NY R04924 - Classification, status under the North American Free Trade Agreement (NAFTA) and country of origin determination for quilts and pillows; General Note 12; Appendix to Part 181, Part II, Section 4(8); Self Produced Materials; 19 CFR 102.21(c)(2); tariff shift; NAFTA Preference Override; Article 509 - United States International Trade Commision Rulings

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NY R04924

October 11, 2006

CLA2-RR:E:NC:TA:349 R04924

CATEGORY: CLASSIFICATION

Ms. Mary Lou Francis
IKEA Wholesale, Inc.
100 Ikea Drive
Westhampton, NJ 08060

RE: Classification, status under the North American Free Trade Agreement (NAFTA) and country of origin determination for quilts and pillows; General Note 12; Appendix to Part 181, Part II, Section 4(8); Self Produced Materials; 19 CFR 102.21(c)(2); tariff shift; NAFTA Preference Override; Article 509

Dear Ms. Francis:

This is in reply to your letters dated September 19 and October 4, 2006, requesting a classification and country of origin determination for quilts and pillows which will be imported into the United States.

FACTS:

The subject merchandise consists of quilts and pillows referred to as LEN. Samples were not submitted. The outer shells of the quilts and pillows will be made from either 50 percent cotton and 50 percent polyester or 65 percent polyester and 35 percent cotton woven fabrics. They will be filled with polyester fibers. The manufacturing operations for the quilts and pillows are as follows:

PAKISTAN, INDIA, CHINA or NORTH KOREA:
-50/50 or 65/35 polyester and cotton fabric is woven. -greige fabric is shipped to Mexico.

CHINA, TAIWAN, UNITED STATES or MEXICO:
-polyester fiber is formed.
-staple fibers are shipped to Mexico.

MEXICO:
-polyester and cotton fabrics are bleached and processed. -for the pillows, fabrics are cut and sewn forming a pillow shell. -shell is stuffed with polyester fibers and sewn closed. -pillows are packed and shipped.
-for the quilts, staple fibers are carded and combed. -layers are combined and lightly heat treated to form a mat. -polyester/cotton fabrics are placed above and below the fiber mat. -the three layers are quilted together forming a quilted fabric. -quilted fabric is cut to size and the edges are finished. -finished quilts are packed and shipped.

ISSUE:

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

CLASSIFICATION:

The applicable subheading for the pillows will be 9404.90.2000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for mattress supports; articles of bedding and similar furnishing (for example, mattresses, quilts, eiderdowns, cushions, pouffes and pillows) fitted with any material or of cellular rubber or plastics, whether or not covered: other: pillows, cushions and similar furnishings: other. The general rate of duty will be 6 percent ad valorem.

The applicable subheading for the quilts will be 9404.90.8522, HTSUS, which provides for mattress supports; articles of bedding and similar furnishing (for example, mattresses, quilts, eiderdowns, cushions, pouffes and pillows) fitted with any material or of cellular rubber or plastics, whether or not covered: other: other: other: quilts, eiderdowns, comforters and similar articles with outer shell of man-made fibers. The general rate of duty will be 12.8 percent ad valorem.

Due to the fact that one version of the quilts and pillows is made from a 50/50 blend of fibers, they are classified using HTSUS Section XI Note 2(A) and Subheading Note 2(A). Additional U.S. Rule of Interpretation 1(d) states that the principles of Section XI regarding mixtures of two or more textile materials shall apply to the classification of goods in any provision in which a textile material is named. The blended fabrics will be classified as if they consisted wholly of that one textile material which is covered by the heading which occurs last in numerical order among those which equally merit consideration. Even a slight change in the fiber content may result in a change of classification, as well as visa and quota requirements. These products may be subject to U.S. Customs and Border Protection (CBP) laboratory analysis at the time of importation, and if the fabric is other than the stated blend they may be reclassified by CBP at that time.

Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at http://www.usitc.gov/tata/hts/.

The quilts fall within textile category designation 666, while the pillows are classified under a heading that is not assigned a textile category. With the exception of certain products of China, quota/visa requirements are no longer applicable for merchandise which is the product of World Trade Organization (WTO) member countries. The textile category number above applies to merchandise produced in non-WTO member-countries. Quota and visa requirements are the result of international agreements that are subject to frequent renegotiations and changes. To obtain the most current information on quota and visa requirements applicable to this merchandise, we suggest you check, close to the time of shipment, the “Textile Status Report for Absolute Quotas” which is available on our web site at www.cbp.gov. For current information regarding possible textile safeguard actions on goods from China and related issues, we refer you to the web site of the Office of Textiles and Apparel of the Department of Commerce at otexa.ita.doc.gov.

NAFTA ELIGIBILITY:

The quilts and pillows undergo processing operations in Mexico and the staple fibers may be formed in the United States in some cases. Mexico and the United States are countries provided for under the North American Free Trade Agreement. These products 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 material undergoes a change in tariff classification described in subdivision (t) to General Note 12, HTSUS. For heading 9404, HTSUS, the appropriate subdivision (t) rule states that:

A change to subheading 9404.90 from any other chapter, except from headings 5007, 5111 through 5113, 5208 through 5212, 5309 through 5311, 5407 through 5408 or 5512 through 5516.

When the 65/35 or 50/50 polyester and cotton woven fabric for the shells of the quilts and pillows leaves Pakistan, India, China or North Korea it is classified in heading 5513 or 5514, HTSUS, depending on the weight. As fabrics of headings 5513 and 5514, HTSUS, are excepted from meeting the tariff change to subheading 9404.90, HTSUS, it would initially appear that the non-originating material from Pakistan, India, China or North Korea does not undergo the requisite change in tariff classification. The staple fibers (5503.20, HTSUS) make the change in classification.

It is noted, however, that the Appendix to Part 181 of the Customs Regulations (19 CFR Part 181), which sets forth the NAFTA rules of origin regulations, specifies rules for determining whether certain non-originating materials undergo an applicable change in tariff classification when used in self- made goods. The Appendix to Part 181, Part II, Section 4 ("Originating Goods")(8), states:

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 the 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.

The quilted fabric and pillow shells, which are manufactured in Mexico prior to the completed quilts and pillows, are considered a “self-produced material.” On the basis of the foregoing, the producer of the quilts and pillows ("the good") has the option of identifying the quilted fabric and the pillow shells ("the self-produced material") as non-originating materials. If this choice is made, the quilted fabric and pillow shells (classifiable under subheading 5811.00 and 6307.90, HTSUS) fall within a tariff provision that is not excepted by the tariff shift rule set forth in subdivision (t). Accordingly, the quilts and pillows would be deemed as undergoing the requisite change in tariff classification.

Pursuant to the analysis set forth above, the quilts and pillows qualify as an originating good. 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

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 9404.90.85 is included in paragraph (e)(2) however, goods classified in that subheading which consist of fiber blends containing 16 percent or more by weight cotton are excepted. The quilts and pillows are made from a single fabric. As the fabric comprising the quilts and pillows is formed in a single country, that is, Pakistan when woven in Pakistan, India when woven in India, China when woven in China or North Korea when woven in North Korea, as per the terms of the tariff shift requirement, country of origin is conferred in Pakistan, India, China or North Korea.

However, the quilts and pillows 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.

Assuming that the producer opts to identify the quilted fabric and pillow shells as a "self-produced material," the quilts and pillows qualify as a NAFTA originating good and applying the terms of Section 102.19(a), the country of origin of the quilts and pillows is Mexico. They will be entitled to the special "MX" duty rate, provided that all other requirements of the NAFTA are met.

HOLDING:

If the producer in Mexico opts to identify the “self-produced material” (the quilted fabric and pillow shells) as a non-originating material, the country of origin of the finished quilts and pillows is Mexico and they will be entitled to the NAFTA “MX” duty rate of Free upon compliance with all applicable laws, regulations and agreements.

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 181.100(a)(2). 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 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 and Border Protection, it is recommended that a new ruling request be submitted.

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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