CLA 2-OT:RR:NC:N3:351
Nancy deVries C.C.S.
Spinrite, Inc.
320 Livingstone Avenue South
Listowel, Ontario, Canada N4W 3H3
RE: Classification and country of origin determination for acrylic yarn; 19 CFR 102.21(c)(2); tariff shift and status under the North American Free Trade Agreement (NAFTA); Article 509
Dear Ms. deVries:
This is in reply to your letter dated Nov. 16, 2009, requesting a classification and country of origin determination for acrylic yarn that will be imported into the United States. You also ask about NAFTA eligibility.
FACTS:
The subject merchandise consists of four-ply twisted staple fiber acrylic yarn.
The manufacturing operations for the yarn are as follows: The fibers are imported into the United States from Portugal in the form of acrylic tow (of Harmonized Tariff Schedule of the United States (HTSUS) heading 5501) or staple fibers carded, combed, or otherwise prepared for spinning (of heading 5506). The yarn is spun in the U.S. and wound onto 10-lb. cones. Our examination indicates that the yarn is approximately 5600 decitex. These cones of U.S.-made yarn are exported to Canada where the yarn is rewound into various size balls weighing between 50 and 400 grams. These balls of yarn are labeled and imported into the U.S. According to the terms of Note 4(A)(b)(iii) to Section XI, HTSUS, these balls of yarn are considered “put up for retail sale.”
ISSUES:
What are the classification and country of origin of the subject merchandise? Is the yarn, exported to Canada for cutting to length and rewinding, eligible for NAFTA upon re-importation into the U.S.? Is the respooled yarn a product of Canada for marking purposes?
CLASSIFICATION:
The applicable subheading for the four-ply twisted staple fiber acrylic yarn that is imported into the U.S. from Canada in balls weighing between 50 and 400 grams will be 5511.10.0030, HTSUS, which provides for yarn (other than sewing thread) of man-made staple fibers, put up for retail sale, of synthetic staple fibers, containing 85 percent or more by weight of such fibers, acrylic or modacrylic. The general rate of duty will be 7.5% ad valorem.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at http://www.usitc.gov/tata/hts/.
According to the terms of Subpart I [Advance Ruling Procedures], Section 181.92(5)(i) [Definitions and general NAFTA advance ruling practice.], this Office has no authority to issue rulings on goods exported from the U.S. to other NAFTA countries (Canada or Mexico). For this reason, we are unable to issue a ruling on the classification of the yarn spun in the U.S. to be exported to Canada on 10-lb. cones. A list of addresses from which advance rulings for exports into Canada can be requested is located at the U.S. Customs and Border Protection website at www.cbp.gov (click on Trade, Trade Programs, International Agreements, International Free Trade Agreements, North American Free Trade Agreement, Advance Rulings).
COUNTRY OF ORIGIN - LAW AND ANALYSIS:
Section 334 of the Uruguay Round Agreements Act (codified at 19 U.S.C. 3592), enacted on December 8, 1994, provided rules of origin for textiles and apparel entered, or withdrawn from warehouse for consumption, on and after July 1, 1996. Section 102.21, Customs Regulations (19 C.F.R. 102.21), published September 5, 1995 in the Federal Register, implements Section 334 (60 FR 46188). Section 334 of the URAA was amended by section 405 of the Trade and Development Act of 2000, enacted on May 18, 2000, and accordingly, section 102.21 was amended (68 Fed. Reg. 8711). Thus, the country of origin of a textile or apparel product shall be determined by the sequential application of the general rules set forth in paragraphs (c)(1) through (5) of Section 102.21.
Paragraph (c)(1) states, “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 is not wholly obtained or produced in a single country, territory or insular possession, paragraph (c)(1) of Section 102.21 is inapplicable.
Paragraph (c)(2) states, “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 of the foreign materials 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) in pertinent part states
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:
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.
The yarn is manufactured (spun) in a single country, that is, the U.S., from tow of heading 5501 or fibers of heading 5506, both of which are outside the group cited in the above rule. Thus, as per the terms of the tariff shift requirement, country of origin is conferred in the United States.
The despooling, cutting to length, rewinding, and repackaging of the U.S.-origin yarn in Canada is considered an alteration under the terms of subheading 9802.00.50, HTSUS. Subheading 9802.00.50 provides for the assessment of duty on the value of repairs or alterations performed on articles returned to the U.S. after having been exported for that purpose provided that the documentary requirements of section 181.64 (for articles returned from Canada or Mexico) of the CBP Regulations (19 CFR §§ 181.64) are satisfied.
MARKING:
If a good is determined to be an article of U.S. origin, it is not subject to the country of origin marking requirements of 19 U.S.C. §1304. Whether an article may be marked with the phrase “Made in the USA” or similar words denoting U.S. origin is an issue under the authority of the Federal Trade Commission (FTC). We suggest that you contact the FTC Division of Enforcement, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580 on the propriety of proposed markings indicating that an article is made in the U.S.
You also ask whether the yarn, once it has been rewound and packaged in Canada into the smaller balls, may be marked “Made in Canada.” The country of origin does not change due to the alterations performed on the yarn in Canada. The goods cannot be marked “Made in Canada.”
NAFTA:
You further ask whether the yarn that is exported from Canada into the U.S. is eligible for duty-free treatment under NAFTA.
General Note (GN) 12(b), HTSUS (19 U.S.C. § 1202) sets forth the criteria for determining whether a good is originating under NAFTA. GN 12(b) states, in pertinent part, that
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
(iv) they are produced entirely in the territory of Canada, Mexico and/or the United States but one or more of the nonoriginating materials falling under provisions for “parts” and used in the production of such goods does not undergo a change in tariff classification because--
(A) the goods were imported into the territory of Canada, Mexico and/or the United States in unassembled or disassembled form but were classified as assembled goods pursuant to general rule of interpretation 2(a), or
(B) the tariff headings for such goods provide for and specifically describe both the goods themselves and their parts and is not further divided into subheadings, or the subheadings for such goods provide for and specifically describe both the goods themselves and their parts,
provided that such goods do not fall under chapters 61 through 63, inclusive, of the tariff schedule, and provided further that the regional value content of such goods, determined in accordance with subdivision (c) of this note, is not less than 60 percent where the transaction value method is used, or is not less than 50 percent where the net cost method is used, and such goods satisfy all other applicable provisions of this note.
GN 12(t)/55(1A), requires “A change to heading 5501 through 5511 from any other chapter
. . . .”
Based on the facts provided, the yarn does not meet the terms of the above tariff shift because the yarn of heading 5511 is spun from tow or fibers of chapter 55. The yarn will not qualify for NAFTA preferential treatment because it will not meet the requirements of GN 12(b). The yarn repackaged in Canada would likewise not qualify for NAFTA.
HOLDING:
The country of origin of the yarn is the United States. The yarn as manufactured (spun) in the U.S. but packaged in Canada is classified in subheading 5511.10.0030, HTSUS, with a duty allowance under subheading 9802.00.50. The yarn is not eligible for duty-free treatment under NAFTA.
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, either directly, by reference, or by implication, is accurate and complete in every material respect.
This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 C.F.R. 181). Should you wish to request an administrative review of this ruling, submit a copy of this ruling and all relevant facts and arguments within 30 days of the date of this letter, to the Director, Commercial Rulings Division, Headquarters, U.S. Customs and Border Protection, Regulations & Rulings, 799 9th Street N.W. - 7th floor, Washington, DC 20229-1177.
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Mitchel Bayer at (646) 733-3102.
Sincerely,
Robert B. Swierupski
Director
National Commodity Specialist Division