NY D85287 - Classification, status under the North American Free Trade Agreement (NAFTA) and country of origin determination for a comforter set; 19 CFR 102.21(c)(1); wholly obtained or produced in a single country; 19 CFR 102.21(c)(4); most important assembly or manufacturing process; 19 CFR 102.21(d); sets; 19 CFR 102.19(a); NAFTA preference override; Article 509 - United States International Trade Commision Rulings

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NY D85287

December 22, 1998

CLA-2-RR:NC:TA:349 D85287

CATEGORY: CLASSIFICATION

Mr. Robert G. Holliday
Robert G. Holliday
8402 Killam Ind. Blvd.
P.O. Box 1559
Laredo, TX 78042-1559

RE: Classification, status under the North American Free Trade Agreement (NAFTA) and country of origin determination for a comforter set; 19 CFR 102.21(c)(1); wholly obtained or produced in a single country; 19 CFR 102.21(c)(4); most important assembly or manufacturing process; 19 CFR 102.21(d); sets; 19 CFR 102.19(a); NAFTA preference override; Article 509

Dear Mr. Holliday:

This is in reply to your letter dated November 17, 1998, received by this office on November 30, 1998, on behalf of American Lintex Corp., requesting a classification, status under the NAFTA and country of origin determination for a comforter set which will be imported into the United States.

FACTS:

The subject merchandise consists of a comforter, flat and fitted sheets, pillowcases and pillow shams. A sample was not submitted. The sets will be made in twin, full, queen and king sizes. The sheets, pillowcases, shams and the outer shell of the comforter are made from a 60 percent polyester and 40 percent cotton woven fabric. The quilted comforter is filled with a polyester batting fabric. The comforter set will be packed for retail sale in a vinyl bag. The manufacturing operations for the comforter set are as follows:

PAKISTAN:
- polyester and cotton fabric is woven,
- comforter shells are made,
- sheets, pillowcases and shams are made.

MEXICO:
- polyester batting fabric is made,
- the comforter shell is stuffed, sewn closed and quilted, - comforter, sheets, pillowcases and shams are packed for retail sale in Mexican made packaging and shipped to the U.S.

ISSUE:

What are the classification, eligibility under NAFTA and country of origin of the subject merchandise?

CLASSIFICATION:

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

The comforter is classifiable in Heading 9404. The pillowcases, flat and fitted sheets are classifiable in Heading 6302 and the shams are classifiable in Heading 6304. Since classification of the submitted merchandise in a single heading cannot be determined by applying GRI 1, we must apply the other GRI's.

GRI 3 provides for goods that are, prima facie, classifiable in two or more headings. GRI 3(b) provides that goods put up in sets for retail sale shall be classified as if they consisted of the material or component which gives them their essential character. According to the Explanatory Notes, the official interpretation of the HTSUSA at the international level, "goods put up in sets for retail sale" refers to goods which:

(a) consist of at least two different articles which are, prima facie, classifiable in different headings; (b) consist of products or articles put up together to meet a particular need or carry out a specific activity; and (c) are put up in a manner suitable for sale directly to users without repacking.

The subject set meets the qualifications of "goods put up in sets for retail sale". The components of the set consist of four different articles which are, prima facie, classifiable in different headings. They are put up together to carry out the specific activity of furnishing a bed and they are packaged for sale directly to users without repacking. It is our opinion that the comforter is the component that gives this set its essential character. Therefore this comforters set is classifiable in Heading 9404.

The applicable subheading for the comforter set will be 9404.90.8522, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for articles of bedding and similar furnishing (for example, mattresses, quilts, eiderdowns, cushions, pouffes and pillows) fitted with springs or stuffed or internally fitted with any material or of cellular rubber or plastics, whether or not covered: other: other: quilts, eiderdowns, comforters and similar articles... with outer shell of man-made fibers. The general rate of duty will be 13.8 percent ad valorem. Effective January 1, 1999, the general rate of duty will be 13.6 percent ad valorem.

All of the components of this comforter set fall within textile category designation 666. The designated textile and apparel categories may be subdivided into parts. If so, visa and quota requirements applicable to the subject merchandise may be affected. Part categories are the result of international bilateral agreements which are subject to frequent renegotiations and changes. To obtain the most current information available, we suggest that you check, close to the time of shipment, the Status Report on Current Import Quotas (Restraint Levels), an internal issuance of the U.S. Customs Service, which is available for inspection at your local Customs office.

NAFTA ELIGIBILITY:

The subject comforter set undergoes processing operations in Mexico 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:

(ii) Goods that originate in the territory of a NAFTA party under subdivision (b) of this note and that qualify to be marked as goods of Mexico 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 "MX" in parentheses, are eligible for such duty rate... .

Accordingly, the comforter set at issue will be eligible for the "Special" "MX" rate of duty provided they are NAFTA "originating" goods under General Note 12(b), HTSUSA, and they qualify to be marked as goods of Mexico. 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

Accordingly, the subject merchandise qualifies as a good of Mexico only if the good has been transformed in Mexico such that the non-originating materials (comforter shells woven, cut and sewn in Pakistan) undergo the applicable change in tariff.

The comforter set is classified in subheading 9404.90, HTSUSA. For merchandise classifiable in this heading subdivision (t), chapter 94, states that:

A change to subheading 9404.90 from any other chapter, except from headings 5007, 5111 through 5113, 5208 through 5212, 5309 through 5311, 5407 through 5408 or 5512 through 5516.

In the case of the comforters, when the non-originating materials from Pakistan enter Mexico they are classifiable in heading 6307, HTSUSA. As heading 6307, HTSUSA, is not excepted by subdivision (t), the merchandise undergoes the requisite change in tariff. As such, the merchandise qualifies for the NAFTA preference. Assuming that the comforters qualify to be marked as a good of Mexico, they are entitled to the special "MX" duty rate, provided that a Certificate of Origin is completed and submitted in accordance with 19 CFR 181.11.

COUNTRY OF ORIGIN - LAW AND ANALYSIS:

On December 8, 1994, the President signed into law the Uruguay Round Agreements Act. Section 334 of that Act (codified at 19 U.S.C. 3592) provides new rules of origin for textiles and apparel entered, or withdrawn from warehouse, for consumption, on and after July 1, 1996. On September 5, 1995, Customs published Section 102.21, Customs Regulations, in the Federal Register, implementing Section 334 (60 FR 46188). Thus, effective July 1, 1996, the country of origin of a textile or apparel product shall be determined by sequential application of the general rules set forth in paragraphs (c)(1) through (5) of Section 102.21.

Additionally, Section 102.21(d) addresses the treatment of sets for country of origin purposes. Section 102.21(d) provides the following:

Where a good classifiable in the HTSUS as a set includes one or more components that are textile or apparel products and a single country of origin for all of the components of the set cannot be determined under paragraph (c) of this section, the country of origin of each component of the set that is a textile or apparel product shall be determined separately under paragraph (c) of this section.

Although the classification of the subject comforter set is based on the comforter, per the terms of Section 102.21(d), the country of origin of each of the items comprising the set must be determined separately as there is no single country of origin for the entire set.

Paragraph (c)(1) states that "The country of origin of a textile or apparel product is the single country, territory, or insular possession in which the good was wholly obtained or produced." As the subject comforter is not wholly obtained or produced in a single country, territory or insular possession, paragraph (c)(1) of Section 102.21 is inapplicable. However, as the sheets, pillowcases and shams were wholly obtained or produced in a single country, that is, Pakistan, country of origin for the sheets, pillowcases and shams is conferred in Pakistan.

Paragraph (c)(2) states that "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 of the foreign materials 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:"

Paragraph (e) in pertinent part states that "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":

HTSUS Tariff shift and/or other requirements

9404.90 The country of origin of a good classifiable under subheading 9404.90 is the country, territory, or insular possession in which the fabric comprising the good was formed by a fabric-making process.

The subject comforter is made from a shell fabric and a batting fabric. Accordingly, as the fabrics comprising the comforter are formed in more than one country, Section 102.21(c)(2) is inapplicable for the comforter.

Section 102.21(c)(3) states that, "Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) or (2) of this section":

(i) If the good was knit to shape, the country of origin of the good is the single country, territory, or insular possession in which the good was knit; or

(ii) Except for goods of heading 5609, 5807, 5811, 6213, 6214, 6301 through 6306, and 6308, and subheadings 6209.20.5040, 6307.10, 6307.90, and 9404.90, if the good was not knit to shape and the good was wholly assembled in a single country, territory, or insular possession, the country of origin of the good is the country, territory, or insular possession in which the good was wholly assembled.

As the subject comforter is not knit and heading 9404.90, HTSUSA, is excepted from provision (ii), Section 102.21 (c)(3) is inapplicable.

Section 102.21 (c)(4) states, "Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1), (2) or (3) of this section, the country of origin of the good is the single country, territory or insular possession in which the most important assembly or manufacturing process occurred". In the case of the subject comforter, the fabric making process of the comforter's outer shell constitutes the most important manufacturing process. It is the outer shell which actually forms the merchandise. Moreover, basing the country of origin determination on the fabric making process as opposed to the assembly process carries out the clear intent of Section 334 as expressed in Section 334 (b)(2) and Part 102.21(c)(3)(ii). Accordingly, the fabric making process in Pakistan, where the fabric for the comforter's outer shell is formed, constitutes the most important manufacturing process. Therefore, the country of origin of the subject comforter is Pakistan.

However, as stated in section 102.19(a):

Except in the case of goods covered by paragraph (b) of this section, if a good which is originating within the meaning of (b) or ?102.21 to be a good of a single NAFTA country, the country of origin of such good is the last NAFTA country in which that good underwent production other than minor processing, provided that a Certificate of Origin (see ?181.11 of this chapter) has been completed and signed for the good.

As this merchandise qualifies as a NAFTA originating good, applying the terms of section 102.19(a), the country of origin of the subject comforters is Mexico.

In the case of the subject merchandise, the essential character of the set is imparted by the comforter which is partially made of foreign fabric from Pakistan, stuffed and sewn in Mexico. Accordingly, as the comforter qualifies to be marked as a good of Mexico, it is entitled to the special "MX" duty rate. It thus follows that as the comforter determines the classification of the set, the set receives the preferential duty rate.

HOLDING:

The subject comforter set is classified in subheading 9404.90.8522, HTSUSA, which provides for other quilts, eiderdowns, comforters and similar articles, with an outer shell of man-made fibers.

The country of origin of the sheets, pillowcases and shams is Pakistan. The sheets fall within part category 666-S, the pillowcases fall within part category 666-P and the shams fall within part category 666-O. Based upon international textile trade agreements products of Pakistan are subject to quota and the requirement of a visa. The country of origin of the comforters is Mexico. The comforter set will be entitled to the NAFTA "MX" special rate of 2.4 percent ad valorem upon compliance with all applicable laws, regulations and agreements. Effective January 1, 1999 the NAFTA "MX" special duty rate will be Free.

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 181.100(a)(2). This section states that a ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect.

This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 C.F.R. 181). Should it be subsequently determined that the information furnished is not complete and does not comply with 19 CFR 181.100(a)(2), 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.

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist John Hansen at 212-466-5854.

Sincerely,

Robert B. Swierupski
Director,

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