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HQ 559186




August 31, 1995

CLA-2 R:C:S 559186 MLR

CATEGORY: MARKING

Mr. Philip Freeman
Cain Customs Brokers
Progreso International Bridge
P.O. Box 10
Progreso, TX 78579

RE: Vinyl-foam inner soles for footwear; vinyl-back polyurethane foam; polyurethane cups; cutting; gluing; Classification; Country of origin marking; NAFTA; Article 509; Mexico

Dear Mr. Freeman:

This is in reference to your letter of April 25, 1995, requesting a ruling on behalf of Cortes Del Bravo, Inc., concerning the tariff classification, country of origin marking, and eligibility for preferential duty treatment under the North American Free Trade Agreement (NAFTA) for vinyl-foam inner soles for footwear. A sample was submitted with your request.

FACTS:

The sample submitted is described as an inner sole for footwear. It is stated that the materials of the inner soles consist of vinyl-backed polyurethane foam and polyurethane "cups," both of which are made in the U.S. The materials are shipped to Mexico where the sheets of the vinyl-backed foam are cut to the shape of the inner soles and the polyurethane cups which cover the heel to the arch part of the inner sole are glued to the vinyl-backed foam to complete the inner soles. A gold "Nunn Bush Lites" logo will be stamped on the inner soles in Mexico. It is noted that there is a textile fabric backing embedded in the insole between the vinyl and the foam.

ISSUES:

I. What is the tariff classification of the vinyl-foam inner soles?

II. Whether the vinyl-foam inner soles qualify for preferential duty treatment under the NAFTA.

III. What are the country of origin marking requirements of the vinyl-foam inner soles?

LAW AND ANALYSIS:

I. Tariff classification

Classification of goods under the Harmonized Tariff Schedule of the United States (HTSUS) is governed by the General Rules of Interpretation (GRI's). GRI 1 provides that "classification shall be determined according to the terms of the headings and any relative section or chapter notes, and, provided such headings or notes do not otherwise require, according to [the remaining GRI's]. In other words, classification is governed first by the terms of the headings of the tariff and any relative section or chapter notes.

Legal note 2(a)(2) to Chapter 59, HTSUS, reads, in pertinent part, as follows:

2. Heading 5903 applies to:

(a) Textile fabrics, impregnated, coated, covered or laminated with plastics, whatever the weight per square meter and whatever the nature of the plastic material (compact or cellular), other than:

(3) Products in which the textile fabric is either completely embedded in plastics or entirely coated or covered on both sides with such material, provided that such coating or covering can be seen with the naked eye with no account being taken of any resulting change of color (chapter

Inasmuch as the textile backing material is completely embedded in the plastic materials comprising the insole, classification under subheading 6406.99.15, HTSUS, as parts of footwear, removable insoles, heel cushions and similar articles, and parts thereof, other, of other materials, of textile materials, is precluded.

Merchandise represented by the sample is classifiable under subheading 6406.99.30, HTSUS, which provides for parts of footwear, removable insoles, heel cushions and similar articles, other of other materials, of rubber or plastics. The applicable general rate of duty for this provision is 5.3% ad valorem.

II. NAFTA Eligibility

To be eligible for tariff preferences under the NAFTA, goods must be "originating goods" within the rules of origin in General Note 12(b), HTSUS. General Notes 12(b)(i) and (ii)(A), HTSUS, state:

[f]or 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

(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...

(iii) they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials....

You have stated that both the vinyl-backed foam and polyurethane cups are made in the U.S. Therefore, assuming that the vinyl-backed foam and polyurethane cups are originating materials, the inner soles produced in Mexico will be considered originating goods and will be eligible for preferential duty treatment under the NAFTA pursuant to General Note 12(b)(iii).

III. Country of Origin

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 134.1(b), interim regulations, defines "country of origin" as:

The country of manufacture, production, or growth of any article of foreign origin entering the United States. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the "country of origin" within the meaning of this part; however for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin. (Emphasis added).

Section 134.1(j), interim regulations, provides that the "NAFTA Marking Rules" are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. Section 134.1(g), interim regulations, defines a "good of a NAFTA country" as an article for which the country of origin is Canada, Mexico, or the U.S. as determined under the NAFTA Marking Rules set out at 19 CFR Part 102, interim regulations.

Section 102.11, interim regulations, sets forth the required hierarchy for determining whether a good is a good of NAFTA country of origin for marking purposes. Section 102.11(a), interim regulations, states that the country of origin of a good is the country in which:

(1) The good is wholly obtained or produced; (2) The good is produced exclusively from domestic materials; or
(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.

In this case, the applicable rule is section 102.11(a)(3), interim regulations. "Foreign material" is defined in section 102.1(e), interim regulations, as "a material whose country of origin as determined under these rules is not the same country as the country in which the good is produced." Accordingly, in order to determine whether Mexico is the country of origin, we must look at those materials whose country of origin is other than Mexico. In making the inner soles, polyurethane cups and vinyl-backed foam sheet cut into the shape of inner soles are used. The polyurethane cups are considered foreign materials as they are ready to be glued to the vinyl-backed foam. However, the vinyl-backed foam inner soles which appear to be classifiable under subheading 6406.99, HTSUS, are considered domestic materials as the sheets of vinyl-backed foam exported to Mexico and cut into the shape of the inner soles are classifiable under subheading 3921.13, HTSUS, and undergo the applicable change in tariff classification set out in section 102.20(l), Section XII, Chapters 64 through 67, 6406.20-6406.99 of the interim regulations.

In regard to the country of origin of the finished inner soles, they are classifiable under subheading 6406.99.30, HTSUS. The applicable change in tariff classification set out in section 102.20(l), Section XII, Chapters 64 through 67, 6406.20-6406.99 of the interim regulations provides:

6406.20-6406.99 ... A change to subheadings 6406.20 through 6406.99 from any other chapter.

The polyurethane cups appear to be classifiable under subheading 6406.99, HTSUS. Therefore, they do not undergo the applicable change in tariff classification set out in section 102.20(l) because they are classifiable under the same subheading as the finished inner soles.

Therefore, since the country of origin is not determined by section 102.11(a), interim regulations, the next step in the country of origin interim regulations hierarchy is section 102.11(b). Section 102.11(b) of the interim regulations states as follows:

Except for a good that is specifically described in the Harmonized Tariff Schedule as a set, or is classified as a set pursuant to General Rule of Interpretation 2, where the country of origin cannot be determined under paragraph (a), the country of origin of the good:

(1) Is the country or countries of origin of the single material that imparts the essential character of the good. . .

When determining the essential character of a good under section 102.11, interim regulations, section 102.18(b) provides that only domestic and foreign materials that are classified in a tariff provision from which a change is not allowed shall be taken into consideration and that, in deciding among these materials, consideration is given to various factors, including the nature of the material or component, bulk, quantity, weight, value, and the role of a constituent material in relation to the use of the goods.

Based upon these factors, both the vinyl-backed foam inner soles and the polyurethane cups are considered because they are classified in a tariff provision from which a change is not allowed. In regard to determining which material imparts the essential character of the finished inner sole, both consist of rubber material and appear to be equally important in cushioning the foot from shock. Consequently, we find that no one material imparts the essential character of the finished inner sole.

As the finished inner soles are not specifically described in the Harmonized System as a set or mixture, or classified as a set, mixture or composite good pursuant to General Rule of Interpretation 3, section 102.11(c), is not applicable.

Therefore, the next step in the country of origin interim regulations hierarchy is section 102.11(d). Pursuant to section 102.11(d):

Where the country of origin of a good cannot be determined under paragraphs (a) through (c), the country of origin of the good is:

(1) The last country in which the good underwent production, other than by simple assembly or minor processing.

"Production" is defined in section 102.1(n) as including, in part, "manufacturing, processing or assembling a good." "Simple assembly" is defined in section 102.1(o) as "the fitting together of five or fewer parts all of which are foreign (excluding fasteners such as screws, bolts, etc.) by bolting, gluing, soldering, sewing or by other means without more than minor processing." "Minor processing" is defined in section 102.1(m) as including, in part, "trimming, filing or cutting off small amounts of excess materials."

Since we have already determined that the vinyl-backed foam inner sole cut from the vinyl-backed foam sheet is a domestic material, all of the parts of the finished inner soles are not foreign. Therefore, the production of the finished inner soles in Mexico, while involving less than five parts, does not result from a "simple assembly." Accordingly, pursuant to section 102.11(d)(1), interim regulations, the country of origin of the finished inner soles is Mexico.

HOLDING:

Based upon the information provided, the merchandise represented by the sample is classifiable under subheading 6406.99.30, HTSUS, which provides for parts of footwear, removable insoles, heel cushions and similar articles, other of other materials, of rubber or plastics. The applicable general rate of duty for this provision is 5.3% ad valorem. Furthermore, pursuant to section 102.11(d)(1), interim regulations, the country of origin of the inner soles is Mexico. The returned inner soles are also considered originating goods pursuant to General Note 12(b)(iii), and, therefore, are eligible for tariff preferences under the NAFTA.

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.

Sincerely,

John Durant, Director
Commercial Rulings Division

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