Mr. David O. Elliott
Barnes, Richardson & Colburn
475 Park Avenue South
New York, NY 10016
RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA) of sausage casings; Article 509
Dear Mr. Elliott:
In your letter dated March 17, 2000, on behalf of Viscofan U.S.A., Inc., you requested a ruling on the status of sausage casings under the NAFTA.
The products are described as cellulose sausage casings and polyamide sausage casings. The cellulosic casings are extruded in Spain. The manufacturing process consists of extruding a viscose solution through an annular die into a regenerating bath, which yields a regenerated tubular gel. The gel is washed to remove acid and other materials, and the unfinished casing material is then plasticized, dried, rehumidified, and wound on reels. The polyamide casings are extruded in Germany. Polyamide in granular form is melted and extruded into the shape of a single or multilayer tube. Both the cellulosic and the polyamide sausage casings are shipped to the United States on reels.
The applicable tariff provision for the regenerated cellulose casings will be 3917.10.1000, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for tubes, pipes, hoses and fittings therefor…of plastics: artificial guts (sausage casings) of hardened protein or of cellulosic plastics materials: of cellulosic plastics materials. The general rate of duty will be 6.5 percent ad valorem.
The applicable tariff provision for the polyamide casings will be 3917.32.6050, HTSUSA, which provides for tubes, pipes, hoses and fittings therefor…of plastics…not reinforced or otherwise combined with other materials, without fittings…other…other. The general rate of duty will be 3.1 percent ad valorem
In the United States, the casings are further processed by being shirred. The shirring process consists of folding continuous lengths of extruded sausage casings in an accordion-like manner. The polyamide casings are generally printed with logos in the United States as well. The shirred casings are then sent to Mexico.
The merchandise does not qualify for preferential treatment under the NAFTA because
the non-originating materials used in the production of the goods will not undergo the change in tariff classification required by General Note 12(t)/39.1, HTSUSA. If the non-originating materials had undergone the required tariff shift, then such merchandise would also be subject to a Regional Value Content (RVC) requirement of 60% under the Transaction Value Method or 50% under the Net Cost Method as required under the rule applicable to the sausage casings.
You suggest that the casings may qualify for preferential treatment under NAFTA even though they do not undergo a tariff shift because of the exception for goods produced entirely in the territory of one or more of the NAFTA countries from one or more non-originating materials which did not undergo a tariff shift because those materials are provided for in a heading which specifically provides for both the good and its parts.
For purposes of this exception, the heading must provide for both (1) classification of the non-originating materials as “parts” of the good into which they are incorporated, and (2) classification of the “good” as a specific good and not as a part. Heading 3917 provides for casings but not for parts of casings. Moreover, the imported extruded casings are not parts of casings, but are fully complete casings even before shirring. Since both the shirred and unshirred casings are classifiable in heading 3917 as complete casings, the transaction fails to satisfy the requirements for application of the exception set out in Article 401(d)(ii) of the NAFTA. Thus, the sausage casings do not qualify as originating goods for purposes of the NAFTA.
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 Joan Mazzola at 212-637-7034.
Should you wish to request an administrative review of this 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 Service, 1300 Pennsylvania Ave. N.W., Washington, D.C. 20229.
Robert B. Swierupski