HQ 961887 - Country of origin determination for quilted piece goods; NAFTA - United States International Trade Commision Rulings

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HQ 961887

June 11, 1998
CLA-2 RR:CR:TE 961887 jb

CATEGORY: CLASSIFICATION

Michael G. Teeter
The Industry Government Relations Group
350 Sparks Street, Suite 1110
Ottawa, Ontario
Canada K1R 7S8

RE: Country of origin determination for quilted piece goods; NAFTA

Dear Mr. Teeter:

This is in reply to your letter dated May 7, 1998, requesting a determination of the North American Free Trade Agreement (NAFTA) eligibility for certain quilted piece goods which will be imported into the United States. This office issued to you Headquarters Ruling Letter 960058 (HQ) on October 27, 1997, regarding the country of origin of the identical merchandise. As you state in your letter that none of the circumstances have changed since the issuance of HQ 960058, we will not reiterate the country of origin of the subject merchandise but will solely address the NAFTA eligibility of the quilted piece goods.

FACTS:

The subject merchandise consists of quilted piece goods comprised of woven outer shells of either 100 percent polyester or 100 percent nylon material attached to 100 percent polyester batting or wadding fabric. The wadding or batting is formed in Canada from fibers sourced in the United States and/or Canada. Also in Canada, the fabric is quilted and rolled for exportation to the United States. In approximately 25 percent of the shipments, either a non-woven polyester or nylon or polypropylene spun-bonded backing fabric is attached to the outer shell fabric prior to quilting in Canada. The spun-bonded fabric is formed in the United States from fibers sourced in the United States.

You state that on an annual basis, in the production of these articles, approximately 25 percent of the outer shell fabrics are woven in the United States from yarn sourced in the United States. The outer shell fabrics are exported to Canada in the greige where they are dyed and finished. Approximately 25 percent of the time, the outer shell greige fabrics are imported from Belgium and dyed and finished in Canada. In the remaining 50 percent of the time the outer shells are comprised of greige fabrics that are sourced in Malaysia or Thailand and dyed and finished in Canada.

Specifically, the submitted samples consist of:

TNSO 64"

Belgium greige nylon outer shell is sourced

Canada nylon outer shell is dyed and finished quilting to Canadian manufactured wadding assembly (by quilting) to a United States formed polypropylene spun-bonded backing

TNUS 62"

United States nylon outer shell is sourced

Canada nylon outer shell is dyed and finished quilting to Canadian manufactured wadding

TNH 60"

Malaysia nylon outer shell is sourced

Canada nylon outer shell is dyed and finished quilting to Canadian manufactured wadding assembly (by quilting) to a United States woven greige fabric which is dyed and finished in Canada

ISSUE:

Whether the subject merchandise is eligible for a duty allowance under the North American Free Trade Agreement (NAFTA)?

LAW AND ANALYSIS:

The subject quilted piece goods undergo processing operations in Canada which is a country provided for under the North American Free Trade Agreement (NAFTA). General Note 12, HTSUSA, incorporates Article 401 of the North American Free Trade Agreement (NAFTA) into the HTSUSA. Note 12(a) provides, in pertinent part:

(i) Goods that originate in the territory of a NAFTA party under the terms of subdivision (b) of this note and that qualify to be marked as goods of Canada under the terms of the marking rules... and are entered under a subheading for which a rate of duty appears in the "Special" subcolumn followed by the symbol "CA" in parentheses, are eligible for such duty rate... . [Emphasis added]

Accordingly, the quilted piece goods at issue will be eligible for the "Special" "CA" rate of duty provided they are NAFTA "originating" goods under General Note 12(b), HTSUSA, and they qualify to be marked as goods of Canada. Note 12(b) 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; or

In the case of "TNUS 62"" as the quilted piece goods qualify as goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States, as per 12(b)(i), they are considered originating in the territory of a NAFTA party and are therefore eligible for NAFTA treatment.

In the case of "TNSO 64"" and "TNH 60"", the merchandise qualifies for NAFTA treatment only if the provisions of General Note 12(b)(ii)(A) are met, that is, if the merchandise is transformed in the territory of Canada so that the non-originating materials (the Belgian fabric for "TNSO 64""; and the Malaysian fabric for "TNH 60"") undergo a change in tariff classification as described in subdivision (t).

For the quilted piece goods, subdivision (t), Chapter 58, states that:

A change to headings 5801 through 5811 from any other chapter, except from headings 5106 through 5113, 5204 through 5212, 5307 through 5308 or 5310 through 5311, or chapters 54 through 55.

For both "TNSO 64"" and "TNH 60"", when the fabrics for the outer shell are sent to Canada, they are classified in either chapter 54 or 55, HTSUS, depending on their composition (i.e., staple fiber yarns or filament yarns). As these chapters are excepted by subdivision (t) for heading 5811, HTSUS, the non-originating material(s) from Belgium or Malaysia do not undergo the requisite change in tariff classification. Accordingly, the merchandise referred to as "TNSO 64"" and "TNH 60"" are not eligible for the NAFTA preference.

HOLDING:

The merchandise identified as "TNUS 62"" is eligible for NAFTA treatment.

The merchandise identified as "TNSO 64"" and "TNH 60"" are not eligible for NAFTA treatment.

It should be noted that the analysis and determination set forth in this ruling letter are based on the specific annual basis production description outlined by you in your submission. Should any of the material facts set forth herein change, a different determination may result. As such, you should notify this office immediately with your request for another ruling addressing any new facts or information.

The holding set forth above applies only to the specific factual situation and merchandise identified in the ruling request. This position is clearly set forth in section 19 CFR 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect.

Should it be subsequently determined that the information furnished is not complete and does not comply with 19 CFR 177.9(b)(1), the ruling will be subject to modification or revocation. In the event there is a change in the facts previously furnished, this may affect the determination of country of origin. Accordingly, if there is any change in the facts submitted to Customs, it is recommended that a new ruling request be submitted in accordance with 19 CFR 177.2.

Sincerely,

John Durant, Director
Commercial Rulings Division

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