CLA-2 RR:TC:TE 959746 jb
William J. LeClair
Trans-Border Customs Services, Inc.
P.O. Box 800
Champlain, NY 12919
RE: Country of origin determination for sewing thread; Section
102.21(c)(4); most important manufacturing process; NAFTA not
applicable
Dear Mr. LeClair:
This is in reply to your letter dated September 6, 1996, on
behalf of your client, Cansew, Inc., requesting a country of
origin and NAFTA eligibility determination for sewing thread
which will be imported into the United States.
FACTS:
The subject merchandise consists of sewing thread made of
either 100 percent cotton or synthetic staple fibers. The
manufacturing operations are as follows:
EGYPT or other countries (not including a NAFTA party or
Israel):
- cotton yarn or synthetic staple fiber yarn is formed (by
spinning and twisting).
CANADA
- yarn is inspected and wound on dye tubes for bleaching
and/or dyeing;
- hydro extraction;
- drying process.
- lab verification;
- dressed;
- rewinding;
- labeling.
ISSUE:
1. Whether the subject merchandise is eligible for duty
free treatment under the North American Free Trade
Agreement (NAFTA)?
2. What is the country of origin of the subject
merchandise?
LAW AND ANALYSIS:
The subject sewing thread undergoes processing operations in
Canada which is a country 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:
* * *
(i) Goods that originate in the territory of a NAFTA party
under the terms of subdivision (b) of this note and that
qualify to be marked as goods of Canada 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 "CA" in parentheses, are eligible
for such duty rate... . [Emphasis added]
Accordingly, the sewing thread at issue will be eligible for the
"Special" "CA" 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 Canada. 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
* * *
The subject merchandise qualifies for NAFTA treatment only if the
provisions of General Note 12(b)(ii)(A) are met, that is, if the
merchandise is transformed in the territory of Canada so that the
non-originating material (the yarn formed in Egypt or other
countries) undergoes a change in tariff classification as
described in subdivision (t).
The sewing thread made of cotton is classifiable in heading
5204, Harmonized Tariff Schedule of the United States (HTSUS).
For sewing thread made of cotton, subdivision (t), Chapter 52,
rule 1, states that:
A change to headings 5201 through 5207 from any other
chapter, except from headings 5401 through 5405 or 5501
through 5507.
The sewing thread made of synthetic staple fibers is
classified in subheading 5508.10, HTSUS. For the sewing thread
made of synthetic staple fibers, subdivision (t), Chapter 55,
rule 1, states:
A change to headings 5501 through 5511 from any other
chapter, except from headings 5201 through 5203 or 5401
through 5405.
When the yarn for the subject sewing thread leaves Egypt (or
other countries), it is classifiable as either cotton yarn of
subheading 5205.44, HTSUS, or yarn of synthetic staple fibers of
subheading 5509.22, HTSUS. As yarns of heading 5205 and heading
5509 are excepted by subdivision (t) for both headings 5204 and
5508, HTSUS, the non-originating material from Egypt (or other
country) does not undergo the requisite change in tariff
classification. Accordingly, the merchandise is not eligible for
the NAFTA preference.
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 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 merchandise is classified in headings
5204, HTSUS, and 5508, HTSUS, textile articles 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":
5204-5207 A change to heading 5204 through 5207 from
any heading outside that group, provided that
the change is the result of a spinning process.
5508-5511 A change to heading 5508 through 5511 from
any heading outside that group, provided that
the change is the result of a spinning process.
Section 102.21(e) states that for articles of heading 5204,
HTSUS, yarns of heading 5205, HTSUS, are excepted by Section
102.21(c)(2). Similarly, for articles of heading 5508, HTSUS,
yarns of heading 5509, HTSUS are excepted. Accordingly, as the
yarn for the subject cotton and synthetic staple fiber sewing
thread does not undergo the requisite change in tariff
classification, Section 102.21(c)(2) is inapplicable.
Section 102.21(c)(3) states that, "Where the country of
origin of a textile or apparel product cannot be determined under
paragraph (c)(1) or (2) of this section":
(i) If the good was knit to shape, the country of origin of
the good is the single country, territory, or insular
possession in which the good was knit; or
(ii) Except for goods of heading 5609, 5807, 5811,
6213, 6214, 6301 through 6306, and 6308, and subheadings
6209.20.5040, 6307.10, 6307.90, and 9404.90, if the good was not knit to shape and the good was wholly assembled in a
single country, territory, or insular possession, the
country of origin of the good is the country, territory, or
insular possession in which the good was wholly assembled.
As the subject merchandise is not knit to shape and the
sewing thread does not undergo an assembly process, Section
102.21(c)(3) is not applicable.
Section 102.21(c)(4) states that, "Where the country of
origin of a textile or apparel product cannot be determined under
paragraph (c) (1), (2) or (3) of this section, the country of
origin of the good is the single country, territory, or insular
possession in which the most important assembly or manufacturing
process occurred". In the case of the subject sewing thread, the
most important manufacturing process occurs at the time of the
spinning of the yarn. Consequently, the country of origin of the
subject sewing thread is Egypt (or other countries).
HOLDING:
The subject merchandise is not eligible for the NAFTA
preference.
The country of origin of the subject sewing thread is Egypt
(or other countries).
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