CLA-2-52:RR:NC:N3:351 I85063
Ms. Barbara G. Clausen
Regulatory Services Specialist
FedEx Trade Networks
205 West Service Road
Champlain, NY 12919
RE: The tariff classification of cotton sliver from Canada.
Dear Ms. Clausen:
In your letter dated August 16, 2002, you requested a ruling on behalf of Cavalier Textiles on tariff classification.
FACTS:
You state that raw cotton, grown in the United States, is sent to Canada where it is carded into sliver that is returned to the United States. You submitted samples of the raw cotton and the slivers, which shall be returned as you request, although we have retained some of each as official samples.
ISSUES:
What are the classification, quota status, and country of origin of the subject merchandise?
CLASSIFICATION AND QUOTA STATUS:
The cotton slivers will be subject to the quantitative restriction described in additional U.S. note 10 to chapter 52, Harmonized Tariff Schedule of the United States (HTS). If this quota is not filled, the applicable subheading for the cotton slivers will be 5203.00.1000, HTS, which provides for cotton, carded or combed; fibers of cotton processed but not spun; described in additional U.S. note 10 to this chapter and entered pursuant to its provisions. The rate of duty will be five percent ad valorem.
If this quota is filled, the cotton/rayon slivers will be classified under subheading 5203.00.3000, HTS, which provides for cotton, not carded or combed: fibers of cotton processed but not spun: other. The merchandise will be subject to a rate of duty of 31.4 cents per kg.
You have not supplied us with final value information, but the slivers must be entered under one of the following additional HTS subheadings, which will require the payment of the appropriate additional duties:
If entered during the effective period of safeguards, based upon value (with duty depending upon value as shown): 9904.52.44 through 9904.52.49, as applicable.
If entered during the effective period of safeguards based upon quantity announced by the Secretary of Agriculture: 9904.52.50.
You state that you have been advised that when the sliver is returned it may be entered under subheading 9802.00.5060, HTS. Subheading 9802.00.5060 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. However, the application of this tariff provision is precluded in circumstances where the operations performed abroad destroy the identity of the article or create a new or commercially different article. In the instant situation, the exported raw cotton is incomplete for its intended use as sliver and the foreign processing operation (i.e., carding) is a necessary step in the preparation or manufacture of the finished slivers. Accordingly, no allowance in duty can be made for the cost or value of the U.S. supplied component. In fact, the value of the raw cotton must be included in the valuation of the finished slivers.
COUNTRY OF ORIGIN - LAW AND ANALYSIS:
On December 8, 1994, the President signed into law the Uruguay Round Agreements Act. Section 334 of that Act (codified at 19 U.S.C. 3592) provides new rules of origin for textiles and apparel entered, or withdrawn from warehouse, for consumption, on and after July 1, 1996. On September 5, 1995, Customs published Section 102.21, Customs Regulations, in the Federal Register, implementing Section 334 (60 FR 46188). Thus, effective July 1, 1996, the country of origin of a textile or apparel product shall be determined by sequential application of the general rules set forth in paragraphs (c)(1) through (5) of Section 102.21.
Paragraph (c)(1) states that “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 sliver 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 that “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 that “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
5203 A change to heading 5203 from any other chapter.
Accordingly, as the raw cotton from which the sliver is manufactured is also classified in chapter 52, Section 102.21(c)(2) is inapplicable.
Section 102.21(c)(3) states that, "Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) or (2) of this section":
(i) 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
(ii) 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.
As the subject merchandise is neither knit, nor wholly assembled in a single country, (carding is not an assembly process) 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 sliver, the carding constitutes the most important manufacturing process. Accordingly, the country of origin of the sliver is Canada.
HOLDING:
The sliver is classified in either heading 5203.00.1000 or 5203.00.3000, as explained above, with quota requirements also explained above. The country of origin of the sliver is Canada.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R.177).
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