On August 1, 2019, the Foreign-Trade Zone Board published in the Federal Register (84 FR 37616) Foreign-Trade Zone (FTZ) 238—Dublin, Virginia; Authorization of Limited Production Activity; EBI, LLC (Mattresses and Sofas), Danville, Virginia.
The EBI facility is used for production of mattresses and sofas. Production under FTZ procedures could exempt EBI from customs duty payments on the foreign-status components used in export production. On its domestic sales, for the foreign-status materials/components noted below, EBI sought the ability to choose the duty rates during customs entry procedures that apply to mattresses, complete sofas, incomplete sofa sections, and sofa cushions (duty-free to 6.0%). EBI would be able to avoid duty on foreign-status components which become scrap/waste. Customs duties also could possibly be deferred or reduced on foreign-status production equipment.
The components and materials sourced from abroad include: Prepared glues and adhesives; polyethylene plastic film; cellular foam cushioning; high resilience polyurethane foam; polyamide/polyethylene sofa cushion bags; medium density fiber boards; non-woven polyester fiber wadding for cushion covers; felt (100% polyester), not impregnated, coated, covered, or laminated; non-woven (100% polypropylene) protective cover used as packing material for shipping; mattress handles (fastener fabric tape), woven, of synthetic fibers; sofa bed box pullout handles of woven polyester; cotton woven mattress covers; synthetic fiber woven mattress covers; non-woven polypropylene dust covers for mattresses; non-woven polypropylene bags; spring mattress cores (inner springs); sofa springs; zinc furniture hinges; zinc furniture clips; zinc furniture fittings; furniture staples of base metal in strips; sofa covers, cut and sewn, used for upholstery (leather; imitation leather; 100% polyester; and, 75% polyester/25% cotton); completed cotton mattress covers; and, upholstered foam seat cushions (duty rate ranges from duty-free to 9.3%).
The FTZ Board authorized the production activity described in the notification on a limited basis, subject to the FTZ Act and the Board’s regulations, including Section 400.14, and further subject to a restriction requiring the following foreign status components be admitted to the zone in privileged foreign status (19 CFR 146.41): (1) High resilience polyurethane foam; (2) polyamide/polyethylene sofa cushion bags; (3) nonwoven polyester fiber wadding for cushion covers; (4) felt (100% polyester), not impregnated, coated, covered, or laminated; (5) mattress handles (fastener fabric tape), woven, of synthetic fibers; (6) cushion covers (polyester fiber wadding); (7) woven mattress covers of cotton; (8) woven mattress covers of synthetic fibers; (9) non-woven polypropylene dust covers for mattresses; (10) non-woven polypropylene bags; (11) completed mattress covers, made of cotton; and, (12) upholstered foam seat cushions. In restricting those textile components to privileged foreign the FTZ Board denies EBI tariff relieve on textile inputs for mattresses and sofas that enter the domestic market. EBI will enjoy import tariff relief on textile inputs to mattresses and sofas that are exported.