The tariff classification, status under the North American Free Trade Agreement (NAFTA), and country of origin determination for a three-layer laminated fabric from Mexico; 19 CFR 102.21(c)(2); tariff shift; Article 509.

N271009 December 31, 2015 CLA-2-60:OT:RR:NC:N3:352 CATEGORY: Classification TARIFF NO.: 6001.22.0000 Ms. Karia Herrera R.L. Jones Customhouse Brokers, Inc. 8830 Siempre Viva Road, Suite 100 San Diego, CA 92154 RE: The tariff classification, status under the North American Free Trade Agreement (NAFTA), and country of origin determination for a three-layer laminated fabric from Mexico; 19 CFR 102.21(c)(2); tariff shift; Article 509. Dear Ms. Herrera: In your letter dated November 18, 2015, on behalf of DELA Laminating Solutions, you requested a ruling on classification, status under the North American Free Trade Agreement and the country of origin for a three-layer laminated fabric consisting of a knit nylon fabric, a cellular polyurethane middle layer and a knit polyester warp knit fleece fabric. FACTS: The subject fabric is identified by two Part Numbers 5102185 and 5102187. According to your submission, the two fabrics are said to be identical, the only difference being the color of the fabrics: Part #5102185 has a white top layer and a black bottom layer; Part #5102187 has a white top layer and a white bottom layer. Each of the subject fabrics is composed of three distinct layers. The top layer, Style #30699, is a 100% nylon knit fabric. The middle layer consists of cellular polyurethane sheet. The bottom layer, Style #P-WKF-4850, is a 100% polyester warp knit fleece fabric. Knit fleece is a looped pile fabric. Your correspondence indicates that these laminated fabrics will be used in the automotive, medical, safety equipment industries. The manufacturing operations are as follows: Nylon yarn is made in Korea. Nylon fabric, Style #30699, is knitted in the United States, then shipped to Mexico. Cellular polyurethane is produced in the U.S., then shipped to Mexico in large solid cylinder blocks weighing 72 pounds and measuring 62” in width by 39” in diameter. In Mexico, the blocks are cut into sheets prior to the lamination process. Polyester yarns are made in the U.S. and Taiwan. Polyester warp knit fleece fabric, Style# P-WKF-4850, is knitted in the U.S., then shipped to Mexico. In Mexico, Part Numbers 5102185 and 5102187 are made through a lamination process, bonding the fabrics to the cellular polyurethane sheet through heat and pressure, sandwiching the polyurethane sheet between the two fabric layers. The result is a single flexible laminated fabric. ISSUE: What is the classification, status under the North American Free Trade Agreement (NAFTA), and country of origin of the subject merchandise? CLASSIFICATION: Note 1(c) to Chapter 60, Harmonized Tariff Schedule of the United States (HTSUS), states that this chapter does not cover: “Knitted or crocheted fabrics, impregnated, coated, covered or laminated, of Chapter 59. However, knitted or crocheted pile fabrics, impregnated, coated, covered or laminated, remain classified in heading 6001…” Since the instant fabric is a laminated fabric incorporating a knit pile fabric, Note 1(c) to Chapter 60 specifically includes it within the scope of heading 6001. The applicable subheading for the laminated fabric, Part Numbers 5102185 and 5102187, will be 6001.22.0000, HTSUS, which provides for pile fabrics, including "long pile" and terry fabrics, knitted or crocheted, looped pile fabrics, of man-made fibers. The duty rate will be 17.2 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/. NAFTA - LAW AND ANALYSIS: 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; Subsection (i) does not apply as the goods are not wholly obtained or produced entirely in a NAFTA territory. Therefore, subsection (ii) is considered. The tariff classification change requirements described in subdivisions (r), (s), and (t), or “the NAFTA tariff shift rule” for heading 6001 states: A change to headings 6001 through 6006 from any other chapter, except from headings 5106 through 5113, chapter 52, headings 5307 through 5308, or 5310 through 5311, or chapters 54 through 55. The laminated fabric is made from two fabrics of Chapter 60 and cellular polyurethane sheet of heading 3920. The various yarns, from Korea, Taiwan and the U.S., are knitted into fabric and then laminated with the cellular polyurethane layer, resulting in a laminated fabric classified in heading 6001. Based on the facts provided, since the yarns originating in the non-NAFTA countries Korea and Taiwan are classified in Chapter 54, one of the exclusions listed in the above rule for heading 6001, the yarns do not make the required tariff shift, and so the finished laminated fabric does not qualify for preferential treatment under the NAFTA as it does not meet the requirements of HTSUS General Note 12(b)(ii)(A). The goods will therefore not be entitled to a Free rate of duty under the NAFTA. COUNTRY OF ORIGIN - LAW AND ANALYSIS: Section 334 of the Uruguay Round Agreements Act (“URAA”, 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, “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, “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, 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: (2) If the country of origin cannot be determined under paragraph (1) of this entry, a change to heading 6001 through 6006 from any heading outside that group, provided that the change is the result of a fabric- making process. Section 102.21(b)(2) of the Customs Regulations defines the meaning of a "fabric-making" process for the purposes of the determination of the country of origin of imported textile and apparel products for purposes of Customs laws and the administration of quantitative restrictions. This section states: (2) Fabric-making process. A fabric-making process is any manufacturing operation that begins with polymers, fibers, filaments (including strips), yarns, twine, cordage, rope, or fabric strips and results in a textile fabric. In the case before us for consideration the only country where a fabric-making process occurs is in the U.S, where the knit fabrics are formed. Since the knit fabrics are formed by a fabric-making process in a single country, that is, the U.S., as per the terms of the tariff shift requirement and/or other requirements specified in paragraph (e), the country of origin would be conferred in the U.S. However, the NAFTA Preference Override set forth in 19 C.F.R. §102.19 is applicable to the subject merchandise. Specifically, 19 C.F.R. §102.19(b) states: 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. In this case, the last NAFTA country in which the good was advanced in value or improved in condition before its return to the United States is Mexico. Therefore, the country of origin of this laminated fabric is Mexico. HOLDING: The applicable subheading for this laminated fabric, Part Numbers 5102185 and 5102187, will be 6001.22.0000, HTSUS, which provides for pile fabrics, including "long pile" and terry fabrics, knitted or crocheted, looped pile fabrics, of man-made fibers. The duty rate will be 17.2 percent ad valorem. The merchandise does not qualify for preferential treatment under the NAFTA because the requirements for originating status under the NAFTA are not met. The country of origin is Mexico. The holding set forth above applies only to the specific factual situation and merchandise identified in the ruling request. This position is clearly set forth in section 19 CFR 181.100(a)(2). This section states that “a ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect.” This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 C.F.R. 181). Should it be subsequently determined that the information furnished is not complete and does not comply with 181.100(a)(2), the ruling will be subject to modification or revocation. In the event there is a change in the facts previously furnished, this may affect the determination of country of origin. Accordingly, if there is any change in the facts submitted to Customs, it is recommended that a new ruling request be submitted. 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 Maribeth Dunajski at maribeth.dunajski@cbp.dhs.gov. 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, 90 K St., NE – 10thth Floor, Washington, D.C. 20229-1177. Sincerely, Gwenn Klein Kirschner Director National Commodity Specialist Division