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HQ 560100





July 22, 1997

CLA 02 RR:TC:SM 560100 KKV

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.90

Mr. Bernard Nottling
Rudolph Miles & Sons
4950 Gateway East
P.O. Box 11057
El Paso, TX 79983

RE: Applicability of subheading 9802.00.90, HTSUS, to roll up awnings used in motor homes and travel trailers; Special Regime Program; cutting to length; sewing; removing excess material; Article 509; 19 CFR 102.21; 19 CFR 12.130

Dear Mr. Nottling:

This is in response to your letter dated September 19, 1996, on behalf of Dometic Corporation, which requests a ruling concerning the applicability of subheading 9802.00.90, Harmonized Tariff Schedule of the United States (HTSUS), to certain roll up awnings imported from Mexico. In addition to several fabric samples, photographs depicting steps in the assembly process have been enclosed for our examination.

FACTS:

We are informed that Dometic Corporation (hereinafter, "Dometic") plans to import awnings, designed for use with motor homes and travel trailers, from Mexico. 100-yard rolls of U.S.-formed synthetic fabric, in two widths (15" and 96"), are exported to Mexico for assembly together with other U.S.-origin components. A partial assembly description has been provided as follows:

1) Fabric Roll Number One - cut a 15" wide fabric roll to length. Length will vary depending upon the particular model number of the awning, ranging from 8' to 25'.

2) Fabric Roll Number Two - Cut a 96" wide fabric roll to length, again ranging from 8' to 25', depending upon the model specifications.

3) Sew the long edge of the 15" wide and 96" wide fabric panels together.

4) Hem the two outside ends of the awning.

5) Trim one long edge of the sewn awning to form a scallop while concurrently folding a binding ribbon over the trimmed edge and sew the binding onto the awning.

6) The fabric awning is then assembled onto seven interlocking aluminum slats to make a complete awning, and is imported into the U.S.

ISSUES:

1) What is the country of origin of the subject awnings for marking and duty purposes?

2) Whether the awnings will be eligible for duty-free treatment under subheading
9802.00.90, HTSUS, upon importation into the United States.

LAW AND ANALYSIS:

I. Country of origin

Pursuant to Section 334 of the Uruguay Round Agreements Act (codified at 19 U.S.C. Section 3592), new rules of origin were effective for textile products entered, or withdrawn from warehouse, for consumption on or after July 1, 1996. These rules were published in the Federal Register, 60 Fed. Reg. 46188 (September 5, 1995). Section 102.21, Customs Regulations (19 CFR Section 102.21), sets forth the general rules to determine country of origin for textile and apparel goods. Thus, the country of origin of a textile product will be determined by a hierarchy of rules set forth in paragraphs (c)(1) through (c)(5) of Section 102.21.

The initial question to be addressed is whether the subject roll-up awning, designed for use in motor homes and travel trailers, is considered a "textile and apparel good." Your letter indicates that the article at issue is classified under subheading 6306.12.0000, HTSUS, which provides for "Tarpaulins, awnings and sunblinds; tents; sails for boats, sailboards or landcraft; camping goods: Tarpaulins, awnings and sunblinds: of synthetic fibers." Section 102.21(b)(5,), Customs Regulations (19 CFR 102.21(b)(5)), provides that a "textile or apparel product" is any good classified in Chapters 50 through 63, HTSUS, and any good classifiable under certain enumerated HTSUS headings or subheadings, including subheading 6306. Thus, under the facts presented, the subject awning, which is classifiable under subheading 6306.12.0000, HTSUS, qualifies as a "textile and apparel good" for purposes of the 19 CFR 102.21 rules of origin.

Section 102.21(c)(1) sets forth the general rule for determining the country of origin of a textile or apparel product in which the good is wholly obtained or produced in a single country, territory, or insular possession. As the subject merchandise is not wholly obtained or produced in a single country, territory, or insular possession, section 102.21(c)(1) is inapplicable.

Section 102.21(c)(2) provides for instances where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) of this section. Section 102.21 (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 foreign material 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.

Section 102.21(e) 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:"

6301-6306 The country of origin of a good classifiable under heading 6301 through 6306 is the country, territory, or insular possession in which the fabric comprising the good was formed by a fabric-making process.

In this instance, the fabric in question is imported into Mexico from the United States, where it was formed. Therefore, pursuant to section 102.21, the country of origin of the awning is the United States. However, there is an exception for products of the United States that are sent abroad for processing. Section 12.130(c), Customs Regulations, provides that any textile product of the United States which is returned after
having been advanced in value or improved in condition abroad, or assembled abroad, shall be a foreign article.

Section 12.130, which remains in effect, was originally intended to be used to determine the country of origin of textiles and textile products for quota/visa requirement. In T.D. 90-17, issued February 23, 1990, Customs announced a change in practice and position. This change resulted in Customs using Section 12.130 for quota, duty and marking purposes when making country of origin determinations for textile goods. Therefore, in accordance with T.D. 90-17 and Section 12.130(c), the country of origin of the subject awning is Mexico for quota, duty and marking purposes. Please be advised that Customs may propose to modify T.D. 90-17 to provide that section 12.130(c), Customs Regulations, would not apply for Customs marking purposes.

II. Applicability of subheading 9802.00.90, HTSUS

Annex 300-B of the North American Free Trade Agreement ("NAFTA") is applicable to textile and apparel goods. Appendix 2.4 of Annex 300-B provides that:

On January 1, 1994, the U.S. shall eliminate customs duties on textiles and apparel goods that are assembled in
Mexico from fabrics wholly formed and cut in the United States and exported from and reimported into the United States under:

(a) U.S. tariff item 9802.00.80.10; or

(b) Chapter 61, 62, or 63 if, after such assembly, those goods that would have qualified for treatment under
9802.00.80.10 have been subject to bleaching, garment dyeing, stone-washing, acid-washing or perma-pressing.

Thereafter, the U.S. shall not adopt or maintain any customs duty on textile or apparel goods of Mexico that satisfy the requirements of subparagraph (a) or (b) or the requirements of any successor provision to U.S. tariff item
9802.00.80.10.

Consequently, subheading 9802.00.90, HTSUS, was created to provide for the duty-free entry of:

Textile and apparel goods, assembled in
Mexico in which all fabric components were wholly formed and cut in the United

States, provided that such fabric components, in whole or in part, (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; provided the goods classifiable in chapters 61, 62, or 63 may have been subject to bleaching, garment dyeing, stone-washing, acid-washing or perma-pressing after assembly as provided for herein.

The enactment of subheading 9802.00.90, HTSUS, was intended to extend duty-free and quota-free status to all goods assembled in Mexico, which previously were eligible for entry under the Special Regime Program administered under subheading
9802.00.8010, HTSUS. However, although subheading 9802.00.90, HTSUS, was intended as a successor provision to subheading 9802.00.80, HTSUS, there exist important differences in the scope of the two provisions.

In this regard, as distinguished from subheading 9802.00.80, HTSUS, it is noted that subheading 9802.00.90 requires only that all fabric components be formed and cut in the U.S., and that only such components, in whole or in part, need be exported from the U.S. in condition ready for assembly without further fabrication.

However, it is important to note that while the three requirements of subheading 9802.00.90, HTSUS, pertain solely to those fabric components incorporated into a "textile and apparel good, assembled in Mexico" these fabric components must be "wholly formed and cut in the United States" (emphasis added). In the facts presented, although the fabric is wholly formed in the United States, it is exported to Mexico on rolls, where it is cut to length, among other operations. During a telephone conversation you clarified that the fabric is not cut to width in the United States, but is milled to specification to a width of either 15 inches or 98 inches. Inasmuch as there are not cutting operations performed in the U.S., the fabric components have not been "wholly formed and cut in the United States" as required by subheading 9802.00.90, HTSUS. Accordingly, the finished awnings are not eligible for duty free treatment under subheading 9802.00.90, HTSUS, upon importation into to the United States.

HOLDING:

1) Based on the information provided, where fabric formed in the U.S. is exported to Mexico for assembly into an awning, the country of origin of the finished awning, for quota, duty and marking purposes, is Mexico, pursuant to T.D. 90-17 and section 12.130(c), Customs Regulations (19 CFR 12.130(c)).

2) Based upon the information provided, where fabric formed in the U.S. is milled to width specifications and exported to Mexico on rolls for assembly into awnings, the fabric components have not been "wholly formed and cut in the United States." Accordingly, the imported awnings are not eligible for duty-free treatment under subheading 9802.00.90, HTSUS, upon importation into the United States.

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

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