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; Article 509

N122644 September 24, 2010 CLA-2-94:OT:RR:NC:TA:349 CATEGORY: Classification TARIFF NO.: 9404.90.8522 Mr. Stephen M. Zelman Stephen M. Zelman & Associates 888 Seventh Avenue, Suite 4500 New York, NY 10106 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; Article 509 Dear Mr. Zelman: In your letter dated August 30, 2010 you requested a ruling on the country of origin, marking and the status of three bedding sets from Mexico under the NAFTA. This request is made on behalf of Textiles from Europe, Inc. dba Victoria Classics. The merchandise consists of three bedding sets. Samples were not submitted. The first set, referred to as “Infinity,” will contain a comforter, bed skirt and two pillow shams. The second set, “Carlyle,” contains a comforter, two pillow shams, bed skirt, two decorative pillows and one neck roll pillow. A comforter, two pillow shams, bed skirt, breakfast pillow, square pillow and a neck roll pillow make up the “Durango” set. All sets are stated to be made from a 100 percent polyester woven fabric. The fabric may be printed or dyed. 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. All of the pillows will be stuffed with a polyester fill. The pillow shams in the Infinity set contain an interior layer of polyester batting. Each set will be packed together for retail sale in a zippered plastic bag with a cardboard insert. The manufacturing operations for the bedding sets are stated to be as follows: CHINA: -polyester fabrics are woven. -polyester fill is created. -fabric is printed or dyed and finished. -fabric is cut to size and shape. -components are sewn on 3 sides creating the comforter shell. -components are sewn creating the finished shams, bed skirts -components are sewn to form the various pillow shells. -pillow shells are stuffed and finished. -comforter shells, shams, bed skirts and pillows are shipped to Mexico. MEXICO: -polyester batting fabric is formed. -batting is cut to size and stuffed into the comforter shell. -comforter is sewn closed and quilted. -comforter, shams, bed skirt, and pillows are packed for retail sale in the appropriate quantities creating the Infinity, Carlyle and Durango bedding sets. -the sets are shipped. 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 9404.90.85 as articles of bedding and similar furnishing that are stuffed or fitted. The pillows are classifiable in subheading 9404.90.20 as pillows, cushions and similar furnishings; 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 or stuffed or fitted bedding in subheading 9404.90.95. 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 Infinity, Carlyle and Durango bedding sets 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. The applicable subheading for the three 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 and pillows 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 three 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 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 and pillows are finished products when they leave China and are imported into Mexico. The bed skirts are classifiable under heading 6303, HTSUS, the pillow shams in the Carlyle and Durango sets are classifiable under heading 6304, HTSUS, while the pillow shams with a layer of batting in the Infinity set are classified under subheading 9404.90, HTSUS. The various pillows in the Carlyle and Durango sets are classifiable under subheading 9404.90, HTSUS. As the Carlyle and Durango pillow shams and all of the bed skirts fall in headings that are not excepted by subdivision (t), each of these items undergoes the requisite change in tariff classification and they qualify for NAFTA preference. However, the pillow shams in the Infinity set and the pillows in the Carlyle and Durango sets are classified in subheading 9404.90, HTSUS. As they are within the same chapter they do not undergo the requisite change in tariff classification. Accordingly, as all of the components of each bedding set are not eligible, the Infinity, Carlyle and Durango sets and do not qualify for the NAFTA preference. 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." As the bed skirts, pillow shams and pillows were wholly obtained or produced in a single country, that is, China, the country of origin of those products is conferred in China. 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. Subheading 9404.90.85 is included in the paragraph (e)(2) exception to the above tariff shift rule. Paragraph (e)(2)(i) is not applicable as the fabrics comprising the comforter are not dyed and printed. Paragraph (e)(2)(ii) states that "If the country of origin cannot be determined under paragraph (e)(2)(i) of this section, 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." 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 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. As a single country of origin for all of the components in the sets has been determined to be China, the country of origin for the three bedding sets is China. You have also inquired as to the marking of the bedding sets, suggesting that the marking of the cardboard insert with “Made in Mexico” is sufficient and that each item in the sets need not be individually marked. The inserts will also contain information on fiber content, number and types of components and care instructions. You have not indicated whether or not there is any labeling, marking or otherwise, on the individual items. 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 134.41(b), Customs Regulations (19 CFR 134.41(b)), mandates that the ultimate purchaser in the U.S. must be able to find the marking easily and read it without strain. Section 134.1(d), defines the ultimate purchaser as generally the last person in the U.S. who will receive the article in the form in which it was imported. If an imported article is to be sold at retail in its imported form, the purchaser at retail is the ultimate purchaser. In this case, the ultimate purchaser of the bedding sets is the consumer who purchases the product at retail. As noted above, the proper country of origin marking for the items in these sets is “Made in China” not Mexico. These sets are imported in an unsealed, easily opened zippered plastic bag. They also contain the type of product that the consumer normally expects to find individually labeled. The proposed marking of the cardboard inserts is therefore not acceptable country of origin marking for the bedding sets. It is our opinion that each item in the sets must be marked with the country of origin. Please note that separate Federal Trade Commission marking requirements exist regarding country of origin, fiber content, and other information that must appear on many textile items. There are specific rules under the Textile Fiber Products Identification Act concerning the location of the labeling of products contained in packages. You should contact the Federal Trade Commission, Division of Enforcement, 6th and Pennsylvania Avenue, N.W., Washington, D.C., 20580, for information on the applicability of these requirements to the sets. 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. Should you wish to request an administrative review of this ruling, submit a copy of this ruling and all relevant facts and arguments within 30 days of the date of this letter, to the Director, Commercial Rulings Division, Headquarters, U.S. Customs and Border Protection, Regulations & Rulings, 799 9th Street N.W. - 7th floor, Washington, DC 20229-1177. Sincerely, Robert B. Swierupski Director National Commodity Specialist Division