CLA-2-RR:NC:TA:351 D85769
Ms. Dorothy Trombley
F.W. Myers & Co., Inc.
Myers Building
Rouses Point, NY 12979-1091
RE: Classification, status under the North American Free Trade Agreement (NAFTA) and country of origin determination for yarn; 19 C.F.R. §102.21(c)(5); last country in which an important assembly or manufacturing process occurs; NAFTA eligibility; Article 509
Dear Ms. Trombley:
This is in reply to your letter received December 21, 1998, requesting a classification, status under the NAFTA and country of origin determination for yarn which will be imported into the United States.
FACTS:
The subject merchandise consists of a cotton and acrylic blend plied yarn.
The manufacturing operations for the yarn are as follows: cotton yarn, count 16/1, is spun in India, acrylic yarn, single, 395 decitex, is spun in Korea. The yarns are then shipped to Canada. In Canada, the yarns are twisted together, dyed and put up on cones for sale. You state that the final fiber composition of the finished yarn is 55% cotton and 45% acrylic. Samples of the yarn were submitted. This yarn is not put up for retail sale.
ISSUE:
What is the classification, eligibility under NAFTA and country of origin of the subject merchandise?
CLASSIFICATION:
The applicable subheading for the yarn will be 5206.42.0000, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for cotton yarn (other than sewing thread), containing less than 85 percent by weight of cotton, not put up for retail sale, multiple (folded) or cabled yarns of combed fibers, exceeding 14 nm but not exceeding 43 nm per single yarn. The rate of duty will be 10 percent ad valorem.
LAW AND ANALYSIS:
The subject yarn undergoes processing operations in Canada which is a country provided for under the North American Free Trade Agreement (NAFTA). General note 12, HTSUSA, incorporates Article 401 of the North American Free Trade Agreement (NAFTA) into the HTSUSA. Note 12(a) provides, in pertinent part:
“(i) Goods that originate in the territory of a NAFTA party under the terms of subdivision (b) of this note and that qualify to be marked as goods of Canada under the terms of the marking rules...and are entered under a subheading for which a rate of duty appears in the “Special” subcolumn followed by the symbol “CA” in parentheses, are eligible for such duty rate...”
Accordingly, the yarn at issue will be eligible for the “Special” CA rate of duty provided it is a NAFTA “originating” good under General Note 12(b), HTSUSA, and it qualifies to be marked as a good of Canada. Note 12(b) provides in pertinent part:
“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 good 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...”
The subject merchandise qualifies for NAFTA treatment only if the provision of General Note 12(b)(ii)(A) are met, that is, if the merchandise is transformed in the territory of Canada so that the non-originating material (the yarn formed in India and Korea) undergoes a change in tariff classification as described in subdivision (t).
The cotton yarn from India is classifiable in heading 5206, Harmonized Tariff Schedule of the United States (HTSUS). For cotton yarn subdivision (t), Chapter 52, rule 1 states that:
“A change to headings 5201 through 5207 from any other chapter, except from headings 5401 through 5405 or 5501 through 5507.”
When the yarn leaves India, it is classifiable as cotton yarn under heading 5205, HTSUS. The yarn which leaves Korea is classifiable under heading 5509, HTSUS. As yarns of headings 5205 are excepted by subdivision (t) for heading 5205, the non-originating material from India does not undergo the requisite change in tariff classification. Accordingly, the merchandise is not eligible for the NAFTA preference.
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 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 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
5204-5207 A change to heading 5204 through 5207 from any heading outside that group, provided that the change is the result of a spinning process.
Section 102.21(e) states that the change must be as a result of a spinning process. As the spinning process occurs in two countries (not a “single” country as required by paragraph (c)(2)), 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 yarn is not knit to shape, paragraph (i) does not apply. Since twisting is not considered an assembly operation, paragraph (ii) also does not apply.
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”. The Section 334 rules of origin for textile products state that a textile or apparel product originates in a country, and is the growth, product or manufacture of that country, if
“(B) the product is a yarn, thread, twine, cordage, rope, cable or braiding and-
(i) the constituent staple fibers are spun in that country, territory or possession or
(ii) the continuous filament is extruded in that country, territory, or possession...”
Clearly, this language indicates that spinning or extrusion, rather than twisting, is the most important process in yarn production. However, as the spinning occurred in more than one country, a single country of origin determination cannot be made based on Section 102.21(c)(4).
Paragraph (c)(5) states that “Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1), (2), (3) or (4) of this section, the country of origin of the good is the last country, territory or insular possession in which an important assembly or manufacturing process occurred”. Accordingly, in the case of the subject yarn, country of origin is conferred by the last country in which an important manufacturing process occurred, i.e., Canada.
HOLDING:
The country of origin of the yarn is Canada.
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 C.F.R. §177.9(b)(1). This sections 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 C.F.R. §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 C.F.R. §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, contact National Import Specialist Camille Ferraro at 212-466-5885.
Sincerely,
Robert B. Swierupski
Director,
National Commodity
Specialist Division