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NY G84264




November 20, 2000

CLA-2-RR:NC:TA:349 G84264

CATEGORY: CLASSIFICATION

Mr. Carlo Bucci
Terra Marketing
2927 Blvd. De la Concorde East #207
Duvernay Laval, Quebec
Canada H7E 2B5

RE: Classification, status under the North American Free Trade Agreement (NAFTA) and country of origin determination for a chair pad; 19 CFR 102.21(c)(2); tariff shift; 19 CFR 102.19(a); NAFTA preference override; Article 509

Dear Mr. Bucci:

This is in reply to your letter dated November 6, 2000, requesting a classification, status under the NAFTA and country of origin determination for a chair pad which will be imported into the United States.

FACTS:

The subject merchandise, referred to as Product # 100, is a filled chair pad. The submitted sample is composed of a solid piece of polyurethane foam covered with a textile fabric. The woven fabric is made from 70 percent polyester and 30 percent cotton fibers and is printed with a plaid pattern. It measures approximately 13 x 14 inches and the edges are finished with strips of self-fabric. The strips of fabric extend to form tie strings that are used to secure the pad to a chair. You have detailed two different manufacturing scenarios. The manufacturing operations for the chair pad are as follows:

Scenario 1
Pakistan:
-fabric is woven and printed.
-fabric is shipped to Mexico in 200 yard rolls.

Mexico:
-polyurethane foam is formed and cut to size. -fabric is cut to size and shape and sewn to form a chair pad shell. -shell is stuffed with the plastic foam, sewn closed and finished. -chair pads are packed and shipped to the United States.

Scenario 2
Pakistan:
-fabric is woven and printed.
-fabric is cut to size and shape and sewn to form a chair pad shell. -chair pad shell is shipped to Mexico.

Mexico:
-polyurethane foam is formed and cut to size. -shell is stuffed with the plastic foam, sewn closed and finished. -chair pads are packed and shipped to the United States.

ISSUE:

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

CLASSIFICATION:

The applicable subheading for the foam filled chair pad will be 9404.90.2000, 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: pillows, cushions and similar furnishings: other. The general rate of duty will be 6 percent ad valorem.

Subheading 9404.90.2000, HTSUSA, is not assigned a textile category designation and item classified therein are not subject to quota or visa restrictions. 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.gov. In addition, 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 chair pad 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 chair pad at issue will be eligible for the "Special" "MX" rate of duty provided it is a NAFTA "originating" good under General Note 12(b), HTSUSA, and it qualifies to be marked as a good 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 nonoriginating 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;

(iii) they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials;

Accordingly, the subject merchandise qualifies as a good of Mexico only if the good has been transformed in Mexico such that the non-originating material (fabric in scenario 1 and chair pad shell in scenario 2) undergoes the applicable change in tariff.

The chair pad 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 chair pad in Scenario 1, when the non-originating material from Pakistan enters Mexico it is classifiable in either heading 5513 or heading 5514, HTSUSA. As fabrics of these headings are excepted from meeting the tariff change to subheading 9404.90, HTSUSA, the non-originating material from Pakistan does not undergo the requisite change in tariff classification. Accordingly, the chair pad in scenario 1 is not eligible for the NAFTA preference.

In Scenario 2, when the chair pad shell from Pakistan is sent to Mexico, the shell is classified in heading 6307, HTSUSA. As this heading is not excepted by subdivision (t) for subheading 9404.90, HTSUSA, the non-originating material from Pakistan undergoes the requisite change in classification. The Scenario 2 chair pad is eligible for the NAFTA preference. Assuming the chair pad qualifies to be marked as a good of Mexico, it is entitled to the special "MX" duty rate of Free, 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 addressed in Headquarters Ruling Letter (HQ) 962122 dated October 1, 1998 which stated that: "...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:
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 chair pad, 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 chair pad 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.

As the fabric comprising the chair pad in both scenarios is formed in a single country, following the terms of the tariff shift requirement, the country of origin of the chair pad is conferred in Pakistan. However, the chair pad in Scenario 2 qualifies as an originating good. 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 chair pad in Scenario 2 is Mexico.

HOLDING:

The subject chair pad is classified in subheading 9404.90.2000, HTSUSA, which provides for other pillows, cushions and similar furnishings.

The country of origin of the chair pad in Scenario 1 is Pakistan. The above subheading is not assigned a textile category number and items classified therein are not subject to quota or visa restrictions. The country of origin of the chair pad in Scenario 2 is Mexico. That chair pad is entitled to the NAFTA "MX" 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 John Hansen at 212-637-7078.

Should you wish to request an administrative review of this ruling, submit a copy of this ruling and all relevant facts and arguments within 30 days of the date of this letter, to the Director, Commercial Rulings Division, Headquarters, U.S. Customs Service, 1300 Pennsylvania Ave. N.W., Washington, D.C. 20229.

Sincerely,

Robert B. Swierupski
Director,

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