HQ 955774: Country of origin and eligibility for the North American Free Trade Agreement (NAFTA) duty preference of cushioned beach towel

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 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
               note; or        -3-


          (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.
                               -4-


     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
102.11(a)(3):

     (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).
                               -5-


     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