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HQ 561633




October 2, 2000

CLA-2 RR:CR:SM 561633 KSG

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.90

S. Richard Shostak, Esq.
Stein, Shostak & O’Hara
Suite 807
1620 L Street, N.W.
Washington, D.C. 20036

RE: Applicability of subheading 9802.00.90, HTSUS, and NAFTA to imported seat cushion covers; fiber-forward textile rule

Dear Mr. Shostak:

This is in reference to your letter of March 4, 1996, requesting a binding ruling on behalf of Ajay Leisure Life, Inc., regarding the applicability of subheading 9802.00.90, Harmonized Tariff Schedule of the United States (“HTSUS”) and the North American Free Trade Agreement (“NAFTA”), to certain imported seat cushion covers which will be assembled in Mexico. You also asked for the proper tariff classification of the imported seat cushion covers. We regret the delay in responding to your inquiry.

FACTS:

Ajay Leisure Life, Inc. plans to import seat cushion covers for stuffing with padding and finishing into seat cushions. The seat cushions will be used for love seats and easy chairs.

The seat cushion covers will be made from U.S.-formed fabric consisting of acrylic and olefin man-made fibers. There are two different scenarios presented. In the first scenario, the U.S.-formed fabric will be cut into components in the U.S. and then assembled by sewing in Mexico. In the second scenario, the U.S.- formed fabric will be cut into components and sewn in Mexico.

ISSUES:

Whether the imported seat cushion covers are eligible for duty-free treatment under subheading 9802.00.90, HTSUS, under scenario one (component parts cut in the U.S. and assembled in Mexico).

Whether the imported seat cushion covers are eligible for NAFTA treatment if the fabric is cut and sewn in Mexico.

LAW AND ANALYSIS:

Based on the facts presented, we find that the seat cushion covers are classified in subheading 6307.90.9989, HTSUS, which provides for:

Other made up articles, including dress patterns; other; other

See Headquarters Ruling Letters (“HRL”) 084046, dated May 11, 1989, HRL 084718, dated July 31, 1989, and HRL 952527, dated December 11, 1992, relating to the classification of pillow shells.

Subheading 9802.00.90 applicability

The first issue presented is whether the seat cushion covers which are assembled in Mexico from fabric components formed and cut in the U.S. are eligible for duty-free treatment under subheading 9802.00.90, HTSUS.

Appendix 2.4 of Annex 300-B of the North American Free Trade Agreement (“NAFTA”) provides that:

On January 1, 1994, the U.S. shall eliminate customs duties on textile 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 duties on textile and apparel goods of Mexico that satisfy 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 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 that 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.

In the instant case, all of the fabric components in the first scenario are formed and cut in the U.S. and assembled by sewing in Mexico. Therefore, the seat cushion covers are eligible for duty-free treatment under subheading 9802.00.90, HTSUS, treatment upon return to the U.S.

NAFTA eligibility

The second issue presented is whether the imported seat cushion covers that are cut and assembled in Mexico are eligible for duty-free treatment under NAFTA. General Note 12, HTSUS, incorporates Article 401 of NAFTA into the HTSUS. General Note 12(a)(ii) provides, in pertinent part:

(ii) 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 Mexico under the terms of the marking rules set forth in regulations issued by the Secretary of the Treasury (without regard to whether the goods are marked), when such goods are imported into the customs territory of the United States 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, in accordance with section 201 of the NAFTA Implementation Act.

Accordingly, the seat cushion covers will be eligible for the “Special” “MX” rate of duty provided it is a NAFTA “originating” good under General Note 12(b), HTSUS, and qualifies to be marked as a product of Mexico under the marking rules. General Note 12(b), HTSUS, 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;...

The rule for subheading 6307, HTSUS, in GN 12(t) states:

A change to heading 6304 through 6310 from any other chapter, except from headings 5106 through 5113, 5204 through 5212, 5307 through 5308 or 5310 through 5311, chapters 54 through 55, or headings 5801 through 5802 or 6001 thruogh 6002, provided that the good is both cut (or knit to shape) and sewn or otherwise assembled in the territory of one or more of the NAFTA parties.

The above rule is a “fiber forward” rule which means that, for articles made of man-made fabric(such as the seat cushion covers involved here), all operations in producing the article, beginning with the extrusion of the fibers, must take place in the NAFTA territory. Although you have indicated that the fabric of the seat cushions would be formed in the U.S., we have no information regarding the origin of the fibers and yarns from which the fabric is made. Without this information, we are unable to determine whether the seat cushion covers will qualify for NAFTA preferential treatment.

HOLDING:

Based on the information submitted, the imported seat cushion covers that are assembled in Mexico from U.S. formed and cut fabric are eligible for duty free treatment under subheading 9802..00.90, HTSUS.

We are unable to determine if the imported seat cushion covers which are cut and assembled in Mexico from fabric formed in the U.S. qualify as “originating goods” under NAFTA based upon the facts submitted.

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is 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
Commercial Rulings Division


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