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NY R00852




October 13, 2004

CLA2-RR:NC:TA:349 R00852

CATEGORY: CLASSIFICATION

Ms. Susan Lyons
Pier 1 Imports (U.S.), Inc.
301 Commerce Street, Suite 600
Fort Worth, TX 76161

RE: Classification and country of origin determination for cushions; 19 CFR 12.130; substantial transformation; 19 CFR 102.21(c)(5); last country where an important assembly or manufacturing process occurred

Dear Ms. Lyons:

This is in reply to your letter dated September 22, 2004, requesting a classification and country of origin determination for cushions which will be imported into the United States.

FACTS:

The subject merchandise consists of seat cushions. A sample was not submitted. The cushions are referred to as Style “Rhapsody” and will be imported under the following SKU numbers: 2052027, 2052042, 2052055 and 2052068. The shell will be made from 100 percent cotton fabric and it will be stuffed with polyester fiberfill. The manufacturing operations for the cushions are as follows:

ISRAEL:
-cotton fabric is formed.
-fabric is shipped to Canada.

CANADA:
-cotton fabric is cut to size and shape.
-cushion shell is formed.
-shell is stuffed and sewn closed.
-cushions are packed and shipped.

In your letter you indicate that you do not intend to request or claim preferential treatment under the North American Free Trade Agreement (NAFTA).

ISSUE:

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

CLASSIFICATION:

The applicable subheading for the cushions will be 9404.90.1000, Harmonized Tariff Schedule of the United States Annotated (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: of cotton. The general rate of duty will be 5.3 percent ad valorem.

The cushions fall within textile category designation 369. 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.

EXCEPTION FOR TEXTILE GOODS PROCESSED IN ISRAEL

Section 102.21(a) specifically states that the rules in Section 102.21 shall not apply "for purposes of determining whether goods originate in Israel or are the growth, product, or manufacture of Israel." The basis for the Israeli exception is Section 334(b)(5) of the Uruguay Round Agreements Act. Section 334(b)(5) provides that:

This section shall not affect, for purposes of the customs laws and administration of quantitative restrictions, the status of goods that, under rulings and administrative practices in effect immediately before the enactment of this Act, would have originated in, or been the growth, product, or manufacture of, a country that is a party to an agreement with the United States establishing a free trade area, which entered into force before January 1, 1987. For such purposes, such rulings and administrative practices that were applied, immediately before the enactment of this Act, to determine the origin of textile and apparel products covered by such agreement shall continue to apply after the enactment of this Act, and on and after the effective date described in subsection (c), unless such rulings and practices are modified by the mutual consent of the parties to the agreement.

Israel is the only country that qualifies under the terms of Section 334(b)(5). As the Section 334 rules of origin for textiles and apparel products do not apply to Israel, we refer to the 19 CFR 12.130 rules of origin, the rules of origin applicable to textiles and textile products before the enactment of Section 334. Section 334(b)(5) makes clear that if country of origin was conferred in Israel under Section 12.130, Israel will now be accorded the same treatment. This interpretation of Section 334(b)(5) was confirmed in a Notice of a general statement of policy, Treasury Decision 96-58, appearing in the Federal Register, Vol. 61, No. 148, dated July 31, 1996.

The cotton fabric used to make the shell of the cushions was formed in Israel. The fabric was shipped to Canada where it was cut, sewn, stuffed with filling and finished. In the case of the instant merchandise, the substantial transformation occurs in Canada at the time of the cutting of the fabric and the assembly of those cut components into the cushion. Accordingly, as Israel does not confer origin pursuant to Section 12.130, we then apply the rules in Section 102.21 to determine the country of origin.

SECTION 102.21 RULES OF ORIGIN FOR TEXTILE AND APPAREL PRODUCTS

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

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.

Subheading 9404.90.10 is not included in the paragraph (e)(2) exception to the above tariff shift rule. The cushions are comprised of a single fabric that is formed in a single country. Following the terms of the tariff shift requirement, the country of origin of the cushions is conferred in Israel where the fabric was formed. However, we have previously determined that the cushions are not the growth, product or manufacture of Israel under the rulings and administrative practices in effect prior to December 8, 1994. The previously cited notice of a general statement of policy, Treasury Decision 96-58, stated in part that:

“it appears to Customs that Congress, in enacting section 334(b)(5), intended that Israel maintain its status quo ante in regard to country of origin determinations for goods processed in that country. Section 102.21(a), Customs Regulations, is clear on its face that the textile origin rules contained in that section will not be applied to determine whether goods originate in, or are the growth, product or manufacture of Israel. Thus, if a good is determined not to be a product of Israel under the rulings and administrative practices in effect prior to December 8, 1994, applying the rules in section 102.21 cannot result in Israel being the country of origin of the good.”

Noting the above, as the application of a rule in section 102.21 results in Israel being the country of origin of a good, that result is invalid and Customs and Border Protection (CBP) will bypass that rule and proceed to the next rule in order.

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 heading 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.

As the cushions are not knit to shape and subheading 9404.90 is excepted from provision (ii), Section 102.21 (c)(3) is inapplicable.

Section 102.21 (c)(4) states, "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." In the case of the subject merchandise, the most important manufacturing process occurs at the time of fabric making. Basing the country of origin determination on the fabric making process as opposed to the assembly process carries out the clear intent of Section 334 as expressed in Section 334 (b)(2) and Part 102.21(c)(3)(ii). In the case of the cushions, the fabric making process occurs in Israel. As previously noted, the application of the rules in section 102.21 cannot result in Israel being the country of origin and therefore section 102.21(c)(4) is inapplicable for the cushions.

Paragraph (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". Accordingly, in the case of the subject cushions, country of origin is conferred by the last country in which an important assembly or manufacturing process occurred, that is, Canada.

HOLDING:

The country of origin of the cushions is Canada.

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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