CLA-2-54:RR:NC:N3:351
Charles Newton
MSR Customs Corp.
Peace Bridge Plaza
P.O. Box 230
Buffalo, NY 14213-0230
RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of high-tenacity polyester yarn; Article 509
Dear Mr. Newton:
In your letter dated Nov. 21, 2006, you requested a ruling on the status of multifilament polyester yarn under the NAFTA. The ruling request is on behalf of your client, St. Gobain Technical Fabrics.
You state that the yarn will be manufactured in a non-NAFTA country, perhaps South Africa or Norway or another country. It will be imported into the United States on spools weighing 22 lbs., one of which you have supplied to us. The yarn is then exported to Canada where it is twisted (1.5 twists per inch) and rewound on smaller spools, weighing approximately 2 lbs.; you have also supplied us with the re-spooled yarn.
According to the specification sheet, the yarn is 505 denier (454.5 decitex) and the break strength is 3838 grams. According to our calculations and yours, the tenacity is approximately 83 centinewtons per tex. This yarn meets the tariff definition of “high tenacity yarn" according to the terms of Section XI, Note 6, Harmonized Tariff Schedule of the United States (HTSUS).
The applicable tariff provision for the high-tenacity polyester yarn, as originally imported and prior to twisting, will be 5402.20.3010, HTSUS, which provides for synthetic filament yarn, not put up for retail sale, high tenacity yarn of polyesters, single yarn: not more than 920 decitex: monofilament; multifilament, untwisted or with twist of less than 5 turns per meter. The rate of duty will be 8.8% ad valorem.
The applicable tariff provision for the high-tenacity polyester yarn after after twisting and respooling in Canada, will be 5402.20.3030, HTSUS, which provides for “Synthetic filament yarn (other than sewing thread), not put up for retail sale . . .: High tenacity yarns of polyesters: Single yarn: Not more than 920 decitex: Multifilament, with twist of 5 turns or more per meter.” The general rate of duty will be 8.8% 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/.
Subheading 5402.20.3010, HTSUS, falls within textile category 606. With the exception of certain products of China, quota/visa requirements are no longer applicable for merchandise that is the product of World Trade Organization (WTO) member countries. The textile category number above applies to merchandise produced in non-WTO member-countries. Quota and visa requirements are the result of international agreements that are subject to frequent renegotiations and changes. To obtain the most current information on quota and visa requirements applicable to this merchandise, we suggest you check, close to the time of shipment, the “Textile Status Report for Absolute Quotas” which is available on our web site at www.cbp.gov. For current information regarding possible textile safeguard actions on goods from China and related issues, we refer you to the web site of the Office of Textiles and Apparel of the Department of Commerce at www.otexa.ita.doc.gov.}
General Note 12(b), HTSUS, sets forth the criteria for determining whether a good is originating under the NAFTA. General Note 12(b), HTSUS, (19 U.S.C. § 1202) 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 non-originating 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.
The re-imported yarn does not qualify for preferential treatment under the NAFTA because none of the above requirements are met. We note that the re-imported yarn is not wholly obtained or produced in a NAFTA country; in addition, it does not meet the requirements of GN 12(t)/Chapter 54(1), which requires “[a] change to headings 5401 through 5406 from any other chapter . . . ” since the yarn remains classified in chapter 54.
Your inquiry asked about the applicability of HTSUS subheading 9802.00.5060 to the re-imported yarn. Under HTSUS subheading 9802.00.5060, articles exported from and returned to the U.S., after having been advanced in value or improved in condition by repairs or alterations outside the U.S., may qualify for a duty exemption, provided the foreign operation does not destroy the identity of the exported articles or create new or commercially different articles through a process of manufacture. The duty in such a case would be assessed upon the value of the repairs or alterations. Repairs and alterations are made to completed articles and do not include intermediate processing operations which are performed as a matter of course in the preparation or the manufacture of finished articles. Dolliff & Company, Inc., v. United States, 66 CCPA 77, C.A.D. 1225 (1979). Therefore, the focus is upon whether the exported article is "incomplete" or "unsuitable for its intended use" prior to the foreign processing. Guardian Industries Corp. v. United States, 3 Ct. Int’l Trade (1982).
It is the opinion of this office that the twisting of the yarn is an intermediate processing operation that prepares the yarn for its intended use. We believe the importer goes to the trouble and expense of exporting the yarn to Canada to be twisted because without that step the yarn is unsuitable for its intended use. The twisting is a necessary step in the preparation or manufacture of the finished yarn. Accordingly, the re-imported yarn would not be eligible under subheading 9802.00.5060, HTSUS.
This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 C.F.R. 181).
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.
Should you wish to request an administrative review of this NAFTA 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, 1300 Pennsylvania Ave. N.W., (Mint Annex), Washington, D.C. 20229.
Sincerely,
Robert B. Swierupski
Director,
National Commodity
Specialist Division