The tariff classification and status under the United States-Bahrain Free Trade Agreement (BFTA), of a pillow shell from Bahrain.

N234432 November 8, 2012 CLA-2-63:OT:RR:NC:N3:349 CATEGORY: Classification TARIFF NO.: 6307.90.8945; 9914.99.20 Margaret Polito, Attorney at Law 222 Riverside Drive, Suite 14E New York, NY 10025 RE: The tariff classification and status under the United States-Bahrain Free Trade Agreement (BFTA), of a pillow shell from Bahrain. Dear Ms. Polito: In your letter dated October 15, 2012 you requested a ruling on the status of a pillow shell from Bahrain under the BFTA. This request is made on behalf of WestPoint Home LLC. The submitted pillow shell is made from 100 percent cotton woven fabric. It measures approximately 18 x 10 inches. Two rectangular pieces of fabric are sewn together along three sides with the fourth side left open. The face panel has a 5-inch wide band of embroidery across the center. After importation a pillow form will be inserted into the shell and the fourth side will be sewn closed. You have proposed two manufacturing scenarios. In the first scenario, cotton fibers are imported into Bahrain from an unspecified country. The fibers are spun into a yarn and the yarn is then woven into a fabric in Bahrain. The fabric is cut into the rectangular face and back panels. A design is created on the face panel using embroidery yarn that is produced in Sri Lanka. The polyester embroidery yarn accounts for 30 percent of the weight of the finished shell. The face and back panels are sewn on three sides creating the pillow shell. The shell is packaged and shipped directly to the United States. For the second scenario, cotton fibers are spun into a yarn in a country other than Bahrain. The yarns are shipped to Bahrain where they are woven into a fabric. From this point forward the second production scenario is identical to the first scenario. The applicable tariff provision for the pillow shell will be 6307.90.8945, Harmonized Tariff Schedule of the United States (HTSUS), which provides for other made up articles, including dress patterns: other: other: surgical towels; cotton towels of pile or tufted construction: pillow shells, of cotton; shells for quilts, eiderdowns, comforters and similar articles of cotton… pillow shells, of cotton. The general rate of duty will be 7 percent ad valorem. General Note 30, HTSUS, sets forth the criteria for determining whether a good is originating under the BFTA. General Note 30(b), HTSUS, (19 U.S.C. § 1202) states, in pertinent part, that For the purposes of this note, subject to the provisions of subdivisions (c), (d), (e), (g) and (h) thereof, a good imported into the United States is eligible for treatment as an originating good of a UBFTA country under the terms of this note only if – (i) the good is a good wholly the growth, product or manufacture of Bahrain or of the United States, or both; (ii) for goods not covered by subdivision (b)(iii) below, the good is a new or different article of commerce that has been grown, produced or manufactured in the territory of Bahrain or of the United States, or both, and the sum of— (A) the value of each material produced in the territory of Bahrain or of the United States, or both, and (B) the direct costs of processing operations performed in the territory of Bahrain or of the United States, or both, is not less than 35 percent of the appraised value of the good at the time the good is entered into the territory of the United States; or (iii) the good falls in a heading or subheading covered by a provision set forth subdivision (h) of this note and— (A) each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in such subdivision (h) as a result of production occurring entirely in the territory of Bahrain or of the United States, or both; or (B) the good otherwise satisfies the requirements specified in such subdivision (h); and is imported directly into the territory of the United States from the territory of Bahrain and meets all other applicable requirements of this note. For purposes of this note, the term “good” means any merchandise, product, article or material. The pillow shell at issue will be eligible for the BFTA preferential treatment if it is transformed in Bahrain so that the non-originating materials undergo a change in tariff classification described in subdivision (h) to General Note 30, HTSUS. For heading 6307, HTSUS, the appropriate subdivision (h) change in tariff classification rule requires: A change to headings 6304 through 6308 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 cut or knit to shape, or both, and sewn or otherwise assembled in the territory of Bahrain or of the United States, or both. In addition to the above heading rule, subdivision (h) to General Note 30, HTSUS, provides a Chapter rule for Chapter 63. That rule states: 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. The non-originating materials imported into Bahrain for the first scenario are the cotton fibers and polyester embroidery yarn. The cotton fibers meet the requirements of the change in tariff classification rule while the polyester yarn does not. However, per the Chapter rule only the component that determines the tariff classification needs to satisfy the tariff change requirements. The cotton shell is the component that determines the tariff classification and the non-originating cotton fibers satisfy the tariff change requirement. Based on the facts provided, the pillow shell created in the first production scenario described above qualifies for BFTA preferential treatment, because it will meet the requirements of HTSUS General Note 30 (b)(iii)(A). The good will therefore be entitled to a Free rate of duty under the BFTA upon compliance with all applicable laws, regulations, and agreements. The non-originating materials imported into Bahrain for the second scenario are the cotton yarns and polyester embroidery yarns. These materials do not meet the requirements of the change in tariff classification rule and the pillow shell made following the second production scenario does not qualify for BFTA preferential treatment under General Note 30, HTSUS. However, this pillow shell may be subject to a reduced rate of duty based upon the Tariff Preference Levels (TPL) established in subheading 9914.99.20, HTSUS, up to the specified annual quantities. Subheading 9914.99.20, HTSUS, provides duty free status specifically for “Imports from Bahrain, in an aggregate quantity not to exceed an annual total quantity of 65 million SME, of goods described in U.S. note 13 to this subchapter.” U.S. Note 13 to Subchapter XIV of Chapter 99 states in part: The “Free” rate of duty for heading 9914.99.20 in the "Special" subcolumn of rates of duty column 1 followed by the symbol "(BH)" shall apply to imports from Bahrain, in an aggregate quantity for the period from August 1, 2006 through December 31, 2006, inclusive, not to exceed a total quantity of 27,083,333 million square meters equivalent (SME), and in an aggregate quantity for each calendar year from 2007 through 2015, inclusive, not to exceed a total quantity of 65 million SME, of: (d) cotton or man-made fiber made-up goods provided for in chapter 63 of the tariff schedule that are cut or knit to shape, or both, and sewn or otherwise assembled in the territory of Bahrain from fabric wholly formed in Bahrain or the United States from yarn produced or obtained outside the territory of Bahrain or the United States. The pillow shell in the second scenario meets the requirements of Note 13(d) as it is provided for in chapter 63, is cut to shape and sewn in the territory of Bahrain from fabric formed in Bahrain from yarn produced outside the territory of Bahrain. Upon completion of the required documentation and up to the specified annual quantities and within the specified time period, the pillow shell in the second production scenario will be eligible for the preferential rate of Free under subheading 9914.99.20, HTSUS. 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/. 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 John Hansen at (646) 733-3043. Sincerely, Thomas J. Russo Director National Commodity Specialist Division