OT:RR:CTF:FTM H309704 TJS
Mr. R.C. Howard
Amatex Corporation
1032 Stanbridge St., Box 228
Norristown, PA 19404-0228
RE: Ruling Request; Tariff Classification of Core Spun Single Yarn; United States-Mexico-Canada Agreement
Dear Mr. Howard,
This is in response to your letter, dated October 8, 2018, filed on behalf of Amatex Corporation (“Amatex”), to U.S. Customs and Border Protection (“CBP”) requesting a binding ruling on the tariff classification under the Harmonized Tariff Schedule of the United States (“HTSUS”), eligibility for preferential tariff treatment under the North American Free Trade Agreement (“NAFTA”), and country of origin of certain yarn. In an email, dated June 11, 2020, you amended your request to address preferential tariff treatment under the United States-Mexico-Canada Agreement (“USMCA”), which replaced the NAFTA effective July 1, 2020. Our ruling is set forth below.
FACTS:
The subject yarn, identified as 2P638-240, is a 2-ply black and beige yarn. You describe the yarn as a core spun single yarn with a fiberglass core, covered by a sheath of para aramid and meta aramid, and then twisted with one end of polyacrylonitrile (PAN) yarn. You provide a percentage breakdown of the yarn and the countries of origin as follows: 28.0% fiberglass filament yarn (United States or Mexico), 8.1% para aramid staple fiber–Kevlar (United States), 8.1% para aramid staple fiber–Twaron (Netherlands), 16.2% meta aramid staple fiber (China), and 39.6% 10’s/1 PAN yarn (United States). According to your submission, the fiberglass filament yarn is used for strength and heat resistance; the para aramid staple fiber is used for strength, abrasion resistance and heat resistance; the meta aramid staple fiber is a softer fiber that blends better and is heat resistant; and the PAN provides the best LOI (loss on ignition) and heat resistance. Moreover, pursuant to the product data specification sheets from your supplier of the PAN yarn, the chemical composition of the PAN is as follows: 62% carbon, 21.5% nitrogen, 12% oxygen, 4.5% hydrogen, and <.1% sodium and other trace metals. The data sheets also indicate that the PAN yarn has not undergone any carbonization. You state that the 2-ply yarn, 2P638-240, is made in Amatex’s plant in Mexico by blending the aramid staple fibers and spinning them over a core of fiberglass. That yarn is then twisted with the PAN yarn. The 2-ply yarn is imported into the United States to be woven into fabric for heat and flame resistant safety clothing garments. In your ruling request, you state that the essential component of the yarn is the fiberglass because it is used for strength and heat resistance.
CBP’s Laboratory and Scientific Services (“CBP Laboratory”) examined a sample of the yarn and its findings are contrary to your description of the merchandise. CBP Lab Report NY20181887, dated May 1, 2019, determined that the 2-ply yarn is constructed of: one black partially oxidized polyacrylonitrile (PAN) staple yarn (36.2% by weight) twisted to one beige/yellow core-spun aramid/glass yarn (63.8% by weight). The core-spun yarn is constructed of a beige/yellow aramid yarn (53.3% by weight) that is wrapped around a core of glass fibers (46.7% by weight). The overall fiber content by weight is as follows: 36.2% PAN, 32.9% aramid, and 30.9% glass. In a follow-up email, dated June 26, 2020, the CBP Laboratory confirmed that the PAN yarn was derived of acrylic.
ISSUES:
What is the tariff classification of the 2P638-240 yarn?
Is the 2P638-240 yarn eligible for preferential tariff treatment under the USMCA?
What is the country of origin for marking purposes of the 2P638-240 yarn?
LAW AND ANALYSIS:
Tariff Classification
Classification of goods under the HTSUS is made in accordance with the General Rules of Interpretation (“GRI”). GRI 1 provides that the classification shall be determined according to the terms of the headings of the tariff schedule and any relative Section or Chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRI may then be applied.
The 2020 HTSUS provisions under consideration are:
5509: Yarn (other than sewing thread) of synthetic staple fibers, not put up for retail sale:
6815: Articles of stone or of other mineral substances (including carbon fibers, articles of carbon fibers and articles of peat), not elsewhere specified or included:
7019: Glass fibers (including glass wool) and articles thereof (for example, yarn, woven fabrics):
* * * * *
Note 1 to Section XI (Textiles and Textile Articles) provides that the section does not cover:
(q) Abrasive-coated textile material (heading 6805) and also carbon fibers or articles of carbon fibers of heading 6815;
[…]
(r) Glass fibers or articles of glass fibers, other than embroidery with glass thread on a visible ground of fabric (chapter 70);
Note 2 to Section XI, HTSUS, provides in pertinent part as follows:
2. (A) Goods classifiable in chapters 50 to 55 or in heading 5809 or 5902 and of a mixture of two or more textile materials are to be classified as if consisting wholly of that one textile material which predominates by weight over each other single textile material.
When no one textile material predominates by weight, the goods are to be classified as if consisting wholly of that one textile material which is covered by the heading which occurs last in numerical order among those which equally merit consideration.
* * * * *
Note 1 to Chapter 54, HTSUS, provides in pertinent part as follows:
The terms “man-made”, “synthetic” and “artificial” shall have the same meanings when used in relation to "textile materials”.
GRI 3(a) and (b) provide as follows:
When, by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:
The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.
Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.
* * * * *
The Harmonized Commodity Description and Coding System Explanatory Notes
(“EN”) constitute the “official interpretation of the Harmonized System” at the international level. See 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989). While neither legally binding nor dispositive, the ENs “provide a commentary on the scope of each heading” of the HTSUS and are “generally indicative of [the] proper interpretation” of these headings. See id.
The EN to GRI 3(b) state, in pertinent part:
This second method relates only to:
Mixtures.
Composite goods consisting of different materials.
Composite goods consisting of different components.
Goods put up in sets for retail sales.
It applies only if Rule 3(a) fails.
In all these cases the goods are to be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.
The factor which determines essential character will vary as between different kinds of goods. It may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods.
For the purposes of this Rule, composite goods made up of different components shall be taken to mean not only those in which the components are attached to each other to form a practically inseparable whole but also those with separable components, provided these components are adapted one to the other and are mutually complementary and that together they form a whole which would not normally be offered for sale in separate parts.
* * * * *
The subject yarn is composed of different components: the PAN staple fiber yarn and the core-spun aramid/glass yarn. We classify each component and the finished 2-ply 2P638-240 yarn as follows:
PAN yarn
You contend that the PAN fiber is classified in heading 6815, HTSUS. We disagree. Heading 6815, HTSUS, covers carbon fibers, including those produced from carbonized PAN fiber. See New York Ruling Letter (“NY”) N309288 (Apr. 7, 2020); and NY C86087 (July 9, 1998). CBP generally distinguishes man-made fibers from carbon fibers by the amount of carbonization that has taken place. See Headquarters Ruling Letter (“HQ”) 950469 (Sept. 11, 1992). Unless the PAN staple fiber is considered to have been carbonized to the point that it has become carbon fiber, it remains classified as synthetic fiber. In your submission, you describe the PAN fiber as “carbon fiber.” However, the data sheets you provided and the CBP Laboratory report indicate that the PAN fiber has not been carbonized. The CBP Laboratory determined that the PAN fiber is partially oxidized, meaning it has not yet been carbonized as oxidation occurs prior to carbonization. See Top 9 Things You Didn’t Know about Carbon Fiber Dep’t of Energy (Mar. 29, 2013), https://www.energy.gov/articles/top-9-things-you-didn-t-know-about-carbon-fiber (“Once fully oxidized, the [PAN] fiber is ready to run through the higher-temperature furnaces, which convert the oxidized PAN fiber to carbon fiber.”).
Additionally, the PAN fiber is similar to the one classified in NY B88259, dated August 5, 1997. In NY B88259, CBP classified a two-ply twisted staple fiber yarn, black in color, which was used to make carbon fiber products for various applications. Prior to oxidation, the chemical composition of the PAN material was 65.5% carbon, 25.4% nitrogen, and 9.1% hydrogen. However, the imported PAN material had been partially oxidized, and the resultant relative elemental weights were 60-62% carbon, 18-22% nitrogen, 8-10% oxygen, and 6-8% hydrogen. CBP classified the partially oxidized PAN material in subheading 5509.32, HTSUS, which provides for “Yarn (other than sewing thread) of synthetic staple fibers, not put up for retail sale: Containing 85 percent or more by weight of acrylic or modacrylic staple fibers: Multiple (folded) or cabled yarn.” Similarly, the PAN at issue has been partially oxidized and is comprised of 62% carbon, 21.5% nitrogen, 12% oxygen, and 4.5% hydrogen. Because the subject PAN yarn has not been carbonized, it is classified as a textile in Section XI, HTSUS. The PAN yarn is a synthetic material and it is not put up for retail sale. Therefore, the PAN yarn is classified in heading 5509, HTSUS, as yarn of synthetic staple fibers.
Core-spun Aramid/Glass Yarn
The aramid/glass yarn is a composite good, made up of different components, which are attached to each other to form a practically inseparable whole. The components consist of the beige/yellow aramid yarn and the glass fiber core. There is no dispute that the fiberglass is classified in heading 7019, HTSUS, which provides for glass fibers and articles thereof. You contend that the aramid staple fiber is classified in heading 5503, HTSUS, which provides for synthetic staple fibers, but the CBP Laboratory reported that the aramid fibers comprise a yarn. Thus, the aramid yarn is classified in heading 5509, HTSUS, which covers yarn (other than sewing thread) of synthetic staple fibers. See, e.g., NY E89709 (Nov. 19, 1999) (staple fiber, multiple ply yarn, trademarked as “Twaron”).
Composite goods consisting of different components cannot be classified by reference to GRI 1 because the components are prima facie classifiable in different headings. GRI 3(b) states in part that “composite goods made up of different components which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character.” According to EN VIII for GRI 3(b), the factor which determines essential character will vary as between different kinds of goods. In order to identify a composite good’s essential character, the U.S. Court of International Trade (“CIT”) has applied the factors listed in EN VIII to GRI 3(b) which are “the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods.” The Home Depot v. United States, 427 F. Supp. 2d 1278, 1293 (Ct. Int’l Trade 2006). With regard to the component which imparts the essential character, the CIT has stated that it is “that which is indispensable to the structure, core or condition of the article, i.e. what it is.” Id. (citing A.N. Deringer, Inc. v. United States, 66 Cust. Ct. 378, 383 (1971)).
Upon review and consistent with EN VIII to GRI 3(b), we find that the essential character of the core-spun aramid/glass yarn is determined by the aramid staple yarn because it provides important characteristics and accounts for 53.3% of the yarn. Although the aramid yarn and fiberglass are both used for strength and heat resistance, the aramid staple yarn also provides abrasion resistance and constitutes the outer surface. Accordingly, we conclude that the aramid/glass yarn is classified under heading 5509, HTSUS, which provides for “Yarn (other than sewing thread) of synthetic staple fibers, not put up for retail sale.”
Classification of Finished 2-Ply Yarn 2P638-240
The two components comprising the subject 2-ply yarn, the PAN staple yarn and the aramid/glass yarn, are both classified in heading 5509, HTSUS, as yarns of synthetic staple fibers. Because the components are classified based on the same textile material–synthetic staple fiber–Note 2 to Section XI, HTSUS is inapplicable. Applying GRI 1, the 2-ply yarn at issue is classified in heading 5509, HTSUS, as a yarn of synthetic staple fibers, not put up for retail sale. As the 2-ply yarn is composed of 36.2% PAN and 32.9% aramid, it does not contain more than 85% of synthetic staple fibers. In fact, because the 2-ply yarn is made of 30.9% glass fibers, it does not contain more than 85% or more by weight of any textile fiber. However, the CBP Laboratory confirmed that the PAN yarn has a base of acrylic fibers and, therefore, the 2-ply yarn is considered “of acrylic or modacrylic staple fibers.” Furthermore, the yarn is not mixed with any wool or fine animal hair, cotton, or artificial staple fibers. Thus, the subject yarn 2P638-240 is classified under subheading 5509.69.60, HTSUS, which provides for “Yarn (other than sewing thread) of synthetic staple fibers, not put up for retail sale: Other yarn, of acrylic or modacrylic staple fibers: Other: Other.”
Eligibility for Preferential Tariff Treatment under the USMCA
The USMCA was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018. The USMCA was approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act, Pub. L. 116-113, 134 Stat. 11, 14 (19 U.S.C. § 4511(a)). General Note (“GN”) 11 of the HTSUS implements the USMCA. GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA. GN 11(b) states:
For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, is eligible for the preferential tariff treatment provided for in the applicable subheading and quantitative limitations set forth in the tariff schedule as a “good originating in the territory of a USMCA country” only if—
the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries;
the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials;
the good is a good produced entirely in the territory of one or more USMCA countries using nonoriginating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o)); or
The 2-ply yarn at issue is manufactured in Mexico of components from the United States, the Netherlands, China, and possibly Mexico. The nonoriginating materials are the fibers from the Netherlands and China that comprise the aramid yarn. The yarn does not meet the requirements set forth in GN 11(b)(i) and (ii) because it is not wholly obtained or produced entirely in the USMCA territory nor is it produced exclusively from originating materials.
The 2-ply yarn is classified in subheading 5509.69, HTSUS. Per GN 11(b)(iii), the applicable tariff shift requirement for goods classified in subheading 5509.69, HTSUS, provided in subdivision (o) is as follows:
A change to subheadings 5509.32 through 5509.99 from any other chapter, except from headings 5201 through 5203 or 5401 through 5405.
The nonoriginating aramid staple fiber from China and Netherlands is classified in heading 5503, HTSUS, which provides for, “Synthetic staple fibers, not carded, combed or otherwise processed for spinning.” Because the nonoriginating aramid staple fiber is classified in Chapter 55, HTSUS, the yarn does not meet the requisite tariff shift requirement. The 2-ply yarn at issue does not meet the requisite tariff shift set forth in GN 11(b), and therefore it does not qualify for preferential tariff treatment under the USMCA.
Country of Origin
Section 334 of the Uruguay Round Agreements Act (“URAA”) (codified at 19 U.S.C. § 3592), enacted on December 8, 1994, provides rules of origin for textiles and apparel products entered, or withdrawn from warehouse, for consumption on or after July 1, 1996. Section 102.21 of the Code of Federal Regulations (19 C.F.R. § 102.21), implements the URAA. The country of origin of a textile or apparel product is determined by the sequential application of paragraphs (1) through (5) of section 102.21 (19 C.F.R. § 102.21(c)(1)-(5)).
Section 102.21(c)(1) states that “[t]he 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 2-ply yarn is manufactured in Mexico of components from the United States, the Netherlands, and China, it is not wholly obtained or produced in a single country. Therefore paragraph (c)(1) is inapplicable.
Section 102.21(c)(2) states that “[w]here 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.” Paragraph (e) of section 102.21 states, in relevant part, that “[t]he following rules will apply for purposes of determining the country of origin of a textile or apparel product under paragraph (c)(2) of this section:”
HTSUS Tariff shift and/or other requirements
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.
As discussed above, the 2P638-240 yarn is classified in heading 5509, HTSUS. Because the PAN staple fiber yarn, which is from the United States, is also classified in heading 5509, HTSUS, the tariff shift is not met. Therefore, paragraph (c)(2) is inapplicable.
Section 102.21(c)(3) states that “[w]here the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) or (2) of this section:”
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
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.
Section 102.21(b)(6) defines “wholly assembled” as:
The term “wholly assembled” when used with reference to a good means that all components, of which there must be at least two, preexisted in essentially the same condition as found in the finished good and were combined to form the finished good in a single country, territory, or insular possession…
The 2-ply yarn at issue is not knit to shape and does not fall under the definition of “wholly assembled” because the aramid/glass yarn did not preexist in essentially the same condition as found in the finished good. To form the component aramid/glass yarn, the aramid staple fibers are blended and then spun over a core of fiberglass. Therefore, Section 102.21(c)(3) is inapplicable.
Section 102.21 (c)(4) states, “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 yarn, the most important assembly or manufacturing process is spinning the fibers. See HQ 561092 (Aug. 28, 1998); and HQ 959746 (Oct. 11, 1996). Here, the fibers in component yarns are spun in the United States and Mexico. Therefore, a country of origin determination cannot be made based on Section 102.21(c)(4).
Paragraph (c)(5) states, “Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1), (2), (3) or (4) of this section, the country of origin of the good is the last country, territory or insular possession in which an important assembly or manufacturing process occurred.” In this case, the aramid/glass yarn is produced by blending the aramid staple fibers and spinning them over a core of fiberglass. That yarn is then twisted with the PAN yarn which results in the production of the subject 2-ply yarn. These manufacturing processes take place in Mexico. Accordingly, in the case of the subject 2-ply yarn, country of origin is conferred by the last country in which an important assembly or manufacturing process occurred, that is, Mexico.
HOLDING:
By application of GRIs 1 and 3, yarn 2P638-240 is classified under subheading 5509.69.60, HTSUS, which provides for “Yarn (other than sewing thread) of synthetic staple fibers, not put up for retail sale: Other yarn, of acrylic or modacrylic staple fibers: Other: Other.” The general rate of duty will be 13.2% ad valorem.
Yarn 2P638-240 does not qualify for preferential tariff treatment under the USMCA.
The country of origin of yarn 2P638-240 is Mexico.
A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Yuliya A. Gulis, Chief Food, Textiles and Marking Branch