CLA-2-54:OT:RR:NC:N3:351
Mr. Ameet Shah
Culp Inc
1823 Eastchester Drive High Point, NC 27265
RE: Classification, country of origin determination, and eligibility under the United States-Mexico-Canada Agreement (USMCA) for polyester textured yarn and polyester yarn waste from Indonesia; 19 CFR 102.21 (c)(1); 19 CFR 102.21(c)(2); tariff shift
Dear Mr. Shah:
This is in reply to your letter dated March 7, 2024, requesting a classification, country of origin determination, and eligibility under the United States-Mexico-Canada Agreement (USMCA) ruling. A sample of the polyester textured filament yarn was provided with your request.
The sample, described as 1-15036PIM Black, are tangled textured 100 percent polyester multifilament single yarns. The yarns will be imported on tubes into Canada from Indonesia and will be used to produce woven and knit mattress ticking fabric. You state in your letter that the tangled yarns are collected during various manufacturing processes which include excess yarn cut after a seam is made; residual yarn leftover on tubes at the end of production or a lot and removed from the tube; and damaged layers of yarn removed from the exterior of the tube. You also state the length of the yarn can range from inch to 14,000 yards in length. The yarns are packaged in bales weighing approximately 900 pounds and shipped to the United States to be shredded and converted into fiber. You further state, the yarns also have a fiber content of cotton, viscose, polyethylene, or polypropylene, and can be considered a staple or filament yarn, and are manufactured in various countries including India, South Korea, and the United States. This office will only consider the classification, country of origin, and USMCA eligibility of the submitted sample in this binding ruling.
The manufacturing steps for the polyester textured filament yarns are as follows:
Indonesia:
ISSUE:
What is the classification, country of origin, and USMCA eligibility for the polyester textured filament yarn?
CLASSIFICATION:
You suggested that the polyester textured filament yarn should be classified under subheading 5505.10.0040, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Waste (including noils, yarn waste and garnetted stock) of man-made fibers: Of synthetic fibers: Of polyesters. We disagree in part. The Explanatory Note for 5505 states, This heading covers waste of man-made fibres (filaments and staple fibres - see the General Explanatory Notes to Chapter 54) and includes: (2) Yarn wastes (hard waste) i.e., broken, knotted, or tangled yarns collected as waste during the spinning, doubling, reeling, weaving, knitting, etc, operations. The yarn pulled from the tubes at the end of production or a lot or considered defective prior to production is not a by-product of manufacture, but rather created before or after manufacture and thus, will not be considered waste. See HQ Ruling 958135 and 089387. The applicable subheading for the polyester textured filament yarn will be 5402.33.3000, HTSUS, which provides for Synthetic filament yarn (other than sewing thread), not put up for retail sales, including synthetic monofilament of less than 67 decitex: Textured yarn: Of polyesters: Single yarn. The rate of duty will be 8.8 percent ad valorem.
However, the applicable subheading for the yarn collected during the manufacturing process by cutting excess yarn after a seam will be 5505.10.0040, HTSUS, which provides for Waste (including noils, yarn waste and garneted stock) of man-made fibers: Of synthetic fibers: Of polyesters. The rate of duty is free.
The merchandise in question may be subject to antidumping duties and countervailing duties (AD/CVD) for polyester textured yarn from Indonesia (A-560-838). Written decisions regarding the scope of AD/CVD orders are issued by the Enforcement and Compliance office in the International Trade Administration of the Department of Commerce (ITA) and are separate from tariff classification and origin rulings issued by Customs and Border Protection (CBP). General information regarding the ITA and AD/CVD can be found at https://www.trade.gov/us-antidumping-and-countervailing-duties. The ITA's Guide on How to File for an Antidumping/Countervailing Duty Scope Ruling Request is available at https://enforcement.trade.gov/scope/Request-Scope-Ruling.pdf.
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 at https://hts.usitc.gov/current.
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 polyester textured filament yarns are wholly obtained or produced in a single country, territory or insular possession, Indonesia, the country of origin is Indonesia. However, as the polyester filament yarn waste 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
5505
A change to heading 5505 from any other heading, provided that the change is the result of garneting. If the change is not the result of garneting, the country of origin of the good is the country of origin of the good prior to its becoming waste.
Accordingly, as the polyester textured filament yarn waste is extruded and formed in Indonesia, as per the terms of the tariff shift rule for heading 5505, HTSUS, the country of origin for the filament yarn waste is Indonesia.
USMCA ELIGIBILITY:
The United States-Mexico-Canada Agreement (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:
(b) 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
(i) the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries;
(ii) the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials;
(iii) 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 applicable provisions under subdivision (o) includes the rule of origin which is as follows:
A change to headings 5401 through 5406 from any other chapter, except from headings 5201 through 5203 or 5501 through 5507.
As the polyester filament yarn from Indonesia is classified under subheading 5402.33.3000, HTSUS, when it was imported into Canada, removed from the tubes, and baled, it has not met the terms of the tariff shift. Therefore, the polyester filament yarn does not qualify for preferential tariff treatment under the USMCA.
GN 11(l)(iv) provides a list of goods of the type that would qualify as a good wholly obtained or produced entirely in the territory of one or more USMCA countries, including:
(10) waste and scrap derived from (A) production in the territory of one or more USMCA countries; or
(B) used goods collected in the territory of one or more USMCA countries, if such goods are fit only for the recovery of raw materials;
In this case, the merchandise to be imported into the United States is identified as polyester textured filament yarn waste. You state that the polyester yarn waste is collected during the manufacturing process by cutting excess yarn after a seam from producing mattress ticking fabric. The polyester yarn waste is baled and shipped to the United States. You state that the U.S. buyer of the polyester yarn waste will shred the yarn waste and convert it into fiber.
The relevant USMCA provisions provide that a good may be originating if it is waste and scrap derived from production in the territory of one or more USMCA countries. It is undisputed that the polyester yarn waste is waste derived from production in the territory of one or more USMCA countries. As such, the polyester filament yarn waste meets the criteria for waste and scrap under GN 11(I)(iv)(10) and will qualify as an originating good pursuant to GN 11(b).
HOLDING:
Based on the information provided, the polyester textured filament yarn, pulled from the tubes at the end of production or a lot or considered defective prior to production, is not a by-product of manufacture, but rather created before or after manufacture, and is classified under 5402.33.3000, HTSUS.
Based on the information provided, the yarn collected during the manufacturing process by cutting excess yarn after a seam is classified under 5505.10.0040, HTSUS.
Pursuant to 19 C.F.R. 102.21(c)(1), the country of origin of the polyester textured filament yarn is Indonesia.
Pursuant to 19 C.F.R. 102.21(c)(2), the country of origin of the polyester textured filament yarn waste is Indonesia.
Based on the information provided, the polyester textured filament yarn does not qualify for USMCA preference pursuant to GN 11 (b) and GN 11(o), HTSUS.
Based on the information provided, the polyester textured filament yarn waste qualifies for USMCA preference pursuant to GN 11(b) and GN 11(1)(iv)(10), HTSUS.
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 177 of the Customs Regulations (19 C.F.R. 177). Should it be subsequently determined that the information furnished is not complete and does not comply with 19 CFR 177.9(b)(1), the ruling will be subject to modification or revocation. In the event there is a change in the facts previously furnished, this may affect the determination of country of origin. Accordingly, if there is any change in the facts submitted to Customs, it is recommended that a new ruling request be submitted in accordance with 19 CFR 177.2.
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, please contact National Import Specialist Kristine Dodge at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division