CLA-2 CO:R:C:T 089444 CC
Mr. Gregory J. Grasher
Border Brokerage Company
P.O. Box B
Blaine, WA 98230
RE: Polypropylene bags; classifiable in Heading 6305; country of
origin is where the fabric is woven-China; CFTA
Dear Mr. Grasher:
This letter is in response to your inquiry of April 25,
1991, on behalf of Komol Plastics Company, Ltd., requesting the
tariff classification and country of origin of polypropylene
bags. Samples were submitted for examination.
FACTS:
The submitted sample is a bag that measures approximately
40 inches by 20 inches. It is made of woven polypropylene strips
and is open at one end. You state that this merchandise will be
used for the conveyance of goods.
According to your submissions, raw material from North
America will be sent to China where it will be spun and woven
into polypropylene fabric on circular bolts. The bolts will be
sent to Canada where the fabric will be cut to length by a heat
cutter. Also one end of the cut material will be double folded
and sewn closed to make the bottom of the bag, and the top edge
will be folded and hemmed. Then the bags will be printed and
packed for shipping. You have indicated that the costs
associated with the processing and assembly operations in Canada
will be greater than the costs associated with the foreign
content and assembly.
ISSUE:
What is the classification of the polypropylene bags under
the Harmonized Tariff Schedule of the United States Annotated
(HTSUSA)?
What is the country of origin of the polypropylene bags?
Whether the merchandise at issue is considered goods
originating in the territory of Canada in accordance with the
United States-Canada Free Trade Agreement (CFTA)?
LAW AND ANALYSIS:
Classification
Classification of merchandise under the HTSUSA is in
accordance with the General Rules of Interpretation (GRI's),
taken in order. GRI 1 provides that classification shall be
determined according to the terms of the headings and any
relative section or chapter notes.
Heading 6305, HTSUSA, provides for sacks and bags, of a kind
used for the packing of goods. According to the Explanatory
Notes, the official interpretation of the HTSUSA at the
international level, this heading covers textile sacks and bags
of a kind normally used for the packing of goods for transport,
storage or sale. The submitted sample clearly fits within this
category of goods and is classifiable in Heading 6305.
Country of origin
Country of origin determinations for textile products are
subject to Section 12.130 of the Customs Regulations (19 CFR
12.130). Section 12.130 provides that a textile product that is
processed in more than one country or territory shall be a
product of that country or territory where it last underwent a
substantial transformation. A textile product will be considered
to have undergone a substantial transformation if it has been
transformed by means of substantial manufacturing or processing
operations into a new and different article of commerce.
Section 12.130(d)(2) of the Customs Regulations states that
in determining whether merchandise has been subjected to
substantial manufacturing or processing operations, the following
will be considered:
(i) The physical change in the material or article as a
result of the manufacturing or processing operations in each
foreign territory or country, or insular possession of the
U.S.
(ii) The time involved in the manufacturing or processing
operations in each foreign territory or country, or insular
possession of the U.S.
(iii) The complexity of the manufacturing or processing
operations in each foreign territory or country, or insular
possession of the U.S.
(iv) The level or degree of skill and/or technology required
in the manufacturing or processing operations in each
foreign territory or country, or insular possession of the
U.S.
(v) The value added to the article or material in each
foreign territory or country, or insular possession of the
U.S., compared to its value when imported into the U.S.
In Canada the tubular fabric has been cut to length and sewn
to make the bags. These are relatively simple operations
involving unskilled labor that would not constitute substantial
manufacturing or processing operations, and, therefore, no
substantial transformation takes place in Canada. The last
substantial transformation occurs in China, where the fabric is
woven; consequently, the country of origin for this merchandise
is China.
CFTA
Concerning the eligibility of this merchandise for a duty
reduction in accordance with the CFTA, General Note 3(c)(vii)
provides the following:
(B) For the purposes of subdivision (c)(vii) of this note,
goods imported into the customs territory of the United
States are eligible for treatment as "goods originating
in the territory of Canada" only if--
(1) they are goods wholly obtained or produced in the
territory of Canada and/or the United States, or
(2) they have been transformed in the territory of
Canada and/or the United States, so as to be
subject--
(I) to a change in tariff classification as
described in the rules of subdivision
(c)(vii)(R) of this note, or
(II) to such other requirements subdivision
(c)(vii)(R) of this note may provide when no
change in tariff classification occurs, and
they meet the other conditions set out in
subdivisions (c)(vii)(F),(G),(H),(I),(J), and
(R) of this note.
General Note 3(c)(vii)(R), which concerns whether a change
in tariff classification has taken place, at Section XI states
regarding Chapter 63 the following:
(pp) A change to any heading of chapter 63 from any heading
outside that chapter other than headings 5106 through
5113, 5204 through 5212, 5306 through 5311, or headings
of Chapters 54 and 55; provided, that goods are both
cut and sewn in the territory of Canada and/or the
United States.
The fabric used to make these bags is classifiable in
Chapter 54, since any plastic applied to the fabric is not
visible to the naked eye. The processing performed in Canada
results in this merchandise being classifiable in Chapter 63.
Therefore this merchandise would not be considered a good
originating in Canada by having undergone a change in tariff
classification, in application of General Note
3(c)(vii)(R)(11)(pp).
Another method for goods to be treated as originating in
Canada is provided for by General Note 3(c)(vii)(H), which states
the following:
Notwithstanding subdivision (c)(vii)(G), goods described in
that paragraph shall be considered to have been transformed
in the territory of Canada and be treated as goods
originating in the territory of Canada if --
(1) the value of materials originating in the territory of
Canada and/or the United States that are used or
consumed in the production of the goods plus the direct
cost of assembling the goods in the territory of Canada
and/or the United States constitute not less than 50
percent of the value of the goods when exported to the
territory of the United States, and
(2) the goods have not subsequent to assembly undergone
processing or further assembly in a third country and
they meet the requirements of subdivision (c)(vii)(E)
of this note.
However, we note there are only two types of goods subject
to this provision. The first are those articles that are
imported into Canada in an unassembled or disassembled form in
accordance with GRI 2(a), HTSUSA (General Note 3(c)(vii)(G)(1)).
The second type of goods are those covered by tariff provisions
which provide for both the goods themselves and their parts
(General Note 3(c)(vii)(G)(2)). In addition, we note that
General Note 3(c)(vii)(I) provides that the provisions of
subdivisions (c)(vii)(H) of this note shall not apply to goods of
chapters 61 through 63. Therefore the bags at issue cannot be
considered goods originating in Canada in application of General
Note 3(c)(vii)(H).
HOLDING:
The submitted merchandise is classified under subheading
6305.31.0020, HTSUSA, which provides for sacks and bags, of a
kind used for the packing of goods, of man-made textile
materials, of polyethylene or polypropylene strip or the like,
other. The rate of duty is 9.5 percent ad valorem, and the
textile category is 669. The country of origin for quota
purposes is China, and this merchandise is not considered goods
originating in the territory of Canada for duty purposes.
Due to the changeable nature of the statistical annotation
(the ninth and tenth digits of the classification) and the
restraint (quota/visa) categories applicable to textile
merchandise, you should contact your local Customs office prior
to importation of this merchandise to determine the current
status of any import restraints or requirements.
The designated textile and apparel category may be
subdivided into parts. If so, visa and quota requirements
applicable to the subject merchandise may be affected. Since
part categories are the result of international bilateral
agreements which are subject to frequent renegotiations and
changes, to obtain the most current information available, we
suggest that you check, close to the time of shipment, the Status
Report On Current Import Quotas (Restraint Levels), an internal
issuance of the U.S. Customs Service, which is available for
inspection at your local Customs office.
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
177.9(b)(1), Customs Regulations (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 connection with the
ruling request and incorporated in the ruling letter, either
directly, by reference, or by implication, is accurate and
complete in every material respect. Should it subsequently be
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, it is
recommended that a new ruling request be submitted in accordance
with section 177.2, Customs Regulations (19 CFR 177.2).
Sincerely,
John Durant, Director
Commercial Rulings Division