The tariff classification, country of origin and status under the North American Free Trade Agreement (NAFTA) of cut warp knit lace-like fabric and trimmings from Mexico, Article 509

N300545 October 12, 2018 CLA-2-63:OT:RR:NC:N3:351 CATEGORY: Classification TARIFF NO.: 6307.90.9889 Ms. Maria Guadalupe Martinez Herrera Grupo Acytex, S.A. de C.V. Avenida Ferrocarril #190 Colonia Moctezuma 2da Sección, C.P. 15530 Ciudad de México, Delegación Venustiano Carranza Mexico RE: The tariff classification, country of origin and status under the North American Free Trade Agreement (NAFTA) of cut warp knit lace-like fabric and trimmings from Mexico, Article 509 Dear Ms. Martinez Herrera: In your letter dated September 4, 2018, you requested a ruling on behalf of your client, Hobby Lobby. Samples of fabrics, cut fabric and finished trimmings will be retained.FACTS: You submitted representative samples of finished products, put up on spools that are imported in lengths of 2 or 3 yards and widths of 7/8, 1 ½, 2.5 and 3 ½ inches. You also submitted warp knit fabric samples, composed of synthetic fibers (either 100 percent polyester or 100 percent nylon) that represent the manufacturing stages of production: from greige fabric to finished fabric to article. All the products are to be used for the application in apparel and handicrafts. Sample EPX1XHL, made from fabric 3XEN001, is a ruffled trim composed of 100 percent nylon. It is cut into strips of the desired width, ruffled by sewing a separate piece of fabric along one side, creating a finished rolled edge. The finished ruffled time is put up on a 3-yard cardboard spool. Sample EPX2XHL, made from fabric 3XEN002, is a ruffled lace composed of 100 percent nylon. It is cut into strips of the desired width, ruffled by sewing a separate piece of fabric along one side, creating a finished rolled edge. The finished ruffled lace is put up on a 2-yard cardboard spool. Sample EPX3XHL, made from fabric 3XEN003, is a ruffled trim composed of 100 percent nylon. It is cut into strips of the desired width, ruffled by sewing a separate piece of fabric along one side, creating a finished rolled edge. The finished ruffled lace is put up on a 3-yard cardboard spool. Sample EPX4XHL, made from fabric 3XEN004, is a ruffled trim composed of 100 percent nylon. It is cut into strips of the desired width, ruffled by sewing a separate piece of fabric along one side, creating a finished rolled edge. The finished ruffled lace is put up on a 2-yard cardboard spool. Sample 2190XHL, made from fabric 3X2190X, composed of 100 percent polyester. The edges of the fabric have been cut to create a decorative scalloped edge. The finished fabric is cut in 9 yard lengths and put up on a cardboard bolt. CLASSIFICATION: Classification of merchandise under the HTSUS is in accordance with the General Rules of Interpretation (GRIs), 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. All submitted items are finished by sewing and/or cutting and all are considered to be “made up” as that term is defined in Note 7 to Section XI, Harmonized Tariff Schedule of the United States (HTSUS). Heading 6307 provides for other made up articles. The Explanatory Notes (ENs), states that, “The heading covers made up articles of any textile material which are not included more specifically in other headings of Section XI or elsewhere in the Nomenclature. The applicable tariff provision for the submitted samples will be 6307.90.9889, HTSUS, which provides for other made up textile articles, other. The rate of duty will be 7 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 the World Wide Web at https://hts.usitc.gov/current. NAFTA - LAW AND ANALYSIS: You state that the manufacturing operations for the products are as follows: For the ruffled trim, greige fabrics EPX1XHL, EPX2XHL, EPX3XHL and EPX4XHL all are knitted with 100 percent nylon fibers in China and then imported into Mexico. The fabric is inspected for defects, dyed, and thermo-set for desired stiffness. Once that fabric meets quality control, it is cut into strips, sewn along one edge creating the ruffled lace trim. The final product is measured to the required yardage, put up on bolts and packaged in a polyethylene bag for shipment. Greige fabric 2190XHL is knitted with 100 percent polyester fibers in India and then imported into Mexico. The fabric is inspected for defects, dyed, and thermo-set for desired stiffness. Once that fabric meets quality control, it is cut to eliminate damages and defects. The edges of the fabric are cut again creating a decorative scalloped edge. The final product is measured to the required yardage, put up on spools and packaged in a polyethylene bag for shipment. 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, thatFor 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; or (iv) they are produced entirely in the territory of Canada, Mexico and/or the United States but one or more of the nonoriginating materials falling under provisions for “parts” and used in the production of such goods does not undergo a change in tariff classification because-- (A) the goods were imported into the territory of Canada, Mexico and/or the United States in unassembled or disassembled form but were classified as assembled goods pursuant to general rule of interpretation 2(a), or (B) the tariff headings for such goods provide for and specifically describe both the goods themselves and their parts and is not further divided into subheadings, or the subheadings for such goods provide for and specifically describe both the goods themselves and their parts,     provided that such goods do not fall under chapters 61 through 63, inclusive, of the tariff schedule, and provided further that the regional value content of such goods, determined in accordance with subdivision (c) of this note, is not less than 60 percent where the transaction value method is used, or is not less than 50 percent where the net cost method is used, and such goods satisfy all other applicable provisions of this note.For goods classified in heading 6307, General Note 12/63.4 requires:    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 6006, provided that the good is both cut (or knit to shape) and sewn or otherwise assembled in the territory of one or more of the NAFTA parties.Chapter 63:Chapter rule 1: 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 component that determines the classification of the goods for all over lace and ruffled lace is the warp knit fabrics composed of 100 percent synthetic fibers classified under heading 6005, HTSUS. All fabrics are said to be formed in China and India, imported on rolls into Mexico, where the fabrics are inspected, dyed, finished, cut, sewn into the finished product and packaged for shipping. Based on the facts provided, the items described above do not qualify for NAFTA preferential treatment, because the fabric imported into Mexico would be classified in heading 6005, and therefore does not meet the requirements of HTSUS General Note 12(t) 63.4. COUNTRY OF ORIGIN - LAW AND ANALYSIS: 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, “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:  6307.90 The country of origin of a good classifiable under subheading 6307.90 is the country, territory, or insular possession in which the fabric comprising the good was formed by a fabric-making process.  The synthetic warp knit fabrics used to make the ruffled trim of EPXIXHL, EPX2XHL, EPX3XHL and EPX4XHL, were formed in China and the warp knit fabric used to make 2190XHL was formed in India and do not meet the tariff shift requirement of 19 C.F.R. 102.21. The country of origin for EPXIXHL, EPX2XHL, EPX3XHL and EPX4XHL is conferred in China; therefore the goods should be marked “Made in China.” The country of origin for 2190XHL is conferred in India; therefore the goods should be marked “Made in India.” 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 Adleasia Lonesome via email at adleasia.a.lonesome@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division