NY E83072 - Classification, status under the North American Free Trade Agreement (NAFTA) and country of origin determination for pillows; 19 CFR 102.21(c)(4); most important assembly or manufacturing process; 19 CFR 102.21(c)(5); last country where an important assembly or manufacturing process occurred; 19 CFR 102.19(a); NAFTA preference override; Article 509 - United States International Trade Commision Rulings

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faqs.org > Rulings and Tariffs Home > Rulings By Number > 1999 NY Rulings > NY E83048 - NY E83095 > NY E83072

July 9, 1999

CLA?2-RR:NC:TA:349 E83072

CATEGORY: CLASSIFICATION

Mr. Neil Smith
Cole International Inc.
9045 Côte De Liesse, Suite 204
Dorval, QC, Canada
H9P 2M9

RE: Classification, status under the North American Free Trade Agreement (NAFTA) and country of origin determination for pillows; 19 CFR 102.21(c)(4); most important assembly or manufacturing process; 19 CFR 102.21(c)(5); last country where an important assembly or manufacturing process occurred; 19 CFR 102.19(a); NAFTA preference override; Article 509

Dear Mr. Smith:

This is in reply to your letter dated May 10, 1999, received by this office on June 8, 1999, on behalf of Fiera Designs Ltd., requesting a classification, status under the NAFTA and country of origin determination for pillows which will be imported into the United States.

FACTS:

The subject merchandise consists of pillows or cushions. You submitted samples of a pillow shell, a pillow cover and two pillows. The first pillow or cushion, referred to as Item A, consists of a 100 percent cotton hand woven shell that has been filled with a polyester batting. The batting fabric has been torn up and stuffed through an approximately 6-inch wide opening in the shell. This opening is sewn closed after stuffing. The pillow is approximately 21 inches square and the edges are finished with a decorative fringe. Item B is a sample of the unstuffed pillow shell.

Item C consists of a pillow form and a cover. The cover, which measures approximately 18 inches square, is made from 100 percent cotton hand woven fabric. A piping cord finishes all four edges and the front of the cover features a knotted cord design. The pillow form has a polyester nonwoven shell and it is stuffed with polyester batting. The cover has a 13-inch wide zippered opening through which the pillow form is inserted. Item D is a sample of a pillow cover that will also be stuffed with a pillow form. This cover is made from rayon woven fabrics that are cut and sewn to form a patchwork design on the front side. The patchwork is backed with a very thin layer of plastic foam and a secondary backing fabric. The cover measures approximately 16 inches square and has a 13-inch zippered opening on the back through which the pillow form is inserted. You have indicated that these covers may also be made with a silk fabric.

The manufacturing operations for the pillows are as follows:

India:
-100% cotton fabrics, 100% rayon fabrics and 100% silk fabrics are woven. -secondary backing fabric is woven.
-cotton fabrics are cut and sewn to form pillow shells with unfinished openings. -cotton or rayon or silk fabrics are cut and sewn forming pillow covers with zippers. -pillow shells and pillow covers are shipped to Canada.

Canada:
-100% polyester batting is made.
-polyester nonwoven fabric is made.
-nonwoven fabric is cut and sewn creating the shell of the pillow form. -battings are torn up and stuffed into the nonwoven shell, creating the pillow form. -pillow shells from India are stuffed with batting and sewn closed. -pillow covers are fitted with the pillow forms and zippered closed. -pillows are packed and shipped.

ISSUE:

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

CLASSIFICATION:

The applicable subheading for the pillows with an outer shell or cover of cotton (Item A and Item C) will be 9404.90.1000, HTSUSA, which provides for mattress supports; 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: pillows, cushions and similar furnishings: of cotton. The general rate of duty will be 5.6 percent ad valorem. The pillows fall within textile category designation 369.

The applicable subheading for the pillows with an outer cover of rayon or silk (Item D) will be 9404.90.2000, HTSUSA, which provides for mattress supports; 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: pillows, cushions and similar furnishings: other. The general rate of duty will be 6 percent ad valorem. This subheading is not assigned a textile category designation.

The designated textile and apparel categories and their quota and visa status are the result of international agreements that are subject to frequent renegotiations and changes. To obtain the most current information, we suggest that you check, close to the time of shipment, the U.S. Customs Service Textile Status Report, an internal issuance of the U.S. Customs Service, which is available at the Customs Web Site at WWW.CUSTOMS.USTREAS.GOV. In addition, 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 and should also be verified at the time of shipment.

NAFTA ELIGIBILITY:

The subject pillows 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 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... .

Accordingly, the pillows 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;

As the cotton shells and the cotton, rayon and silk covers are made in India, the pillows do not meet the eligibility requirements of General Note 12(b)(i) or 12(b)(iii), HTSUSA. Therefore, we must ascertain whether the non-originating components qualify for NAFTA eligibility under General Note 12(b)(ii), HTSUSA. In order to qualify, the Indian shells and covers must undergo the change in tariff classification required in General Note 12(t), HTSUSA. The applicable subdivision (t) rule for Chapter 94 provides the following:

7. 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.

When the pillow shells and pillow covers from India are sent to Canada, the pillow shells are classified in heading 6307, HTSUSA, and the pillow covers are classifiable in heading 6304, HTSUSA. As these headings are not excepted by subdivision (t) for subheading 9404.90, HTSUSA, the non-originating materials from India do undergo the requisite change in tariff classification. Accordingly, the pillows are eligible for the NAFTA preference. Assuming that the pillows qualify to be marked as a good of Canada, they are entitled to the special "CA" 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.

We note that as written, the listed headings and subheadings under 19 CFR 102.21(b)(5) include subheading 9404.90.10, HTSUSA, but fail to include subheading 9404.90.20, HTSUSA, for purposes of the section 102.21 rules of origin. The omission of that subheading was recently addressed in Headquarters Ruling Letter (HQ) 962122 dated October 1, 1998 which stated that: A...it is Customs position that the omission of subheading 9404.90.20, HTSUS, was an oversight. In that respect we direct your attention to the statute pertaining to the rules of origin, 19 U.S.C. section 3592, which states explicitly under (b)(2), Special rules, that:

(A) the origin of a good that is classified under one of the following HTS headings or subheadings shall be determined under subparagraph (A),(B), or (C) of paragraph (1), as appropriate: 5609, 5807, 5811, 6209.20.5040, 6213, 6214, 6301, 6302, 6303, 6304, 6305, 6306, 6307.10, 6307.90, 6308, or 9404.90; and (Emphasis added)

As the statute does not break out subheading 9404.90, HTSUS, it is Customs position that the statute takes precedence over the regulation. That is to say, Customs cannot exclude by regulation what is specifically included by statute. Accordingly, in determining the origin of the subject cushions, the 102.21 rules of origin are applicable.@ 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 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

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.

Accordingly, as the fabrics comprising the pillows are not formed in a single country, Section 102.21(c)(2) is inapplicable.

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 merchandise is not knit and subheading 9404, HTSUSA, is excepted from provision (ii), Section 102.21 (c)(3) is inapplicable.

Section 102.21 (c)(4) states, AWhere 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 merchandise, the most important manufacturing process occurs at the time of fabric making. 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). In the case of the pillow referred to as Item A, the fabric making process of the outer shell constitutes the most important manufacturing process. It is the outer shell which actually forms the merchandise. Accordingly, the fabric making process in India, where the fabric for the shell of Item A is formed, constitutes the most important manufacturing process and the country of origin for Item A is India. In the case of the pillows referred to as Item C and Item D however, the fabric for the shell of the pillow form and the pillow cover are sourced in more than one country. As no one fabric is more important than the other, a single country of origin determination cannot be made based on Section 102.21(c)(4).

Paragraph (c)(5) states that AWhere the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1), (2), (3) or (4) of this section, the country of origin of the good is the last country, territory or insular possession in which an important assembly or manufacturing process occurred@. Accordingly, in the case of the pillows referred to as Item C and Item D, the country of origin is conferred by the last country in which an important assembly or manufacturing process occurred, that is, Canada.

The country of origin of the pillow referred to as Item A was determined to be India following Section 102.21(c)(4). 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 '181.1(q) of this chapter is not determined under '102.11(a) or (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 pillow referred to as Item A is Canada.

HOLDING:

The subject pillows with an outer shell or cover of cotton (Item A and Item C) are classified in subheading 9404.90.1000, HTSUSA, which provides for pillows and cushions of cotton. The pillows with an outer cover of rayon or silk (Item D) are classified in subheading 9404.90.2000, HTSUSA, which provides for other pillows and cushions.

The country of origin for the pillows referred to as Item A, Item C and Item D is Canada. They will be entitled to the NAFTA "CA" special duty rate of Free upon compliance with all applicable laws, regulation 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.

This ruling letter is binding only as to the party to whom it is issued and may be relied on only by that party.

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 212-637-7078.

Sincerely,

Robert B. Swierupski
Director,

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