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NY K89547




September 27, 2004

CLA2-RR:NC:N3:351 K89547

CATEGORY: CLASSIFICATION

Tom Leister
Transportation Manager
The Longaberger Company
Building F
5563 Raiders Road
Frazyesburg, OH 43822

RE: Classification and country of origin determination for basket liners; 19 CFR 102.21(c)(2); tariff shift; CBERA

Dear Mr. Leister:

This is in reply to your letter dated Sept. 14, 2004, requesting a classification and country of origin determination for basket liners of cotton fabric that will be imported into the United States.

FACTS:

The subject merchandise consists of textile liners for decorative household baskets.

The manufacturing operations for the liners are as follows: 100% cotton or 90% cotton/10% rayon woven fabric is sent to Nicaragua where the liners are cut and sewn and other finishing processes, such as adding buttons and button holes, are performed to complete the liners. It appears from your letter that the fabric is currently of U.S. origin but that in the future it will be of Chinese origin. It also appears from your letter that Longaberger sends the fabric to the manufacturer of the liners at no cost.

ISSUE:

What are the classification and country of origin of the subject merchandise? Does the merchandise qualify for duty-free treatment under any special trade programs?

CLASSIFICATION:

The applicable subheading for the basket liners of textile fabric will be 6307.90.9889, Harmonized Tariff Schedule of the United States Annotated (HTS), which provides for other made up textile articles, other. The general rate of duty will be seven percent ad valorem.

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at 19 U.S.C. 3592), enacted on December 8, 1994, provided rules of origin for textiles and apparel entered, or withdrawn from warehouse for consumption, on and after July 1, 1996.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, “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

6307 The country of origin of a good classifiable under subheading 6307.90 is the country, territory, or insular possession in which the fabric comprising the good was formed by a fabric-making process.

As the cotton fabric is formed in a single country, as per the terms of the tariff shift requirement, country of origin would ordinarily be conferred in that country. That is the case if the fabric is manufactured in China; that is, the country of origin in that case is China.

However, when the cotton fabric is manufactured in the United States, there is an exception. For textile products from the U.S. that are sent abroad for processing, Section 12.130(c), Customs Regulations, applies. Section 12.130(c) 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 basket liners made from U.S.-manufactured fabric, for quota, marking, and duty purposes, is the country in which the final assembly process occurs, that is, Nicaragua.

SPECIAL TRADE PROGRAMS:

Articles classifiable under subheading 6307.90.9889, HTS, which are products of Nicaragua, are entitled to duty-free treatment under the Caribbean Basin Economic Recovery Act (CBERA), upon compliance with all applicable regulations.

ASSISTS:

Please note that if Longaberger or any other source supplies the cotton fabric to the Nicaraguan manufacturer of the liners, the cost or value of that fabric will represent an assist under Section 402 of the Tariff Act (TA).

The term “assist” is defined as that which is supplied directly or indirectly by the buyer of imported merchandise, free of charge or at reduced cost, for use in connection with the sale of the merchandise for export to the U.S., under 19 U.S.C. 1401a(h)(1)(A). There are four categories of assists, but only the first, encompassing “materials, components, parts and similar items incorporated in the imported merchandise,” is potentially relevant to the instant situation. As an assist, the value of the fabric must be added to the processing costs of the snowmobile covers before the ad valorem rate of duty is applied, pursuant to Section 402, TA. Additionally, please note that the value of any assist will include transportation costs to the place of production. See Section 152.103(d), Customs Regulations (19 C.F.R. §152.103(d)).

HOLDING:

The country of origin of the basket liners made from Chinese fabric is China and must be marked to so indicate. The country of origin of the basket liners made from U.S. fabric is Nicaragua and likewise must be so marked. The basket liners of Nicaraguan origin are entitled to duty-free treatment under CBERA.

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 Mitchel Bayer at 646-733-3102.

Sincerely,

Robert B. Swierupski
Director,

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