CLA-2 RR:CR:TE 0962316 SS

TARIFF NO .: 5201.00.1400, 5201.00.1800

William H. Stubblefield, Senior Vice President
Dunavant Enterprises, Inc.
3797 New Getwell Road
Memphis, TN 38118

RE: Classification of raw cotton; 5201.00.1400; 5201.00.1800; Additional U.S. Note 5 to Chapter 52; Oral opinion; 19 C.F.R. 177.1(b)

Dear Mr. Stubblefield:

This letter is in response to your letters dated October 29, 1998, and November 2, 1998, concerning the classification under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) of raw cotton imported from Uzbekistan. A sample was not submitted. Your request for expedited review was granted based on the representation that you had three metric tons of cotton at sea, bound for Charleston, South Carolina, and a ruling adverse to your interest would force you to divert the vessel or vessels from Charleston.

FACTS:

Although the cotton is not specifically described in your submissions, based on your assertions that the cotton is subject to additional U.S. note 5 to Chapter 52, HTSUSA, it is assumed for the purposes of this ruling that the cotton at issue has a staple length under 28.575 mm (1-1/8 inches).

On September 22, 1998, a representative of Dunavant Enterprises, Inc. spoke with the National Import Specialist ("NIS") who handles cotton. The NIS advises that no specific amounts or prospective transactions were discussed. It appears that the NIS stated that in her opinion the importation of cotton from Uzbekistan under subheading 5201.00.1400, HTSUSA, would not be limited to the 215,512 kg allocated to Uzbekistan and other former Soviet Union republics set forth in additional U.S. note 5 to Chapter 52, HTSUSA. It was your understanding that Uzbekistan could import additional quantities of cotton until the quantitative limitations set

forth in additional U.S. note 5 were met. Presently, you have three metric tons of cotton bound for Charleston. The vessels involved are either stopped at European ports, or have intermittent stops at other European ports where final arrangements for disposition of the cotton cargoes can be made. Based on conversations with Customs Service personnel in Charleston and the Office of Regulations and Rulings, you became concerned that the cotton would not be entered under subheading 5201.00.1400, HTSUSA, because additional U.S. note 5 limits the importation of cotton, under the subheading, from Uzbekistan and other former Soviet Union republics to 215,512 kg. Accordingly, you filed the subject ruling request.

In your letter dated October 29, 1998, you requested a ruling allowing the importation of the Uzbekistani cotton under subheading 5201.00.1400, HTSUSA, which provides for duty-free treatment, pursuant to the residual allotment contained in additional U.S. note 5. In the alternative, you requested a one-time waiver of any restrictions on the three metric tons of cotton bound for Charleston.

ISSUE:

Whether additional U.S. note 5 restricts the importation of cotton from Uzbekistan, under subheading 5201.00.1400, HTSUSA, to a maximum of 215,512 kg?

LAW AND ANALYSIS:

Classification of goods under the HTSUSA is governed by the General Rules of Interpretation ("GRIs"). GRI 1 provides that classification shall be determined according to the terms of the tariff schedule and any relative section or chapter notes. Subheading 5201.00.1400, HTSUSA, covers cotton described in additional U.S. note 5 to Chapter 52 and entered pursuant to its provisions. Thus, the classification of the cotton in this case revolves around the application of additional U.S. note 5.

Additional U.S. note 5, sets up the tariff rate quota system for raw cotton. The first sentence of the note sets forth the maximum amount of cotton to be entered under subheading 5201.00.1400, HTSUSA. The aggregate quantity of cotton entered under subheading 5201.00.1400, from all countries, during the period from September 20, 1998, through September 19, 1999, shall not exceed 15,522.25 metric tons. The second sentence of the note sets forth the guaranteed minimum allocations for specific countries. The precise language of the second sentence is as follows:

"Of the quantitative limitations provided for in this note, the countries listed below shall have access to not less than the quantities specified below:" Uzbekistan and 14 other former Soviet Union republics are listed together and guaranteed an aggregate quantity of 215,512 kg to be entered under 5201.00.1400, HTSUSA. The third sentence limits the importation of cotton in excess of the amounts set forth in the second sentence to members of the World Trade Organization ("WTO"). The third sentence, states as follows:

"Other than as provided for in the country allocations above, articles the product of countries or areas who are not members of the World Trade Organization shall not be permitted or included in the quantitative limitations set forth in this note." All parties agree that Uzbekistan is not a member of the WTO. Thus, the crucial question is whether the note limits importations of cotton from Uzbekistan and the other former Soviet Union republics to 215,512 kg or allows additional imports up to the maximum 15,522.25 metric tons under subheading 5201.00.1400, HTSUSA.

It is Customs position that additional U.S. note 5 limits the importation of cotton from non-WTO members to the amounts specified in the list contained in the second sentence of additional U.S. note 5. By stating "shall have access to not less than" in the second sentence, the drafters merely guaranteed minimum amounts for the countries listed. Additional access beyond the allotted amounts is restricted by the third sentence. Furthermore, any possible ambiguity is resolved by the wording of the third sentence. The use of the language "country allocations above" indicates that the drafters clearly intended to limit the non-WTO member countries to the "allocations" set forth in the second sentence of the note. As written, the note provides that listed non-WTO members may only enter the allocated amounts under subheading 5201.00.1400. Accordingly, under subheading 5201.00.1400, no more than the 215,512 kg of cotton from Uzbekistan and the former Soviet Union republics may be imported in to the United States.

Additional U.S. note 5 sets the quantitative limitation for cotton entered under subheading 5201.00.1400 at 15,522.25 metric tons. Non-WTO members are not be entitled to import beyond their guaranteed allocations up to the quantitative limitation; they are restricted to their set allocations. Only WTO members are entitled to import up to the 15,522.25 metric ton quantitative limitation on a first come, first serve basis.

HOLDING:

As of October 26, 1998, the entire quota for cotton from the former Soviet Union republics was open. To the extent that the quota remains open, cotton that falls within the requirements of additional U.S. note 5 is classified in subheading 5201.00.1400, HTSUSA, which provides for "Cotton, not carded or combed: Having a staple length under 28.575 mm (1-1/8 inches): Other: Described in additional U.S. note 5 to this chapter and entered pursuant to its provisions". The general column one duty rate is "Free". Obviously, this only covers a small portion of your large shipment of cotton from Uzbekistan. The remaining cotton is classified under subheading 5201.00.1800, HTSUSA, which provides for Cotton, not carded or combed, Having a staple length under 28.575 mm (1-1/8 inches): Other: Other. The general column one duty rate is 33.2›/kg. Subheading 5201.00.1800, HTSUSA, must also be paired with subheading 9904.52.01 through 9904.52.09, depending on the value of the cotton, which will impose an additional duty.

Due to the changeable nature of the statistical annotation (the ninth and tenth digits of the classification) and the restraint (visa/quota) 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.

We understand your disappointment in receiving this ruling. However, Part 177 of the Customs Regulations (19 U.S.C. 177.1(b)) specifically states that oral opinions or advice of Customs Service personnel are not binding on the Customs Service. The Customs Service will not issue rulings in response to oral requests. 19 U.S.C. 177.1(b). The procedures for obtaining binding rulings from Customs for prospective transactions is set forth in Part 177.

Sincerely,


John Durant, Director
Commercial Rulings Division