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NY K88759




September 15, 2004

CLA2-RR:NC:TA:349 K88759

CATEGORY: CLASSIFICATION

Mr. Mathews C. Herring
The Hipage Company, Inc.
251 West Main Street
Dublin, VA 24084

RE: Classification and country of origin determination for tufted rugs; 19 CFR 102.21(c)(2); tariff shift

Dear Mr. Herring:

This is in reply to your letter dated July 23, 2004, received by this office on August 19, 2004, requesting a classification and country of origin determination for tufted rugs which will be imported into the United States. This request is made on behalf of Bacova Guild Ltd.

FACTS:

The subject merchandise consists of tufted rugs. A sample was not submitted. The rugs are made from nylon yarns tufted into a pre-existing base with a latex backing. You have indicated in your letter that all components are products of the United States. The manufacturing operations for the rugs are as follows:

UNITED STATES:
-carpet backing is formed.
-nylon yarns are formed.
-yarns are tufted into the base and latex backing is applied. -carpeting, heat transfer paper, nylon sewing yarn, labels and packing boxes for return to U.S. are shipped to Uruguay.

URUGUAY:
-carpets are cut to size (tufting pattern indicates where to cut). -rugs are printed using heat transfer paper by a dye sublimation process. -edges are sewn and labels are attached.
-rugs are packed and shipped.

ISSUE:

What are the classification and country of origin of the subject merchandise?

CLASSIFICATION:

The applicable subheading for the rugs if not more than 5.25m2 will be 5703.20.2010, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for carpets and other textile floor coverings, tufted, whether or not made up: of nylon or other polyamides: other measuring not more than 5.25m2 in area. The rate of duty will be 6.7 percent ac valorem.

The applicable subheading for the rugs if more than 5.25m2 will be 5703.20.2090, HTSUSA, which provides for carpets and other textile floor coverings, tufted, whether or not made up: of nylon or other polyamides: other other. The rate of duty will be 6.7 percent ad valorem.

The rugs fall within textile category designation 665. 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 Textile Status Report for Absolute Quotas, which is available at our Web site at www.cbp.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.

COUNTRY OF ORIGIN - LAW AND ANALYSIS:

Section 334 of the Uruguay Round Agreements Act (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 C.F.R. 102.21), published September 5, 1995, in the Federal Register, implements Section 334 (60 FR 46188). Section 334 of the URAA was amended by section 405 of the Trade and Development Act of 2000, enacted on May 18, 2000, and accordingly, section 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 (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, 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

5701-5705 A change to heading 5701 through 5705 from any other chapter.

As the change from yarns, base fabric and latex to carpeting of Chapter 57 occurred in a single country, that is, the United States, as per the terms of the tariff shift requirement, country of origin is conferred in The United States. However, there is an exception for textile products from the United States that are sent abroad for processing. Section 12.130(c), Customs Regulations, provides that any product of the United States that is returned after having been advanced in value or improved in condition abroad, or assembled abroad, shall be a foreign article.

Section 12.130, which remains in effect, was originally intended to be used to determine the country of origin of textiles and textile products for quota/visa requirements. In T.D. 90-17, issued February 23, 1990, Customs announced a change in practice and position. This change resulted in Customs using Section 12.130 for quota, duty, and marking purposes when making country of origin determinations for textile goods. In accordance with T.D. 90-17 and Section 12.130(c), the country of origin of the rugs made from U.S. tufted carpeting is Uruguay, for quota, marking, and duty purposes. However, this position has recently been modified. On July 11, 2000, Customs published T.D. 00-44 in the Federal Register (65 FR 42634), stating that effective October 10, 2000, Customs will no longer apply 19 CFR 12.130(c) for purposes of country of origin marking. Therefore, in accordance with T.D. 00-44, Section 12.130(c) and Section 102.21(c)(2), the country of origin of the rugs will be the United States. Section 12.130(c) remains in effect for duty and quota purposes and the rugs are subject to the general rate of duty noted previously.

As the origin of the rugs for the purposes of marking has been determined to be the United States, the rugs are not required to be marked as a foreign article for purposes of 19 U.S.C. 1304. However, separate Federal Trade Commission marking requirements exist regarding country of origin, fiber content, and other information that must appear on many textile items. For more information on the applicability of the requirements under the Textile Fiber Products Identification Act (TFPIA), you should contact the Federal Trade Commission, Textile Program, Division of Enforcement, Bureau of Consumer Protection, 600 Pennsylvania Avenue, N.W., Washington, D.C., 20580.

HOLDING:

The country of origin of the rugs for marking purposes is the United States. Based upon international textile trade agreements products of Uruguay are not subject to quota or visa restrictions.

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 177.9(b)(1). 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 177 of the Customs Regulations (19 C.F.R. 177). 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 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 646-733-3043.

Sincerely,

Robert B. Swierupski
Director,

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