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 > 1995 HQ Rulings > HQ 956320 - HQ 956470 > HQ 956420

Previous Ruling Next Ruling
HQ 956420





July 7, 1995

CLA-2 R:C:T 956420 CMR

CATEGORY: CLASSIFICATION

TARIFF NO.: 5903.90.1000

Ms. J. Wilson
S. Fattal Canvas Inc.
200 Edgehill road
Montreal, Canada H3Y 1E9

RE: Classification and NAFTA eligibility of Pakistani fabric processed in Canada; country of origin; visa/quota; Article 509

Dear Ms. Wilson:

This is in response to your request of May 2, 1994, regarding the classification and eligibility for NAFTA preferential duty treatment of certain Pakistani fabric processed in Canada. Two samples were received with your request. They were reviewed by Customs in New York. This office did not receive the samples and so, descriptions of the samples are based upon the information contained in the report from our New York office.

Additional information was requested by our New York office regarding the nature of the adhesive and processing steps performed in Canada. It is our understanding the requested information was never supplied. Therefore, this ruling is based upon the information available in the file. We regret the delay in responding to your request.

FACTS:

Two samples were submitted. One sample was of the subject fabric in its condition as imported into Canada. The fabric was a 100 percent cotton grey cotton Osnaburg fabric, construction 42 x 26 12/8 59", weighing 5.5 ounces per square yard. The fabric is made in Pakistan.

In Canada, the grey fabric is "dipped" into a solution of a water activated adhesive. The adhesive is obtained from a U.S. company. Customs is assuming that since the adhesive is a water activated type that it is plastics in nature and not of a rubber base. The adhesive does not fully and visibly cover or encase -2-
the fabric on both sides. There are noticeable areas of textile showing through, particularly on one side. The end use of this product is to wrap up insulation that goes on pipe lines and duct systems.

The dipping process involves immersing the fabric up to three times in the solution in a textile immersion tank, then passing it through a tenter frame drying machine. The fabric is sometimes slit, and sometimes the selvedge is cut off. The finished fabric is then repackaged.

ISSUE:

What is the classification of the "dipped" fabric?

Does the fabric qualify for preferential duty treatment under the North American Free Trade Agreement (NAFTA)?

What is the country of origin of the fabric and is the fabric subject to quota/visa restraints?

Does cutting the selvedge or slitting the fabric into narrower widths affect the classification or origin of the fabric?

LAW AND ANALYSIS:

Classification of goods under the HTSUSA is governed by the General Rules of Interpretation (GRIs). 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 GRIs taken in order]."

Heading 5903, Harmonized Tariff Schedule of the United States (HTSUS), provides for "Textile fabrics impregnated, coated, covered or laminated with plastics, other than those of heading 5902 [tire cord fabric]." Note 2, Chapter 59, states, in relevant part:

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:

(1) Fabrics in which the impregnation, coating or covering cannot be seen with the naked eye (usually -3-
chapters 50 to 55, 58 or 60); for the purpose of this provision, no account should be taken of any resulting change of color;

(4) Fabrics partially coated or partially covered with plastics and bearing designs resulting from these treatments (usually chapters 50 to 55, 58 or 60);

Based upon the report from the National Import Specialist who examined the submitted samples, it is apparent that the plastic coating is visible to the naked eye. In addition, while the coating is a partial coating, it does not create a design on the fabric and thus is not excluded from heading 5903. Therefore, the coated, or "dipped", fabric is classified in heading 5903, HTSUS.

Chapter 4 of the NAFTA sets forth rules for determining whether an imported good qualifies as an originating good of a NAFTA country. A good that qualifies as an originating good is eligible for preferential tariff treatment as provided for under Article 302(2) and Annex 302.2 of the NAFTA. The basic rules of origin in Chapter 4 of the NAFTA, as well as the specific rules of origin found in Annex 401 of the NAFTA, are set forth in General Note 12, Harmonized Tariff Schedule of the United States Annotated (HTSUSA). (See 58 Fed. Reg. 69, 460, December 30, 1993).

Subdivision (b) of General Note 12, HTSUSA, provides, in pertinent part:

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.

In this case, Pakistani fabric is "dipped" into a U.S. plastics solution in Canada. The finished good is classified in heading 5903, HTSUS. As the coated fabric does not meet Note 12(b)(i) or (iii) above, in order to qualify for preferential duty treatment under the NAFTA, it must meet Note 12(b)(ii).

Note 12(t)/59.3 sets out the tariff shift rule applicable to goods classified in heading 5903. The rule states:

A change to headings 5903 through 5908 from any other chapter, except from headings 5111 through 5113, 5208 through 5212, 5310 through 5311, 5407 through 5408 or 5512 through 5516.

The grey cotton Osnaburg fabric, prior to dipping, is classified in heading 5208, HTSUS. The tariff shift which occurs in Canada is from heading 5208 to heading 5903. As the rule precludes a change from heading 5208 as a qualifying tariff change, the operations which occur in Canada do not render the coated fabric eligible for the NAFTA preferential duty treatment.

Section 12.130 of the Customs Regulations, 19 CFR 12.130, sets forth the principles for determining the country of origin of textiles and textile products subject to section 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854). However, in 19 CFR 12.130(b), the regulation states that the origin of products of Canada and Mexico are (sic) determined pursuant to the procedures set forth in part 102 of this chapter. As the Pakistani fabric is processed in Canada, Customs must look to 19 CFR 102 to determine the origin of the coated fabric.

Section 102.11 provides, in pertinent part:

(a) The country of origin of a good is the country in which:

(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 satisfies.

Section 102.20 provides the following rule, in part, for goods classified in heading 5903, HTSUS:

A change to heading 5903 from any other heading except heading 5007, 5111 through 5113, 5208 through 5212, 5309 through 5311, 5407 through 5408, 5512 through 5516, 5803, 5806.31 through 5806.39, 5808, and 6002; or,

(1) For woven fabric, a change to heading 5903 from any other heading, provided that the impregnation, coating, covering, or lamination accounts for at least 15 percent of the total weight of the fabric.

The submitted coated and not coated fabric samples were weighed to determine what percentage of the total weight of the fabric is attributable to the coating. The coated sample weighed 14.1 ounces per square yard. The fabric in its condition prior to dipping weighed 6.4 ounces per square yard. This amounts to a 117.8 percent gain. Thus, the coating in this case accounts for at least 15 percent of the total weight of the fabric. The coated fabric meets the tariff shift requirement for heading 5903 set out in section 102.20. Therefore, the coated fabric is considered a product of Canada for marking purposes.

As stated above, the coated fabric is classified in heading 5903. As the fabric is of cotton, it is classified in subheading 5903.90.1000, HTSUSA, provided it is coated with a plastics other than polyvinyl chloride or polyurethane (which we assume is the case). Goods classified in this subheading of the tariff are not subject to visa/quota restraints and so we need not determine origin for those purposes.

As to whether cutting the selvedge off the fabric or slitting the fabric into narrower widths will affect its classification, the answer is no. Narrow woven fabrics, i.e., of a width not exceeding 30 centimeters, are classified in Chapter 58, HTSUS. However, Note 1, Chapter 58, excludes, among other things, coated fabrics classifiable in Chapter 59. As the coated subject fabric is excluded from classification as a narrow woven fabric of Chapter 58, cutting it into narrower widths does not affect its classification. -6-

HOLDING:

If coated with a plastics other than polyvinyl chloride or polyurethane (which we assume is the case), the coated cotton fabric is classified in subheading 5903.90.1000, HTSUSA, dutiable at 5 percent ad valorem. No textile category is designated for this subheading.

The coated cotton fabric does not qualify for preferential duty treatment under NAFTA. However, the fabric does qualify to be marked as a product of Canada.

Sincerely,

John Durant, Director
Commercial Rulings Division

Previous Ruling Next Ruling

See also: