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NY L82177





February 3, 2005

CLA2-RR:NC:TA:349 L82177

CATEGORY: CLASSIFICATION

Ms. Margaret R. Polito
Neville Peterson LLP
17 State Street, 19th Floor
New York, NY 10004

RE: Classification, status under the North American Free Trade Agreement (NAFTA) and country of origin determination for electric blankets; 19 CFR 102.21(c)(2); tariff shift; 19 CFR 102.19(a) and (b); NAFTA Preference Override; Article 509

Dear Ms. Polito:

This is in reply to your letter dated January 12, 2005, requesting a classification, status under the NAFTA and country of origin determination for electric blankets which will be imported into the United States. This request is made on behalf of WestPoint Stevens Inc.

FACTS:

The subject merchandise consists of electric blankets. A sample of the blanket was submitted. The blanket is made from two layers of Vellux® fabric. Wires (the heating element) are placed between the layers and held in place by stitching that goes through both layers of fabric. The wires are connected to a circuit board/control panel that is used to adjust the temperature of the blanket. The control panel is attached to an electric cord. The two layers of fabric are sewn together along the edges. The Vellux® fabric consists of a layer of tricot knit fabric laminated to a thin layer of polyurethane foam. A latex adhesive is applied to the other side of the foam and nylon flock is electrostatically applied to that side.

You have described two manufacturing scenarios. The manufacturing operations for the electric blankets are as follows:

Scenario 1
UNITED STATES:
-nylon tricot fabric is knit.
-polyurethane foam is formed.
-nylon flock is created.
-components are combined to create the Vellux® fabric. -fabric is shipped to Mexico.

ENGLAND:
-electric wires are made.
-wires are shipped to Mexico.

CHINA:
-circuit board/control panel formed and shipped to Mexico.

MEXICO:
-fabric cut to length and width.
-wires inserted between two fabric layers and sewn into place. -wires connected to circuit board/control panel and electric cord. -blanket sewn on all four sides.
-blanket is tested and shipped.

Scenario 2
ENGLAND:
-electric wires are made.
-wires are shipped to Mexico.

CHINA:
-nylon tricot fabric is knit.
-polyurethane foam is formed.
-nylon flock is created.
-components are combined to create the fabric. -fabric is shipped to Mexico.
-circuit board/control panel formed and shipped to Mexico.

MEXICO:
-fabric cut to length and width.
-wires inserted between two fabric layers and sewn into place. -wires connected to circuit board/control panel and electric cord. -blanket sewn on all four sides.
-blanket is tested and shipped.

ISSUE:

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

CLASSIFICATION:

The applicable subheading for the electric blankets will be 6301.10.0000, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for blankets and traveling rugs: electric blankets. The general rate of duty will be 11.4 percent ad valorem.

The blankets fall within textile category designation 666. Quota and visa status are the result of international agreements that are subject to frequent renegotiations and changes. To obtain the most current information as to whether quota and visa requirements apply to this merchandise, we suggest that you check, close to the time of shipment, the “Textile Status Report for Absolute Quotas” available at our web site at www.cbp.gov. In addition, you will find current information on textile import quotas, textile safeguard actions and related issues at the web site of the Office of Textiles and Apparel, at otexa.ita.doc.gov.

NAFTA ELIGIBILITY:

The blankets undergo processing operations in Mexico under scenario 2 and in the United States and Mexico under scenario 1. The United States and Mexico are countries provided for under the North American Free Trade Agreement. The blankets will be eligible for the NAFTA preference if they qualify to be marked as a good of Mexico and if they are wholly obtained or produced in the NAFTA territories or transformed in Mexico so that the non-originating materials undergo a change in tariff classification described in subdivision (t) to General Note 12, HTSUSA. For heading 6301, HTSUSA, the appropriate subdivision (t) rule states that:

A change to headings 6301 through 6302 from any other chapter, except from headings 5106 through 5113, 5204 through 5212, 5307 through 5308 or 5310 through 5311, chapters 54 through 55, or headings 5801 through 5802 or 6001 through 6006, provided that the good is both cut (or knit to shape) and sewn or otherwise assembled in the territory of one or more of the NAFTA parties.

In Scenario 1 and 2 when the non-originating electric wires from England and the circuit board/control panels from China enter Mexico, they are classified in headings outside Section XI, HTSUSA. In scenario 2 when the laminated and flocked fabric from China enters Mexico, it is classifiable under heading 5907, HTSUSA. The Vellux® fabric in scenario 1 is stated to be an originating fabric however, if not wholly originating it would also be classified under heading 5907, HTSUSA. As the headings for the electrical components and heading 5907, HTSUSA are not excepted by subdivision (t), the merchandise undergoes the requisite change in tariff classification and the electric blankets qualify for NAFTA preference. Accordingly, they will be entitled to the special "MX" rate of duty if they qualify to be marked as a good of Mexico and provided that all other NAFTA requirements are met.

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

6301-6306 Except for goods of heading 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.

As the fabric comprising the blankets is formed in a single country, that is, the United States in scenario 1 and China in scenario 2, as per the terms of the tariff shift requirement, country of origin is conferred in the United States for scenario 1 and in China for scenario 2.

However, the electric blankets qualify as a NAFTA 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.

(b) If, under any provision of this part, the country of origin of a good which is originating within the meaning of § 181.1(q) of this chapter is determined to be the United States and that good has been exported from, and returned to, the United States after having been advanced in value or improved in condition in another NAFTA country, the country of origin of such good for Customs duty purposes is the last NAFTA country in which that good was advanced in value or improved in condition before its return to the United States.

Based on the facts presented, the scenario 1 blanket is an originating good under NAFTA and has been determined under section 102.21(c)(2) to be a good of U.S. origin. Because the articles were returned to the U.S. after having been advanced in value or improved in condition in Mexico by virtue of cutting and sewing into a finished electric blanket, the country of origin of the scenario 1 blanket for Customs duty purposes is Mexico, pursuant to Section 102.19(b). Accordingly, the “MX” NAFTA rate will be applicable to the scenario 1 blanket.

The blankets in scenario 2 also qualify as a NAFTA originating good. Applying the terms of Section 102.19(a), the country of origin of the scenario 2 electric blankets is Mexico, the last NAFTA country in which the good underwent production. The electric blankets in both scenarios will be entitled to the special "MX" duty rate, provided that all other requirements of the NAFTA are met.

HOLDING:

The country of origin of the electric blankets in scenario 2 is Mexico for marking and duty purposes. The scenario 2 blankets will be entitled to the NAFTA “MX” duty rate of Free upon compliance with all applicable laws, regulations and agreements. By virtue of the NAFTA override in 19 CFR 102.19(b), the country of origin of the scenario 1 electric blankets is Mexico for duty purposes and they are entitled to the NAFTA “MX” special duty rate of Free. However, the country of origin of the scenario 1 electric blankets for marking purposes is the United States. The scenario 1 blankets are not subject to the marking requirements of 19 U.S.C. 1304.

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.

This ruling letter is binding only as to the party to whom it is issued and may be relied on only by that party.

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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