CLA-2-63:OT:RR:NC:N1:358
Cody Keser
Universal Logistics USA Inc
2205 Kenmore Avenue
Suite 106 Buffalo, NY 14207
RE: Ruling Request; Tariff Classification of worn clothing; United States-Mexico-Canada Agreement
Dear Mr. Keser:
In your letter dated May 23, 2024, you requested a tariff classification ruling under the Harmonized Tariff Schedule of the United States (HTSUS) and eligibility for preferential tariff treatment under the United States-Mexico-Canada Agreement (USMCA).
You have submitted photographs and indicated that the merchandise in question is used (worn) clothing that is donated to local charities and private collection agencies across Canada for reuse, repair, remanufacturing or recycling. You further state that Bank & Vogue Ltd. representatives purchase wholesale lots of approximately 40,000 pounds of worn clothing they deem to be salvage, overstock of worn clothing that cannot be monetized domestically and negotiate to sell it to a domestic customer elsewhere in Canada or the USA.
In understanding the language of the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and coding System, which constitutes the official interpretation of the Harmonized System at the international level, may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading and are generally indicative of the proper interpretation of the HTSUS.
Heading 6309, HTSUS, provides for worn clothing and other worn textile articles. The Explanatory Note (EN) to heading 6309, HTSUS, explicitly state that for merchandise to qualify in this provision, two criteria must be met:
(A) They must show signs of appreciable wear, whether or not they require cleaning or repair before use.
New articles with faults in weaving, dyeing, etc., and shop-soiled articles are excluded from this heading.
(B) They must be presented in bulk (e.g., in railway goods wagons) or in bales, sacks or similar bulk packings, or in bundles
tied together without external wrapping, or packed roughly in crates.
These articles are normally traded in large consignments, usually for resale, and are less carefully packed than is generally the case with new articles.
Note 3 to Chapter 63 provides additional requirements for Heading 6309.
Heading 6309 applies only to the following goods:
(a) Articles of textile materials:
(i) Clothing and clothing accessories, and parts thereof;
(ii) Blankets and traveling rugs;
(iii) Bed linen, table linen, toilet linen and kitchen linen;
(iv) Furnishings, other than carpets of headings 5701 to 5705 and tapestries of heading 5805.
(b) Footwear and headgear of any material other than asbestos.
In sum, for the subject merchandise to be covered by Heading 6309, it must meet these requirements: (1) be one of the aforementioned articles of textile materials or specified footwear and headgear; (2) show signs of appreciable wear; and (3) be entered in bales.
In Dis Vintage LLC v. United States, Ct. No. 16-00013, the U.S. Court of International Trade (CIT) held that the term appreciable wear in Note 3(i) to Chapter 63 of the HTSUS, which limits the application of heading 6309 to (among other conditions) articles that show signs of appreciable wear, means noticeable damage or impairment caused by use. 456 F. Supp. 3d 1323, 1331-34 (Ct. Int'l Trade 2020). Such damage or impairment must be visible to the eye. Id. at 1331. If use' is not sufficient to cause damage or impairment, then the merchandise will not and should not meet the definition of wear.' Id. at 1333. The court explained further that [t]he language of Heading 6309 and Chapter Note 3 permit the possibility that damage to something other than fabric can comprise appreciable wear.' Id. at 1337.
Because of the bulk shipping requirement, unique nature of each garment, and the requirement that each garment be appreciably worn, the appropriateness of classification under subheading 6309.00.0010, HTSUS, cannot be determined until the time of importation. If the shipment meets the above stated requirements, the applicable subheading will be 6309.00.0010, HTSUS, which provides for Worn clothing and other worn articles....Worn clothing. The rate of duty will be free.
It should be noted that entry will not be accepted under subheading 6309.00.0010, HTSUS, if any article within the bale, sack or similar packing does not meet the requirements of appreciable wear and has been commingled with the clothing classified under subheading 6309.00.0010, HTSUS, which does show appreciable wear.
General Note 3(f)(i) of the HTSUS states:
Whenever goods subject to different rates of duty are so packed together or mingled that the quantity or value of each class of goods cannot be readily ascertained by customs officers (without physical segregation of the shipment or the contents of any entire package thereof), by one or more of the following means:
(A) sampling,
(B) verification of packing lists or other documents filed at the time of entry, or
(C) evidence showing performance of commercial settlement tests generally accepted in the trade and filed in such time and manner as may be prescribed by regulations of the Secretary of the Treasury, the commingled goods shall be subject to the highest rate of duty applicable to any part thereof unless the consignee or his agent segregates the goods pursuant to subdivision (f)(i) hereof.
Accordingly, if the goods cannot be segregated, the commingled garments would be subject to the appropriate provisions of HTSUS Chapter 61, 62 or 64 for which the highest rate of duty applies.
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 non-originating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o));
Chapter 63
Chapter Rule 1: For the purposes of determining the origin of a good of this chapter, the rule applicable to that good shall only apply to the component that determines the tariff classification of the good and such component must satisfy the tariff change requirements set out in the rule for that good.
5. A change to headings 6304 through 6310 from any other chapter, except from headings 5106 through 5113, 5204 through 5212, 5310 through 5311, chapters 54 through 55 or headings 5801 through 5802 or 6001 through 6006, or other made-up textile articles of heading 9619, provided that the good is both cut (or knit to shape) and sewn or otherwise assembled in the territory of one or more of the USMCA countries.
Because of the unique materials as well as the indeterminate sourcing and manufacturing history of each article of donated worn clothing we are unable to issue a USMCA ruling.
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/.
The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in Title 19, Code of Federal Regulations (CFR), Section 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, whether directly, by reference, or by implication, is accurate and complete in every material respect. In the event that the facts are modified in any way, or if the goods do not conform to these facts at time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and submit a request for a new ruling in accordance with 19 CFR 177.2. Additionally, we note that the material facts described in the foregoing ruling may be subject to periodic verification by CBP.
This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection 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, please contact National Import Specialist Katherine Souffront at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division