture – i.e., the back cushion, seat cushion, back panel, etc. A jig-saw knife is then used to cut the stacked fabric into the pattern shapes. The pre-cut pieces are then taken to a sewing room where they are partially sewn together to make a cover that can be upholstered to a wooden frame. After sewing the textile they are packed and shipped to the United States. (2) Following importation into the United States, Global Textile Alliance sells the upholstery cover kits to unrelated domestic furniture manufacturers for assembly into completed upholstered furniture. The fabric cover kits are pulled over the wooden frame, where springs, foam and padding are added, in the manufacture of the upholstered furniture pieces. While each frame may have several cover kits that fit it to provide a variety of fabric choices to the consumer, a kit that fits one frame will not fit another because the dimensions of the components are specific to the frame. New York Ruling, N017962 dated October 11, 2007, for Ashley Furniture Industries, classified upholstered kit covers for sofas in subheading 9401.90, Harmonized Tariff Schedule of the United States (HTSUS) – the provision for parts of seats. In pertinent part: the Explanatory Notes (ENs) to the HTSUS, Chapter 94, Parts, states that this Chapter only covers parts, whether or not in the rough, of the goods of headings 9401 to 9403, when identifiable by their shape or other specific features as parts designed solely or principally for an article of those headings. Upon examination of the process description for the kits as detailed in your position paper and the sample of the textile upholstery cover kit, these kits with their components are identifiable by their size and shape as parts of seats, thereby classifying them in Subheading 9401.90, HTSUS. The applicable subheading for the textile upholstery cover kits, will be 9401.90.5020, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Seats (other than those of heading 9402) whether or not convertible into beds, and parts thereof: Parts: Other: Other; Of textile material, cut to shape." The rate of duty will be free. 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/. The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides 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 a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. Part 134, Customs Regulations (19 CFR part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.35, Customs Regulations (19 CFR 134.35), states that the manufacturer or processor in the U.S. who converts or combines the imported articles into articles having a new name, character or use will be considered the ultimate purchaser of the imported article within the scope of 19 U.S.C. 1304 and the article will be excepted from marking. The outermost containers of the imported articles shall be marked, however the new articles resulting from the United States processing or manufacturing are excepted from country of origin marking requirements. Section 134.1(b) defines "country of origin" as: the 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 Part 134 of the 19CFR. A substantial transformation occurs when articles lose their identity and become new articles having a new name, character, or use. United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 at 270 (1940); Koru North America v. United States, 12 CIT 1120, 701 F.Supp. 229 (1988). The question of when a substantial transformation occurs for marking purposes is a question of fact based upon the totality of the circumstances to be determined on a case-by-case basis. Uniroyal Inc. v. United States, 3 CIT 220, 542 F.Supp. 1026 (1982), aff'd, 1 Fed. Cir. 21, 702 F.2d 1022 (1983). In determining whether the combining of “parts or materials” constitutes a substantial transformation, the issue is the extent of operations performed and whether the parts lose their identity and become an integral part of the new article. Belcrest Linens v. United States, 6 CIT 204, 573 F.Supp. 1149 (1983), aff'd, 2 Fed. Cir. 105, 741 F.2d 1368 (1984). The Court in Carlson Furniture Industries v. United States, 65 Cust. CT 474 (1970), dealt with the issue of substantial transformation of finished and unfinished chair parts. The Court found that after importation the importer assembles, fits and glues the wooden parts together, steel pins the key joints, cuts to length and levels the legs, and in some instances, upholsters the chair and fits the legs with glides and casters. The Court determined that the imported articles required the importer to perform additional work on them and material would have to be added to them to create a functional article of commerce and that more than the mere assembly of parts together was required. See New York Ruling, N072855 dated September 3, 2009. Accordingly, the Court concluded, that the imported finished and unfinished chair parts assembled in the United States into finished chairs were substantially transformed. Under the conditions set forth in the process description of the position paper, it is unclear whether the wood frames with their springs, foam and padding are of United States or foreign origin. We find that a substantial transformation would occur in the United States of the textile upholstery cover kits used in the manufacture of completed seats, when foreign fabric that is cut to size and shape, is sewn onto United States manufactured wood frames containing their springs, foam and padding; in this case the completed sofas, loveseats, chairs and ottomans would be of United States origin. However, no substantial transformation would occur of the textile upholstery cover kits used in the manufacture of completed seats, when foreign fabric that is cut to size and shape, is sewn onto foreign wood frames containing their springs, foam and padding; in this case simple assembly while in the United States would not transform the foreign made loveseats, chairs and ottomans into furniture pieces of U.S. origin – see “Scenario E” of ruling N07285. With respect to the adding of foreign cut to size and shape fabric to frames having their springs, foam and padding manufactured in the United States, we are of the opinion, in accordance with 19 CFR 132(d) and 134.35, that the marking of the outmost container or box with country of origin China will reasonably indicate the country of origin to the ultimate purchaser, which in this case is the United States manufacturer of the completed furniture pieces. This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177). 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 Neil H. Levy at (646) 733-3036. Sincerely, Robert B. Swierupski Director National Commodity Specialist Division