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