OT:RR:CTF:VS H284749 CMR
Mr. Gerardo Aguilar
Kaltex Group
350 5th Avenue
New York, NY 10118
RE: Modification of NY N273725, dated December 22, 2016; Component that Determines the Classification; U.S. – Colombia Trade Promotion Agreement; Classification; Textured Polyester Elastomeric Yarn
Dear Mr. Aguilar:
This is in response to your correspondence of January 26, 2017, requesting Customs and Border Protection (CBP) review our decision in New York Ruling Letter (NY) N273725, dated December 22, 2016, wherein we determined that certain non-originating yarn was classified in subheading 5402.31.60, Harmonized Tariff Schedule of the United States (HTSUS) and that certain jeans produced with such non-originating yarn in Colombia, did not qualify for preferential tariff treatment under the U.S. – Colombia Trade Promotion Agreement (CTPA). Specifically, you request we review the ruling and address the application of Chapter 62, Chapter Rule 2 of the Annex 3-A, “Textile and Apparel Specific Rules of Origin,” of the CTPA.
Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. §1625(c)(1)), as amended by section 623 of Title VI, notice of the proposed modification of NY N273725 was published on June 7, 2017, in the Customs Bulletin, Volume 51, No. 23. CBP received no comments in response to the notice.
FACTS:
In NY N273725, CBP determined that the non-originating polyester yarn was classified in subheading 5402.31.6000, HTSUS, which provides for synthetic filament yarn, not put up for retail sale, textured yarn, of nylon or other polyamides, measuring per single yarn not more than 500 decitex, multiple (folded) or cabled yarn. The polyester yarn, known as an air entangled yarn, is made in Mexico of an elastomeric filament core with a textured polyester filament yarn covering the core in a spiral direction. A report provided by the Office of Laboratory Services described the yarn as “composed of elastomeric core yarn (13 percent by weight) which is covered by textured polyester filament (97 percent by weight) by air entanglement process.”
The ruling determined that the sample garment, a pair of women’s denim fabric jeans, produced from fabric manufactured in Colombia of the polyester elastomeric yarn and cotton yarns made in Colombia from U.S. or Colombian cotton fibers, did “not qualify for preferential treatment under the CTPA because (a) it will not be wholly obtained or produced entirely in the territory of Colombia or of the United States; (b) one or more of the non-originating materials used in the production of the good will not undergo the change in tariff classification required by General Note 34; and (c) it will not [be] produced entirely in the territory of Colombia or of the United States, or both.
Your request for review of NY N273725 centers on the application of Chapter 62, Chapter Rule 2 of the Annex 3-A, “Textile and Apparel Specific Rules of Origin.” You interpret that language of that provision to apply to only the cotton yarn used in the production of the jeans at issue as you believe the component that determines the classification of the jeans is the cotton yarn.
ISSUE:
What is the component that determines the classification of the women’s denim fabric jeans for the purpose of determining its eligibility for preferential tariff treatment under the CTPA?
LAW AND ANALYSIS:
The U.S.- Colombia Trade Promotion Agreement Implementation Act, Public Law 112-42, 125 Stat. 462, is implemented in the Harmonized Tariff Schedule of the United States at General Note (GN) 34. Chapter 62, Chapter Rule 2 of the Annex 3-A, “Textile and Apparel Specific Rules of Origin,” is implemented in GN 34(o)/Chapter 62/Rule 2. The rule states, with regards to goods of Chapter 62:
For purposes of determining whether a good of this chapter is originating, the rule applicable to that good shall only apply to the component that determines the tariff classification of the good and such component must satisfy the tariff change
requirements set out in the rule for that good. If the rule requires that the good must also satisfy the tariff change requirements for visible lining fabrics listed in chapter rule 1 for this chapter, such requirement shall only apply to the visible lining fabric in the main body of the garment, excluding sleeves, which covers the largest surface area, and shall not apply to removable linings.
The rule of origin set forth in GN 34(o)/62.29, which applies to the jeans at issue provides:
A change to subheadings 6204.61 through 6204.69 from any other chapter, except from headings 5106 through 5113, 5204 through 5212, 5307 through 5308, 5310 through 5311 or 5401 through 5402, subheadings 5403.20, 5403.33 through 5403.39, 5403.42 through heading 5408, or headings 5508 through 5516, 5801 through 5802 or 6006 through 6006, provided that the good is cut or knit to shape, or both, and sewn or otherwise assembled in the territory of Colombia or of the United States, or both.
The submitted sample jeans were described in NY N273725 as featuring “a left over right front fly opening with a zipper closure and a metal button on a flat waistband, five belt loops, a rear yoke, two rear patch pockets, front pockets, and hemmed leg openings.” This office was not provided with the sample garment; however, from the description we can discern that among the components used to produce the garment are the cotton/polyester woven fabric, a zipper, a metal button and sewing thread. Of these components, it is the woven fabric which is the component that determines the classification of the good. Therefore, the woven fabric must make the tariff shift change set forth in the tariff shift rule, quoted above. As the woven fabric is in chief weight of cotton, it is classifiable as a cotton woven fabric in Chapter 52. However, the tariff shift rule quoted above, i.e., GN 34(o)/62.29, does not allow a change from non-originating cotton woven fabrics to the finished jeans. As such, the cotton woven fabric must originate in order for the jeans to qualify for preferential tariff treatment. The tariff shift rule for the cotton fabric states:
A change to headings 5208 through 5212 from any heading outside that group, except from headings 5106 through 5110, 5205 through 5206 or 5401 through 5402, subheadings 5403.20, 5403.33 through 5403.39 or 5403.42 through heading 5404 or headings 5509 through 5510.
As the tariff shift rule for the cotton fabric does not allow a change from non-originating polyester elastomeric yarn classified within heading 5402, HTSUS, the cotton woven fabric of which the jeans are manufactured is non-originating. Therefore, NY N273725 correctly concluded that the jeans at issue do not qualify for preferential tariff treatment under the CTPA.
Nonetheless, we note that an error occurred in NY N273725 regarding the classification of the polyester elastomeric yarn produced in Mexico. In the ruling, the yarn was classified in subheading 5402.31.60, HTSUS, which provides for, among other things, textured yarn of nylon. As stated in that ruling, and in your submission, the yarn is not of nylon, but of polyester filament with an elastomeric core yarn. The polyester elastomeric yarn is produced by an air entanglement process, similar to that used to produce a yarn classified in Headquarters Ruling Letter (HQ) 966051, dated March 3, 2003, as a multiple yarn in heading 5402, HTSUS. Therefore, while the polyester elastomeric yarn was properly classified as a multiple yarn, as it is of polyester, it is classified in subheading 5402.33.60, HTSUS.
HOLDING:
NY N273725 correctly held that the jeans at issue do not qualify for preferential tariff treatment under the CTPA. However, the polyester elastomeric yarn is correctly classified in subheading 5402.33.60, HTSUS, which provides for “Synthetic filament yarn (other than sewing thread), not put up for retail sale, including synthetic monofilament of less than 67 decitex: Textured yarn: Of polyesters: Multiple (folded) or cabled yarn.” NY N273725, dated December 22, 2016, is hereby modified in accordance with this decision.
In accordance with 19 U.S.C. § 1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division