United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 1994 HQ Rulings > HQ 0955731 - HQ 0955819 > HQ 0955774

Previous Ruling Next Ruling



HQ 955774


April 13, 1994
CLA-2 CO:R:C:T 955774 CMR

CATEGORY: CLASSIFICATION

TARIFF NO.: 6307.90.9986

Mr. Jack Alsup
Alsup & Alsup, Inc.
P.O. Box 1251
Del Rio, Texas 78841

RE: Country of origin and eligibility for the North American Free Trade Agreement (NAFTA) duty preference of cushioned beach towel

Dear Mr. Alsup:

This is in response to your request of December 9, 1993, on behalf of your client, Douglas & Lomason Company, for a ruling on the applicability of NAFTA preferential treatment and the proper country of origin for a cushioned beach towel. Your request was forwarded to this office for a response. We did not receive any sample.

FACTS:

By letter dated March 31, 1993, you requested a classifi- cation ruling for the Sun-n-Comfort Cushioned Beach Towel at issue. In response, Customs issued DD 884730 of April 22, 1993, classifying the beach towel in subheading 6307.90.9986, HTSUSA, which provides for other made up articles, other. That ruling described the cushioned beach towel as:
consisting of terry cloth material laminated to a 3/4 inch thick foam cushion. The complete cushion measures 27 inches by 60 inches. It has woven straps and a woven handle for carrying and storage.

In your December 9th ruling request, you describe the production of the article. One hundred percent cotton terry cloth is imported in rolls from China into the United States. [We note that your March 31st letter indicated the terry cloth fabric consisted of 90 percent cotton and 4.3 percent polyester.] In the U.S., the terry cloth is flame laminated to a 100 percent polyether foam backing and scrim covering of 100 percent tricot nylon. The foam backing and scrim covering are in roll form and -2-
are of U.S. origin. The laminated material is then shipped to Mexico where it is cut to shape, binding material is sewn around the outside edge, two elastic straps are added to keep the pad rolled up when not in use and a carrying strap is sewn on. [The binding material, elastic straps and carrying strap are of U.S. origin and are shipped to Mexico in roll form.] The finished article is then packaged for shipment to the United States.

You included a cost analysis by country indicating China cost, 22 percent; U.S. cost, 66 percent; and Mexican cost, 12 percent.

ISSUE:

Does the cushioned beach towel qualify for NAFTA preferential treatment?

What is the country of origin of the finished article for marking and quota/visa purposes?

LAW AND ANALYSIS:

General Note 12 of the Harmonized Tariff Schedule of the United States Annotated (hereinafter HTSUSA) incorporates Article 401, North American Free Trade Agreement (NAFTA), into the HTSUSA. Note 12(b) provides in pertinent part:

For the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as "goods originating in the territory of a NAFTA party" only if--

(i) they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; or

(ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that--

(A) except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein, or,

(B) the goods otherwise satisfy the applicable requirements of subdivisions (r), (s) and (t) where no change in tariff classification is required, and the goods satisfy all other requirements of this

(iii) they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials.

Since the cushioned beach towel is produced in Mexico of materials from the United States (a NAFTA country) and China, it does not meet the eligibility requirements of General Notes 12(b)(i) or 12(b)(iii). Therefore, we must ascertain whether the cushioned beach towel qualifies for NAFTA eligibility under General Note 12(b)(ii). To qualify under this provision, we must determine if the non-originating material, i.e., the terry fabric, undergoes the requisite change in tariff classification required in General Note 12(t).

As indicated in DD 884730, the cushioned beach towel is classified in subheading 6307.90.9986, HTSUSA. The rule applicable to goods of heading 6307, HTSUSA, is provided for in General Note 12(t), Chapter 63, Rule 4, which states, in pertinent part:

A change to headings 6304 through 6310 from any other chapter, except from headings * * * 5801 through 5802 * * *, 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.

Chapter Rule 1 of General Note 12(t), Chapter 63, states:

For purposes of determining the origin of a good of this chapter, the rule applicable to that good shall only apply to the component that determines the tariff classification of the good and such component must satisfy the tariff change requirements set out in the rule for the good.

The cushioned beach towel is a composite of different materials, i.e., terry fabric, foam padding and nylon scrim. Customs believes it is the terry fabric which imparts the essential character to the article (see General Rule of Interpretation 3(b), HTSUSA) and thus it is classifiable as a textile article. See also, DD 884730 classifying the good as an other made up textile article. Since the terry fabric determines the classification of the good and is a non-originating material, it must meet the required tariff change cited above.

As you correctly indicated in your letter of December 9th, the cotton terry fabric imported from China is classifiable in subheading 5802.19, HTSUSA. As a change from 5802 to 6307 is excepted from the applicable tariff shift rule, the cotton terry fabric does not meet the required tariff change and the cushioned beach towel does not qualify for NAFTA preferential treatment.

Since the good at issue is subjected to processing in the territories of NAFTA parties, it is subject to the country of origin marking rules set out in the interim amendments to the Customs Regulations (19 CFR Part 102). The interim amendments to the Customs Regulations were published as T.D. 94-4 (59 Fed. Reg. 109, January 3, 1994) with corrections (59 Fed. Reg. 5082, February 3, 1994) and T.D. 94-1 (59 Fed. Reg. 69460, December 30, 1993). These interim amendments took effect on January 1, 1994, to coincide with the effective date of the NAFTA.

Section 102.11 sets forth the general rules to determine country of origin. It provides, in pertinent part, in section

(a) The country of origin of a good is the country in which:

(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.

Section 102.20(k), Section XI (Chapters 50 through 63), states the tariff shift requirement for goods of 6307.90 is:

A change to subheading 6307.90 from any other heading provided that the change is the result of at least cutting and a significant sewing or assembly operation.

The change in classification of the laminated fabric to the finished cushioned beach towel is clearly a change to 6307.90 from another heading and that change is the result of cutting and sewing. However, the sewing of binding to the edges of the cushioned towel and the addition of two elastic straps and a carrying strap is not, in our view, a significant sewing operation. Therefore, the good fails to meet the specific tariff shift rule.

Section 102.20(k), Section XI (Chapters 50 through 63), contains Notes applicable to the various tariff shift requirements contained therein. Note 3 provides:

For the purposes of Section 102.11(b) of the General Rules, except for sets, where a good classifiable in Chapters 61 through 63 does not meet the tariff shift and/or other requirements of the heading or subheading under which it is classifiable, the country of origin of that good shall be the single country where the component which determines the classification of that good was cut or formed (e.g. knit to shape).

As stated above, Customs believes that the terry fabric imparts the essential character of the cushioned beach towel. The terry fabric, along with all the other components of the good, is cut in Mexico. Therefore, applying Note 3, Section 102.20(k), the country of origin of the cushioned beach towel is Mexico.

HOLDING:

The Sun-n-Comfort Cushioned Beach Towel is not eligible for NAFTA preferential duty treatment. However, under 19 CFR Part 102, it is a product of Mexico for marking purposes.

Goods classified in 6307.90.9986, HTSUSA, are not subject to textile visa/quota requirements or restraints. As the cushioned beach towel is classifiable therein, Customs need not issue a country of origin ruling for visa/quota purposes.

Sincerely,

John Durant, Director

Previous Ruling Next Ruling

See also: