HQ 0089424 - "Floor Covering Product"; GRI 2(a); Not Carpet and Other Textile Floor Covering of Heading 5703; GRI 3(b); Other Article of Plastic of Heading 3926; Chapter 59, Legal Note 2(a)(3); United States-Canada Free Trade Agreement; Subheading 9802.00.80, U.S. Goods Returned; Paperboard Containers; GRI 5(b); Subheading 9801.00.10. - United States International Trade Commision Rulings

United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org Rulings By Number Rulings By Category Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 1992 HQ Rulings > HQ 0089289 - HQ 0089572 > HQ 0089424

HQ 089424

October 29, 1991

CLA-2 CO:R:C:F 089424 SLR

CATEGORY: CLASSIFICATION

TARIFF NO.: 3926.90.9050

Mr. George M. Keller
Customs Advisory Services, Inc.
1001 Virginia Ave., Suite 211
Atlanta, GA 30354

RE: "Floor Covering Product"; GRI 2(a); Not Carpet and Other Textile Floor Covering of Heading 5703; GRI 3(b); Other Article of Plastic of Heading 3926; Chapter 59, Legal Note 2(a)(3); United States-Canada Free Trade Agreement; Subheading 9802.00.80, U.S. Goods Returned; Paperboard Containers; GRI 5(b); Subheading 9801.00.10.

Dear Mr. Keller:

This is in response to your May 23, 1991 letter requesting the proper classification of what is described as a "floor covering product" under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA). Samples, along with photographs, were forwarded for our examination.

FACTS:

The specific article under consideration is the framework for floor coverings. It consists of a plastic coated textile base of U.S. origin and a plastic nosing (or edging) of Canadian origin. (The nosing may be U.S. sourced in the future.) According to Customs laboratory analysis, the weight of the base fabric is 48 percent woven polyester and 52 percent acrylic plastic material. An examination of the sample forwarded to this office reveals that the textile base is completely embedded in cellular plastics covering both sides of the fabric and the plastic coating can be seen with the naked eye.

The U.S. base material is sent to Canada in rolls measuring approximately 30.5 meters in length, in various widths beginning as narrow as 45 centimeters. In Canada the base material is trimmed to the specific size requirements for the particular floor covering being assembled. Polyvinyl chloride nosing, measuring 6.4 centimeters in width on the underside and 3.8 centimeters in width on its topside, is cut to the appropriate lengths and heated and glued to form the border of the finished product. One or more pieces of the base material
are glued to the framing, and any internal seams in the base fabric are sealed with heat activated tape. The corners are reinforced with heat activated tape as well. The finished framework is placed in a packing tube, the ends of which are sealed by the taping of circular cut-outs extracted from a paperboard sheet. The paperboard tubes and sheets are presently manufactured in Canada but may be U.S. sourced in the future. The framework is then shipped to the U.S. where carpet tiles are placed over the base material to form the finished product.

ISSUES:

I. What is the proper classification of the framework under the HTSUSA?

II. Whether the article qualifies for a reduction in duty under the United States-Canada Free Trade Agreement.

III. Whether the article qualifies for a partial duty exemption under subheading 9802.00.80, HTSUSA.

IV. Whether the packing tubes qualify for the duty exemption under subheading 9801.00.10, HTSUSA.

ISSUE I
FRAMEWORK -- CLASSIFICATION

Classification of merchandise under the HTSUSA is in accordance with the General Rules of Interpretation (GRI's), taken in order. GRI 1 provides that classification is determined according to the terms of the headings and any relative section or chapter notes.

No heading in the Nomenclature provides for carpet framework by name or description. GRI 1, therefore, does not help us resolve the current classification problem. The remaining GRI's must be consulted.

GRI 2(a) indicates that an unfinished product is classifiable under the heading which describes the product as completed as long as the unfinished product has the essential character of the finished article. Of particular relevance here is heading 5703, HTSUSA, which provides for carpet and other textile floor coverings. While the subject article forms the framework for the finished floor coverings, it is the added carpet tiles which provide the product's visual appeal, marketability, and utilitarian quality. Accordingly, we are not persuaded that the framework has the essential character of the final floor covering.

The subject article consists of plastic nosing and a plastic coated textile base, the former classifiable in heading 3920, HTSUSA, which covers other plates, sheets, film, foil and strip, of plastics, noncellular and not reinforced, laminated, supported or similarly combined with other materials; the latter classifiable in heading 3926, HTSUSA, which covers other articles of plastics. [The plastic coated textile base would be classifiable in heading 5903, HTSUSA, (which covers textile fabrics coated with plastics) but for the application of Chapter 59, Legal Note 2(a)(3). Additionally, heading 3921, HTSUSA, (which covers other plates, sheets, and strip, of plastics) is discounted since, by applying the nosing, the base material has been "otherwise worked."] As the framework is made up of two components classifiable under different headings, GRI 3 must be consulted.

GRI 3(a) provides that articles classifiable under two or more headings are to be classified under the heading which provides the most specific description of the goods in question. All headings are regarded as equally specific, however, when each refers to part only of the goods.

Each of the headings in question -- heading 3920 and heading 3926 -- refers to part only of the subject merchandise. As the headings are regarded as equally specific, classification of the framework cannot be determined by application of GRI 3(a). Consequently, we must turn our attention to GRI 3(b).

GRI 3(b) provides that articles made up of different components shall be classified as if they consisted of the component which gives them their essential character. "Essential character" may be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of the constituent material in relation to the use of the goods.

The polyvinyl chloride nosing sets the shape and outline of the imported product. Nonetheless, it is the framework's base material which comprises the bulk and quantity of the product. The base material, therefore, represents the essential character of the imported product, and the product as a whole is classifiable in heading 3926, HTSUSA.

ISSUE II
CFTA STATUS

Under specific circumstances, goods originating in the territory of Canada which enter the territory of the U.S. are entitled to a reduction in duty under the United States-Canada Free Trade Agreement [herinafter "CFTA"]. Articles which are
considered "goods originating in the territory of Canada" under General Note 3(c)(vii)(B), HTSUSA, are those which are "obtained or produced" or "transformed" in "Canada and/or the United States (bold added). Thus, goods made of originating components of both the United States and Canada are considered to be "goods originating in the territory of Canada" for purposes of General

Here, the two components of the framework -- the base material and plastic nosing -- are stated to be of Canadian and U.S. origin. Hence, the framework qualifies as a "good originating from the territory of Canada" and will enjoy a reduction in duty under the CFTA. Please be reminded that all necessary documentation relating to CFTA status must be presented upon entry.

ISSUE III
U.S. GOODS RETURNED

Chapter 98, Subchapter II, HTSUSA, incorporates provisions that apply to articles which are exported and then returned to the United States. Subheading 9802.00.80, HTSUSA, provides a partial duty exemption for:

Articles assembled abroad in whole or in part of fabricated components, the product of the United States, which (a) were exported in condition ready for assembly without further fabrication, (b) have not lost their physical identity in such articles by change in form, shape, or otherwise, and (c) have not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process such as cleaning, lubricating and painting.

All three of the above-mentioned requirements must be satisfied before a component may receive a duty allowance. An article entered under subheading 9802.00.80 is subject to duty upon the full cost or value of the imported assembled article, less the cost or value of the U.S. components assembled therein, upon compliance with the documentary requirements of section 10.24, Customs Regulations (19 CFR 10.24).

According to section 10.16(a), Customs Regulations (19 CFR 10.16(a)), the assembly operations performed abroad may consist of any method used to join or fit together solid components. Gluing is specifically enumerated in this regulation as an acceptable means of assembly. The application of heat activated tape also qualifies as an acceptable assembly operation.

Assembly operations performed abroad may be preceded, accompanied, or followed by operations incidental to the assembly. See 19 CFR 10.16(a). Operations incidental to the assembly process do not constitute further fabrication and shall not preclude the application of the duty exemption. See 19 CFR 10.16(b). Examples of operations which are incidental to the assembly process include: trimming, filing, or cutting off of small amounts of excess materials; and cutting to length of wire, thread, tape, foil and similar products exported in continuous length. See 19 CFR 10.16(b)(4) and (6), respectively.

Once imported into Canada, the U.S. base material is "trimmed" to meet the specifications of a particular order. It appears from the information and samples provided that the "trimming" involves cutting the material to length and width, which is not considered an operation incidental to the assembly process. As cutting to size constitutes further fabrication, no allowances in duty may be made under subheading 9802.00.80, HTSUSA, for the cost or value of the U.S. textile base exported to Canada for assembly.

As for the polyvinyl chloride nosing, if U.S. sourced and exported to Canada for assembly, the cutting to length of that product would constitute an operation incidental to the assembly process. Consequently, the nosing would be eligible for the duty exemption under subheading 9802.00.80, HTSUSA.

IV
PACKING -- TARIFF STATUS

If the tube packing is Canadian sourced, its tariff status will be determined in accordance with GRI 5. GRI 5(b) indicates that:

[P]acking materials and packing containers entered with the goods therein shall be classified with the goods if they are of a kind normally used for the packing such goods. However, this provision does not apply when such packing materials or packing containers are clearly suitable for repetitive use.

Paperboard tubes are normally used in the packing of carpet framework. Moreover, the specific tubes in question are not reusable. Under GRI 5(b), therefore, the tubes are classifiable under the provision which governs the classification of the framework. The value of the each container is considered a part of the value of its contents and is dutiable at the rate of the contents.

If the tube packing is of U.S. origin and is being returned without having been advanced in value or improved in condition while abroad, it is entitled to duty-free treatment under subheading 9801.00.10, HTSUSA, provided the documentary requirements of section 10.1, Customs Regulations (19 CFR 10.1), are met. The act of being filled with its contents is not considered to constitute such an advancement or improvement. See Headquarters Ruling Letter 731806 dated November 18, 1988. The manipulation of the cardboard sheets to form circular cut-outs, however, does constitute an advance in value or improvement in condition. Accordingly, the tube packing, if U.S. sourced, does not qualify for duty free treatment under subheading 9801.00.10.

HOLDING:

The framework is classifiable under subheading 3926.90.9050, HTSUSA, which provides for other articles of plastics and articles of heading 3901 to 3914: other: other: other. The "General" rate of duty is 5.3 percent ad valorem.

The framework is entitled to a reduced rate of duty of 3.7 percent ad valorem under the CFTA. All necessary documentation relevant to CFTA status must be presented upon entry, however.

The nosing, if of U.S. origin, is entitled to the partial duty exemption under subheading 9802.00.80, HTSUSA. Therefore, the 3.7 percent duty rate would be applied against the fully appraised value of the article less the cost or value of the U.S. fabricated components. All necessary documentation under 19 CFR 10.24 must be presented upon entry.

The U.S. plastic coated textile base material is not entitled to the partial duty exemption under subheading 9802.00.80, HTSUSA.

The tube packing, if of Canadian origin, is classifiable with its contents in subheading 3926.90.9050, HTSUSA, pursuant to GRI 5. The value of the each container is considered a part of the value of its contents and is dutiable at the rate of the contents, here 3.7 percent ad valorem.

The tube packing, if of U.S. origin, is not eligible for duty free treatment under subheading 9801.00.10, HTSUSA, and will be dutiable at the rate of its contents.

Sincerely,

John Durant, Director
Commercial Rulings Division

Previous Ruling Next Ruling

See also: