N338883

N338883 April 12, 2024 CLA-2-54:OT:RR:NC:N3:351 CATEGORY: Classification, Country of Origin: USMCA eligibility TARIFF NO.: 5402.33.3000; 5505.10.0040 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 ½ 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: 100 percent polyester filament yarn is extruded and spooled. Polyester yarn (5402.33) is shipped to Canada in tubes. 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 de

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 requir