HQ 084533: Country of Origin of Rayon Yarn

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            HQ 084533

                         AUGUST 31, 1989


CLA-2 CO:R:C:G  084533  PR

CATEGORY:  Classification

TARIFF NO.:  None

Ms. Ann M. Williams
A.N. Deringer, Inc.
30 West Service Road
Champlain, New York 12919-9703

RE:  Country of Origin of Rayon Yarn

Dear Ms. Williams:

     This ruling is in response to your letter of May 9, 1989, on
behalf of Filtex, Inc., concerning the country of origin of
certain rayon yarn.

FACTS:

     Filtex, Inc., imports into Canada from the United States,
Brazil, and Japan, under the Harmonized Tariff System Subheading
5403.41, filament viscose rayon yarn put up on cones, with 1.9
turns per inch twist, at a cost of $2.10(US) per pound.  In
Canada the yarns are wound on bobbins, twisted 9 turns per inch
with an "S" twist, removed from the bobbins, and combined with
another yarn.  The two yarns are twisted 7.5 turns per inch with
a "Z" twist.  The resulting product, which is exported to the
United States under Subheading 5403.31, Harmonized Tariff
Schedule of the United States Annotated (HTSUSA),is a 167
decitex 2 ply filament rayon yarn that is then wound into skeins,
dyed, dried, and wound onto Schiffli embroidery spools.  The
labor cost for processing is $4.80(US) per pound and the selling
price of the yarn is $8.40(US) per pound.

ISSUE:

     The question asked by the Canadian manufacturer is whether
the merchandise described above is eligible for reduced duty
pursuant to the United States-Canada Free Trade Agreement (FTA).

LAW AND ANALYSIS:

     General Note 3(c)(vii), Harmonized Tariff Schedule of the
United States Annotated (HTSUSA), sets out the provisions of the
FTA Implementation Act of 1988.  General Note 3(c)(vii)(B) states
that goods imported into the United States are eligible for
treatment under the FTA only if--


     (1) they are goods wholly obtained or produced in the
     territory of Canada and/or the United States, or

     (2) they have been transformed in the territory of Canada
     and/or the United States, so as to be subject--

          (I) to a change in the tariff classification in Canada
          as described in the rules of subdivision (c)(vii)(R) of
          this note

                    *         *         *

     When read in conjunction with the above note, General Note
3(c)(vii)(R)(11)(ff), HTSUSA, provides that merchandise produced
in Canada from material manufactured in another country, other
than the United States, and exported to the United States under a
heading in Chapter 54, HTSUSA, shall be eligible for treatment
under the FTA as "goods originating in the territory of Canada"
if the goods, when imported into Canada, were classifiable in
another chapter of the HTSUSA.  Since Subheadings 5403.31 and
5403.41 are both within Chapter 54, the yarn which originates in
Brazil and Japan will not be sufficiently processed in Canada to
make it subject to the provisions of the FTA.

     Without more information concerning the yarn imported into
Canada from the United States (i.e. the origin of the material
and the nature of the processing in the United States), we are
unable to rule on the dutiable status of the yarn produced
therefrom.

HOLDING:

     The subject yarn which is derived from yarn originating in
Brazil and Japan is not subject to the provisions of the FTA and
is classifiable under the provision for other multiple or cabled
viscose rayon yarn, in Subheading 5403.41.0000, HTSUSA, with duty
at the rate of 9.1 percent ad valorem.

                              Sincerely,




                              John Durant, Director
                              Commercial Rulings Division