CLA-2 CO:R:C:F 952547 LPF
Mr. Timothy F. Szczesiul
Purchasing Agent
Scharr Industries, Inc.
40 East Newberry Road
Bloomfield, CT 06002
RE: Metallized polyester film; Heading 3921, HTSUSA; Other
plates, sheets, film, foil and strip, of plastics; Tariff
preferences under CFTA; General Notes 3(c)(vii)(B) and
3(c)(vii)(R)(7)(aa)
Dear Mr. Szczesiul:
This is in response to your letter dated August 31, 1992,
requesting the proper classification under the Harmonized Tariff
Schedule of the United States Annotated (HTSUSA), and eligibility
under the United States - Canada Free Trade Agreement (CFTA), of
metallized polyester film imported from Canada. You submitted
samples with your request for a binding ruling.
FACTS:
Polyester film, produced in Korea, Japan, Thailand, or the
Republic of China, is shipped to Canada where it is metallized.
The metallization enhances the film's appearance and improves its
heat and water resistance, making the film especially suitable
for food packaging. You state that the cost of processing the
film in Canada accounts for at least 50 percent of the value of
the goods when exported to the territory of the U.S.
ISSUE:
Whether the metallized polyester film is classifiable in
heading 3920 as other film, of plastics, noncellular and not
reinforced, laminated, supported or similarly combined with other
materials or in 3921 as other film, of plastics; and whether it
is considered a "good originating in Canada" for purposes of the
United States - Canada Free Trade Agreement (CFTA) and, thus, is
eligible for preferential tariff treatment.
-2-
LAW AND ANALYSIS:
Tariff Classification
The General Rules of Interpretation (GRI's) taken in their
appropriate order provide a framework for classification of
merchandise under the HTSUSA. Most imported goods are classified
by application of GRI 1, that is, according to the terms of the
headings of the tariff schedule and any relative section or
chapter notes. The Explanatory Notes (EN's) to the Harmonized
Commodity Description and Coding System, which represent the
official interpretation of the tariff at the international level,
facilitate classification under the HTSUSA by offering guidance
in understanding the scope of the headings and GRI's.
Heading 3920 provides for other film, of plastics,
noncellular and not reinforced, laminated, supported or similarly
combined with other materials, while 3921 provides for other
film, of plastics. Because the polyester film is metallized
before entry into the U.S., it is "combined with other materials"
and is not classifiable in 3920, but rather in 3921. As the film
is noncellular, the appropriate subheading is 3921.90.40.
United States - Canada Free Trade Agreement
Articles which are imported from Canada may be entitled to
certain tariff preferences under the United States - Canada Free
Trade Agreement (CFTA) if the articles are "originating goods" as
defined by General Note 3(c)(vii)(B), HTSUSA. There are two
primary means in General Note 3(c)(vii)(B) by which articles
imported into the United States may be "goods originating in the
territory of Canada." General Note 3(c)(vii)(B)(1) provides for
goods "wholly obtained or produced in the territory of Canada
and/or United States." General Note 3(c)(vii)(B)(2) provides for
goods "transformed in the territory of Canada and/or the United
States."
Pursuant to General Note 3(c)(vii)(B)(2), a transformation
occurs when a change in tariff classification occurs that is
authorized by General Note 3(c)(vii)(R). General Note
3(c)(vii)(R)(7)(aa) provides that a transformation is evident for
Chapter 39, HTSUSA, when:
[a] change to any heading of chapter 39 from any
other heading, including another heading within that
chapter [occurs]; provided, that the value of
materials originating in the territory of Canada
and/or the United States plus the direct cost of
processing performed 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.
-3-
In this instance, the non-metallized, polyester film is
classifiable within heading 3920, when entering Canada. Upon
entry into the U.S., the film, now metallized, is classifiable
within heading 3921. A change in tariff classification occurs.
Because the film is transformed in Canada, it qualifies as a
"good originating in the territory of Canada," provided it also
meets the 50 percent value requirement, as referred to in General
Note 3(c)(vii)(R)(7)(aa).
HOLDING:
The metallized polyester film is an originating good under
General Note 3(c)(vii)(B)(2) and is entitled to the tariff
preferences under the CFTA, provided it meets the 50 percent
value requirement under General Note 3(c)(vii)(R)(7)(aa). As the
article is classifiable in subheading 3921.90.40, HTSUSA, as
"Other plates, sheets, film, foil and strip, of plastics: Other:
Other: Flexible," the special column one rate of duty for
products of Canada is 2.5 percent ad valorem.
Sincerely,
John Durant, Director