HQ 959367: Country of origin determination for a curtain panel; Section102.21(c)(2); NAFTA; Section 12.130(c)

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            HQ 959367
                                 
August 6, 1996                   
CLA-2   RR:TC:TE  959367  jb

CATEGORY: Classification

Michael A. Pipitone
John F. Kilroy  Co., Inc.
JFK International Airport
Cargo Bldg. 80, Suite 227
Jamaica, NY 11430-1718

RE:  Country of origin determination for a curtain panel; Section
102.21(c)(2); NAFTA;     Section 12.130(c)

Dear Mr. Pipitone:

     This is in reply to your letter dated May 21, 1996, on
behalf of your client, Croscill Home Fashions, requesting a
country of origin determination for a curtain panel which will be
imported into the United States.  A sample was submitted to this
office for examination.

FACTS:

     The subject merchandise consists of a curtain panel,
referred to as style "Bali Gauze", made out of 100 percent cotton
woven fabric.  The panel measures approximately 56 by 82 inches
and has five 5-inch hang loops evenly spaced across the top.  The
manufacturing operations are as follows:

     USA

     - cotton is grown;
     - yarn is spun;
     - fabric is woven.

     MEXICO

     - fabric is cut;
     - fabric is sewn into panels.



ISSUE:

     1. What is the proper tariff classification and duty rate
for the subject merchandise?

     2.  Whether the subject merchandise is eligible for duty
free treatment under the North           American Free Trade
Agreement (NAFTA)?

     3.  What is the country of origin of the subject
merchandise?        

     4.  What method of appraisement is used to determine the
entered value of the subject        merchandise? 

LAW AND ANALYSIS:

Tariff Classification

     Classification of merchandise under the Harmonized Tariff
Schedule of the United States Annotated is in accordance with the
General Rules of Interpretation (GRI).  GRI 1 requires that
classification be determined according to the terms of the
headings and any relative section or chapter notes.  Where goods
cannot be classified solely on the basis of GRI 1, the remaining
GRI will be applied, in the order of their appearance.

     Heading 6303, HTSUS, provides for, among other things,
curtains (including drapes).  The subject merchandise is thus
properly classified in subheading 6303.91.0000, HTSUSA, which
provides for, curtains (including drapes) and interior blinds;
curtains or bed valances: other: of cotton.   

NAFTA Eligibility

     The subject curtain panel undergoes processing operations in
the United States and Mexico, which are countries provided for
under the North American Free Trade Agreement (NAFTA).   General
Note 12, HTSUSA, incorporates Article 401 of the North American
Free Trade Agreement (NAFTA) into the HTSUSA.  Note 12(a)
provides, in pertinent part:

                                                            *   *   *

     (ii) Goods that originate in the territory of a NAFTA party
under subdivision (b) of this            note and that qualify to
be marked as goods of Mexico under the terms of the         
marking rules... and are entered under a subheading for which a
rate of duty appears in             the "Special" subcolumn
followed by the symbol "MX" in parentheses, are eligible for           such duty rate... . [Emphasis added]



Accordingly, the curtain panel at issue will be eligible for the
"Special" "MX" rate of duty provided it is a NAFTA "originating"
good under General Note 12(b), HTSUSA, and it qualifies to be
marked as a good of Mexico.  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
note; or

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

                              *   *   *

     As the subject curtain panel is constructed in Mexico of
materials wholly obtained or produced in the territory of the
United States (a NAFTA signatory country), it meets the criteria
set out in General Note 12(b)(i).  Accordingly, the curtain panel
qualifies as a good originating in the territory of a NAFTA
party.  Assuming that the curtain panel qualifies to be marked as
a good of Mexico, it is entitled to the special "MX" duty rate,
provided that a Certificate of Origin is completed and submitted
in accordance with 19 CFR 181.11.

Country of origin

     On September 5, 1995, Customs published in the Federal
Register (60 FR 46188)) T.D. 95-69 which set forth final
amendments to the Customs Regulations to implement the provisions
of section 334 (b) of the Uruguay Round Agreements Act ("the
Act"), Public Law 103-465, 108 Stat. 4809, hereinafter 19 U.S.C.
3592, regarding the country of origin of textile and apparel
products.  These final regulations will apply to goods entered,
or withdrawn from warehouse, for consumption on or after July 1,
1996.  The regulatory provisions in T.D. 95-69 that implement the
basic origin principles of section 334(b) of the Act are
contained in a new 102.21 of the Customs Regulations (19 CFR
102.21).

     The final rule for the rules for determining country of
origin of a good for purposes of Annex 311 of the NAFTA was
published by Customs on June 6, 1996, in the Federal Register (61
FR 28932).  Therein it was stated, in pertinent part:

     New 102.21 was modeled on the approach taken in the interim
     Part 102 texts as published in T.D. 94-4 and thus
     incorporates a general statement of applicability (paragraph
     (a)), various definitions (paragraph (b)), general origin
     rules (paragraphs (c) and (d)), and specific tariff shift
     and/or other requirements (paragraph (e)) that apply under
     the second general rule.  Of particular note for purposes of
     the present document is the definition of "textile or
     apparel product" in 102.21(b)(5) which delineates the class
     of goods covered by the 102.21 rules.  That definition
     identifies those goods with reference to classification in
     the HTSUS and refers to Chapters 50 through 63 (that is, all
     of Section XI) of the HTSUS as well as to specific headings
     and 6-, 8- or 10-digit subheadings of the 
     HTSUS that fall outside Section XI.  Thus, if a good is
classifiable in an HTSUS provision      listed in 102.21(b)(5),
precedence must be given to the 102.21 rules over any other     regulatory provision with regard to that good, including any
origin rules contained   elsewhere in part 102.

     Accordingly, as the subject curtain panel is classified in
heading 6303, HTSUS, a textile article identified by
102.21(b)(5), the 102.21 rules take precedence over any other
rules of origin to determine the appropriate country of origin.

     Section 102.21(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 was not wholly obtained or
produced in a single country, Section 102.21(c)(1) is not
applicable.

     Section 102.21(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 foreign material 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."

     Section 102.21(e) 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":

     6301-6306           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 subject curtain panel was formed in
the United States by a fabric-making process, country of origin
is conferred by the United States.

     However, there is an exception to products from the United
States that are sent abroad for processing.  Section 12.130(c),
Customs Regulations, provides that any product of the United
States which 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.  Therefore,
in accordance with T.D. 90-17 and Section 12.130(c), the country
of origin of the subject curtain panel is Mexico, for quota,
marking, and duty purposes.

Value

     Merchandise imported into the United States is appraised in
accordance with section 402 of the Tariff Act of 1930, as amended
by the Trade Agreements Act of 1979 (TAA; 19 U.S.C. 1401a).  The
preferred method of appraisement is transaction value, which is
defined as the "price actually paid or payable for merchandise
when sold for exportation to the United States," plus certain
statutorily enumerated additions.  19 U.S.C. 1401a (b)(1).

     When imported merchandise cannot be appraised on the basis
of transaction value, it is appraised in accordance with the
remaining methods of valuation, applied in sequential order.  19
U.S.C. 1401a(a)(1).  The alternative basis of appraisement, in
order of precedence, are: the transaction value of identical or
similar merchandise (19 U.S.C. 1401a(c)); deductive value (19
U.S.C. 1401a(d)); computed value (19 U.S.C. 1401a(e)); and the
"fallback" method (19 U.S.C. 1401a(f)).

     The transaction value of identical or similar merchandise is
based on sales at the same commercial level and in substantially
the same quantity, of merchandise exported to the United States
at or about the same time as that being appraised.  19 U.S.C.
1401a(c).

     Under the deductive value method, merchandise is appraised
on the basis of the price at which it is sold in the U.S. in its
condition as imported and in the greatest aggregate quantity
either at or about the time of importation, or before the close
of the ninetieth day after the date of importation.  19 U.S.C.
1401(d)(2)(A)(i)-(ii).  This price is also subject to certain
enumerated deductions.  19 U.S.C. 1401a(d)(3).  However,
merchandise that is not sold in its condition as imported, nor
before the close of the ninetieth day can still be appraised
under deductive value, provided the importer so elects.  19
U.S.C. 1401a(d)(2)(A)(iii).


     Under the computed value method, merchandise is appraised on
the basis of the material and processing costs incurred in the
production of imported merchandise, plus an amount for profit and
general expenses equal to that usually reflected in sales of
merchandise of the same class or kind, and the value of any
assists and packing costs.  19 U.S.C. 1401a(e)(1).

     Where merchandise cannot be appraised under the methods set
forth in 19 U.S.C. 1401a(b)-(e), its value is to be determined
in accordance with the "fallback" method of section 402(f) of the
TAA.  The fallback method provides that merchandise should be
appraised on the basis of a value derived from one of the prior
methods reasonably adjusted to the extent necessary to arrive at
a value.  19 U.S.C. 1401a(f)(1).

     Based on the information you have submitted to us, we cannot
determine the appropriate method of appraisement at this time. 
If you would like more specific information or have additional
questions, you must submit a separate request addressing value
appraisement to the Value Branch, Office of Regulations and
Rulings.  They will issue you a separate letter addressing value.

HOLDING:

     The subject curtain panel, referenced style Bali Gauze, is
classified in subheading 6303.91.0000, HTSUSA, which provides
for, curtains (including drapes) and interior blinds; curtain or
bed valances: other: of cotton.  The applicable rate of duty is
11.4 percent ad valorem.  As a product of Mexico it is not
subject to quota. 

     The curtain panel is eligible for the NAFTA "MX" special
duty rate of "Free".  Also, in accordance with Section 12.130(c),
the country of origin of the curtain panel is Mexico for marking
purposes.

     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 is issued
on the assumption that all of the information furnished in the
ruling letter, either directly, by reference, or by implication,
is accurate and complete in every material respect.










     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.  



                              Sincerely,




                              John Durant, Director
                              Tariff Classification Appeals
Division