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HQ 562839

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October 7, 2003

MAR-2 RR:CR:SM 562839 KSG

CATEGORY: MARKING

Arthur W. Bodek, Esq.
Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP 245 Park Avenue
33rd Floor
New York, NY 10167-3397

RE: Country of origin marking for comforter set: NAFTA

Dear Mr. Bodek:

This is in response to your letter of August 18, 2003, requesting a binding ruling on behalf of F. Schumacher & Co., concerning the eligibility of a comforter set for preferential treatment under the North America Free Trade Agreement ("NAFTA") and the proper country of origin marking for the comforter set. A sample was included with your request.

FACTS:

The comforter set consists of a comforter, two pillow shams, and a bed skirt. The comforter will be produced in Mexico from the following materials:

Fabric-100% cotton, top fabric of comforter, from Pakistan Fabric-100% cotton, bottom fabric, from Malaysia Fabric- 100% polyester faux suede, top border, from Taiwan Fabric- 100% polyester, fiber-fill, from Mexico Buttons from U.S., covered with fabric from Pakistan Cord-100% polyester, from Mexico or Third Country

The foreign fabric will be imported into Mexico in rolls, where it will be cut into the components of a comforter shell. The components of the comforter shell will be sewn together on three sides to form the comforter shell. The shell will be stuffed with the fiber-fill and sewn closed. Then, the comforter shell will be quilted (where necessary) and the buttons and cord for the trims will be attached, forming the finished comforter. You state that the finished comforter is classified in subheading 9404.90, of the Harmonized Tariff Schedule of the United States ("HTSUS").

The pillow shams will be made from 100% cotton fabric from Pakistan on one side of the pillow shams with a flap to insert the pillow. On the other side of the pillow sham, there is one panel that is made of the cotton fabric from Pakistan and one panel that is made of 100% polyester faux suede from Taiwan and buttons from the U.S. that are covered with fabric from Pakistan. In Mexico, the fabric will be cut into components and sewn together. Buttons will be attached to one side of the pillow shams. You state that the pillow shams are classified in heading 6304, HTSUS.

The platform portion of the bed skirt will be made from 70% polyester, 30% cotton fabric from the U.S. or Pakistan, and the skirt will be made from 100% polyester faux suede from Taiwan with a border strip made of 100% cotton fabric from the U.S. In Mexico, the fabric will be cut into components and sewn together to form the bed skirts. You state that the finished bed skirt is classified in heading 6303, HTSUS. After production in Mexico, the comforter, pillow shams and bed skirt will be packaged together as a comforter set in clear vinyl retail packaging. You state that the comforter set is classified in subheading 9404.90, HTSUS, pursuant to GRI 3(b).

ISSUES:

I. Whether the imported comforter set qualifies as an "originating good" for the purposes of NAFTA.

II. What is the proper country of origin marking for the imported comforter set?

LAW AND ANALYSIS:

I. Originating good

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 comforter set 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 NAFTA 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 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;

Because the comforter set is not wholly obtained or produced entirely in Mexico and/or the United States, it will only qualify as an originating good of Mexico if the non-originating materials undergo the applicable change in tariff classification. Therefore, we must ascertain whether the non-originating materials in the subject comforter set are transformed in Mexico pursuant to General Note 12(b)(ii)(A). To qualify under this provision, the non-originating materials must undergo the change in tariff classification set forth in General Note 12(t), HTSUS. The comforter set is classified in subheading 9404.90, HTSUS, so the applicable rule would be GN 12(t)/94.7, which reads as follows:

A change to subheading 9409.90 from any other chapter, except from heading 5007, 5111 through 5113, 5208 through 5212, 5309 through 5311, 5407 through 5408 or 5512 through 5516.

At the time the non-originating fabrics for the comforter, pillow shams and bed skirt are imported into Mexico, they are classifiable under headings 5208 through 5212, 5407, 5408, or 5512 through 5516, which provide for various types of cotton and man-made fiber woven fabrics. As these headings are excepted by subdivision (t), it would initially appear that the non-originating materials do not undergo the requisite change in tariff classification.

However, when a non-originating material is manufactured into an intermediate article (a "self produced material") in a NAFTA country prior to being manufactured into the finished article, that intermediate article (rather than the imported raw material) may be designated as the non-originating material for purposes of applying the applicable NAFTA tariff-shift rule.

The NAFTA Rules of Origin Regulations are set forth in 19 CFR Part 181, Appendix ("App."). The term "self-produced material" means "a material that is produced by the producer of a good and used in the production of that good." See 19 CFR Part 181, App., sec. 2(1).

Section 4(8) of the NAFTA Rules of Origin Regulations, 19 CFR Part 181, App. sec. 4(8), states that:

For purposes of determining whether non-originating materials undergo an applicable change in tariff classification, a self-produced material may, at the choice of the producer of a good into which the self-produced material is incorporated, be considered as an originating material or non-originating material, as the case may be, used in the production of that good.

An example is set forth in 19 CFR Part 181, App., sec. 4(9):

Producer A, located in a NAFTA country, produces Good A. In the production process, Producer A uses originating Material X and non-originating Material Y to produce Material Z. Material Z is a self-produced material that will be used to produce Good A.

The rule set out in Schedule I for the heading under which Good A is classified specifies a change in tariff classification from any other heading. In this case, both Good A and the non-originating material Y are of the same heading. However, the self-produced Material Z is of a heading different than that of Good A.

For purposes of determining whether the non-originating materials that are used in the production of Good A undergo the applicable change in tariff classification, Producer A has the option to consider the self-produced Material Z as the material that must undergo a change in tariff classification. As Material Z is of a heading different than that of Good A, Material Z satisfies the applicable change in tariff classification and Good A would qualify as an originating good.

On the basis of the foregoing, the producer of the comforter set has the option of identifying the comforter shell, bed skirt and pillow shams ("the self produced materials") as non-originating materials. If this choice is made, the comforter shell (classifiable in heading 6307, HTSUS), bed skirt (classifiable in heading 6303, HTSUS), and pillow shams (classifiable in heading 6304), fall within tariff provisions that are not excepted by the tariff shift rule set forth in subdivision (t) for goods of subheading 9404.90, HTSUS. Accordingly, the comforter shell, bed skirt and pillow shams would be deemed as undergoing the requisite change in tariff classification. Pursuant to the analysis set forth above, the comforter set qualifies as an originating good. This is consistent with Headquarters Ruling Letter ("HRL") 562498, dated November 13, 2002, and HRL 965986, dated May 1, 2003.

Accordingly, the comforter set will be entitled to the special "MX" rate of duty if it qualifies to be marked as a good of Mexico and provided that all other NAFTA requirements are met.

II. NAFTA Marking Rules

Section 334 of the Uruguay Round Agreements Act ("section 334") (codified at 19 U.S.C. 3592), enacted on December 8, 1994, provided rules of origin for textiles and apparel entered, or withdrawn from warehouse, for consumption, on and after July 1, 1996. Section 102.21, Customs Regulations (19 CFR 102.21), published September 5, 1995, in the Federal Register, implements section 334 (60 Fed. Reg. 46188). Section 334 was amended by section 405 of the Trade and Development Act of 2000, enacted on May 18, 2000, and accordingly, 19 CFR 102.21 was amended (68 Fed. Reg. 8711). Thus, the country of origin of a textile or apparel product shall be determined by the sequential application of the general rules set forth in paragraphs (c)(1) through (c)(5) of section 102.21.

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, 19 CFR 102.21(c)(1) 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 foreign material 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." Based on the information presented, the following rules are applicable. Section 102.21(e)(1) states that for goods classified in subheading 9404.90, HTSUS, and headings 6303 and 6304, the applicable rules are:

HTSUS 6301-6306 Except for goods of headings 6302 through 6304 provided for in paragraph (e)(2) of this section, the country of origin of a good classifiable under heading 6301 through 6306 is the country, territory, or insular possession in which the fabric comprising the good was formed by a fabric-making process.

HTSUS 9404.90 Except for goods of subheading 9404.90 provided for in paragraph (e)(2) of this section, 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.

Section 102.21(e)(2) provides a rule of origin for the following goods:

(2) For goods of HTSUS headings 6213 and 6214 and HTSUS subheadings 6117.10, 6302.22, 6302.29, 6302.52, 6302.53, 6302.59, 6302.92, 6302.93, 6302.99, 6303.92, 6303.99, 6304.19, 6304.93, 6304.99, 9404.90.85 and 9404.90.95, except for goods classified under those headings or subheadings as of cotton or of wool or consisting of fiber blends containing 16 percent or more by weight of cotton:.

Because the comforter, pillow shams and bed skirt will be made from fabrics formed in more than one country, the rules for the goods set forth in section 102.21(e)(1) will not be met. In addition, the rule set forth in section 102.21(e)(2) is inapplicable in this case because these articles are 16 percent or more by weight of cotton. Therefore, the origin of the set cannot be determined under section 102.21(c)(2).

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 headings 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.

Further, 19 CFR 102.21(c)(3) is inapplicable since the comforter, pillow shams and bedskirt are not knit to shape and headings 6301 through 6306 and subheading 9404.90, HTSUS, are excepted from provision (c)(3)(ii).

Section 102.21(c)(4) states that :

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.

Customs held in HRL 562498 that for a comforter, the fabric making process for the outer shell of the comforter constituted the most important manufacturing process. However, in this case, the outer shell of the comforter is made of two fabrics that do not come from a single country. Therefore, the country of origin cannot be determined under 19 CFR 102.21(c)(4). Similarly, Customs has held that for a pillow sham, the fabric-making process is the most important manufacturing process. See HRL 959327, dated June 24, 1996, as an example. In this case, the pillow shams are made from fabrics sourced in more than one country and therefore, the country of origin cannot be determined under 19 CFR 102.21(c)(4). For a bed skirt, Customs has also held that the most important manufacturing process occurs at the time of fabric making and that if the fabric is sourced from more than one country, the skirt and the platform portion are considered equally important, and therefore, the country of origin cannot be determined pursuant to 19 CFR 102.21(c)(4). See HRL 965739, dated June 27, 2002.

Section 102.21(c)(5) states that:

Where 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.

In this case, the comforter, pillow shams and bed skirt are all cut and assembled in Mexico. This is the last country in which an important assembly occurs for the comforter, pillow shams and the bedskirt. Further, cutting of the components and assembly is not a non-qualifying operation pursuant to 19 CFR 102.17. Accordingly, pursuant to 19 CFR 102.21(c)(5), Mexico is the country of origin for the comforter, pillow shams and the bedskirt.

HOLDING:

Based on the information provided, the imported comforter set is originating for the purposes of NAFTA. The comforter set should be marked as a product of Mexico for the purposes of 19 U.S.C. 1304.

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 19 CFR 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect.

Should it be subsequently determined that the information furnished is not complete and does not comply with 19 CFR 177.9(b)(1), 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 in accordance with 19 CFR 177.2.

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are 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,

Myles B. Harmon, Director
Commercial Rulings Division

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See also:

• Tariff No.: 6209.20.50 - Babies' garments & clothing acc. nesoi, of cotton, incl. sunsuits & sim app, sets & parts of sets, & diapers, not knitted or crocheted
• Tariff No.: 9404.90.85 - Quilts, eiderdowns, comforters and similar articles, not of cotton
• Tariff No.: 9404.90.95 - Arts. of bedding & similar furnishings stuffed or internally fitted w/any material nesoi