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January 11, 1999

CLA?2-RR:NC:TA:351 D86056

CATEGORY: CLASSIFICATION

Mr. David Griffin
TRICOM
4515 Mariette Ave., Montreal
Quebec, Canada
H4B 2G3

RE: Classification, status under the North American Free Trade Agreement (NAFTA) and country of origin determination for labels; 19 CFR 102.21(c)(2); tariff shift; Article 509

Dear Mr. Griffin:

This is in reply to your letter dated December 16, 1998, requesting a classification, status under the NAFTA and country of origin determination for labels in the piece which will be imported into the United States.

FACTS:

The subject merchandise consists of printed labels in continuous roll form. You have submitted samples of these labels in their various stages of production. The manufacturing operations for the labels are as follows:

UNITED STATES
-100 percent polyester yarn of U.S. origin is shipped to Mexico. You do not indicate the source of the raw material used to produce the yarn; we will assume for the purpose of this ruling that those materials came from a non-Nafta country and became “originating” in the course of processing in the United States.

MEXICO
-the yarn is woven to make a ribbon. It is woven to specific width, in continuous lengths of approximately 250 to 300 yard rolls. -the ribbon on rolls is run through a printing machine, printed on and then rewound into rolls.

ISSUE:

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

CLASSIFICATION:

The applicable subheading for the labels in the piece will be 5807.10.0520, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for labels, badges and similar articles of textile materials, in the piece, woven, labels, of cotton or man-made fibers, other. The general rate of duty will be 8.4 percent ad valorem.

NAFTA ELIGIBILITY:

The labels undergo 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 labels 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;...

As the subject labels are produced in Mexico exclusively from materials which themselves are originating, they meet the criteria set out in General Note 12(b)(iii). Accordingly, the labels qualify as a good originating in the territory of a NAFTA party. Assuming that the labels 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.

Paragraph (c)(1) of section 102.21 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 merchandise is not wholly obtained or produced in a single country, territory or insular possession, paragraph (c)(1) of Section 102.21 is inapplicable.

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

5807 The country of origin of a good classifiable under heading 5807 is the country, territory, or insular possession in which the fabric comprising the good was formed by a fabric-making process.

As the fabric comprising the labels was formed by a fabric-making process in a single country, that is, Mexico, as per the terms of the tariff shift requirement, country of origin is conferred in Mexico.

HOLDING:

The subject labels are classified in subheading 5807.10.0520, HTSUSA, which provides for labels, badges and similar articles of textile materials, in the piece, woven, labels, of cotton or man-made fibers, other.

The country of origin of the labels is Mexico. They will be entitled to the NAFTA "MX" special duty rate of Free upon compliance with all applicable laws, regulations and agreements.

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 Camille Ferraro at 212-466-5885.

Sincerely,

Robert B. Swierupski
Director,

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