HQ 952801 - Classification and country of origin of metalized embroidery thread; gimping; subheading 5605.00.0090, HTSUSA - United States International Trade Commision Rulings

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HQ 952801

July 13, 1993

CLA-2 CO:R:C:T 952801 jb

CATEGORY: CLASSIFICATION

TARIFF NO.: 5605.00.0090

Mr. David R. McCauley
Jacky Maeder Ltd.
Harbour Tech Center
P.O. Box 6070
Chelsea, MA 02150

RE: Classification and country of origin of metalized embroidery thread; gimping; subheading 5605.00.0090, HTSUSA

Dear Mr. McCauley:

This is in response to your letter, dated September 14, 1992, on behalf of your client, Madeira USA Ltd, requesting classification under the Harmonized Tariff Schedule of the United States Annotated and country of origin determination for metalized embroidery thread imported from Singapore. Samples were provided to this office for examination.

FACTS:

The submitted samples, referred to as "Metalfil" yarn, consist of a core of German-made polyester filament core yarn, wrapped with a Japanese-made metallic foil plastic strip with a final "S" twist. The final twisting (gimping) operation is done in a third country, Singapore, to make the finished product. Based on results from the Customs New York laboratory, the 1/64 inch ST silver foil strip from Japan in the gimped yarn is metalized polyester strip.

ISSUE:

1. What is the classification of the metalized embroidery thread?

2. What is the country of origin of the submitted merchandise?

LAW AND ANALYSIS:

I. Classification

Classification of merchandise under the HTSUSA is governed by the General Rules of Interpretation (GRI). GRI 1 requires that classification be determined according to the terms of the headings and any relative section or chapter notes, taken in order. Where goods cannot be classified solely on the basis of GRI 1, the remaining GRI will be applied, in the order of their appearance.

The samples at issue appear to be gimped metalized yarns. Heading 5605, HTSUSA, provides for metalized yarn, whether or not gimped, being textile yarn, or strip or the like of heading 5404 or 5405, combined with metal in the form of thread, strip or powder or covered with metal.

Gimping is a kind of twisting. Gimped yarn is defined as:

Yarn consisting of a tightly twisted center or heart yarn wrapped around by soft twisted yarn, and usually colored, novelty yarn. Spirality in gimp is very important to bring out the effect. George E. Linton, The Modern Textile and Apparel Dictionary, at 265, (1973).

Thus, in a gimped yarn, the yarn's core is separate from the outer covering. The core is straight and wrapped with the covering. In a plied yarn on the other hand, the plies are twisted together at the same rate of speed by the twisting machine.

The Explanatory Notes to the Harmonized Commodity Description and Coding System (EN) are the official interpretation of the tariff at the international level. The EN to heading 5605, HTSUSA, state:

This heading covers:

(1) Yarn consisting of any textile material (including monofilament, strip and the like and paper yarn) combined with metal thread or strip, whether obtained by a process of twisting, cabling or by gimping, whatever the proportion of the metal present. The gimped yarns are obtained by wrapping metal thread or strip spirally round the textile core which does not twist with the metal. Precious metals or plated metals are frequently used.

Accordingly, the samples are classifiable in subheading 5605.00.0090, HTSUSA, which provides for gimped metalized yarn.

II. Country of Origin

Section 12.130 of the Customs Regulations (19 CFR 12.130), sets forth the principles of country of origin for textiles and textile products subject to section 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854).

Pursuant to 19 CFR 12.130(b), the standard of substantial transformation governs the country of origin determination where textiles and textile products are processed in more than one country. The country of origin of textile products is deemed to be that foreign territory or country where the article last underwent a substantial transformation. Substantial transformation is said to occur when the article has been transformed into a new and different article of commerce by means of substantial manufacturing or processing.

The factors to be applied in determining whether or not a manufacturing operation is substantial are set forth in 19 CFR 12.130(d). Section 12.130(d)(1) states that a new and different article of commerce will usually result from a manufacturing or processing operation if there is a change in: (i) Commercial designation or identity, (ii) Fundamental character or (iii) Commercial use.

Section 12.130(d)(2) of the Customs Regulations states that in determining whether merchandise has been subjected to substantial manufacturing or processing operations, the following will be considered:

(i) The physical change in the material or article as a result of the manufacturing or processing operations in each foreign territory or country, or insular possession of the U.S.

(ii) The time involved in the manufacturing or processing operations in each foreign territory or country, or insular possession of the U.S.

(iii) The complexity of the manufacturing or processing operations in each foreign territory or country, or insular possession of the U.S.

(iv) The level or degree of skill and/or technology required in the manufacturing or processing operations in each foreign territory or country, or insular possession of the U.S.

(v) The value added to the article or material in each foreign territory or country, or insular possession of the U.S., compared to its value when imported into the U.S.

As the metalized gimped yarns at issue consist of components of two countries, assembled in a third country, a determination must be made as to where the last substantial transformation occurred. It is Customs' view that the assembly of two yarns into one yarn, whether by plying or gimping, does not substantially transform those yarns. While they may have new uses, it does not change the fact that the articles are still yarns. Thus, the assembly of the yarns in Singapore is not a substantial transformation.

In a case such as this, where Section 12.130 does not address the situation where an article is composed of two components, each contributing equally to the finished article, and the article is not substantially transformed in a third country, a different test must be applied to determine country of origin.

Where for the purposes of our international textile agreements, a determination must be made in regard to the country of origin of a composite article comprised of components of different countries, where the joining of the components is not sufficient to confer origin, the origin of the article will be determined by the component which would be selected under GRI 3, HTSUSA, as being determinative of classification.

GRI 3(c) provides:

When goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.

In the case at hand, individually, we have a core polyester yarn and a metallic foil plastic strip (subheadings 5402.43.0040 and 5605.00.0010, HTSUSA, respectively). In HQ 952802, dated June 11, 1993, we concluded that in a situation involving gimped yarn where the rubber core yarn component provided elasticity and the surrounding cotton yarn component provided strength, a GRI 3(c) determination was necessary. Similarly, in the submitted merchandise where we have a core polyester yarn component providing strength and a metallic foil component providing a decorative or ornamental effect, both components equally impart essential character. As the metallic foil portion of the yarn, from Japan, occurs last in numerical order, the subject yarn is a product of Japan.

HOLDING:

The submitted "Metalfil" yarn is classified in subheading 5605.00.0090, HTSUSA, which provides for metalized yarn, whether or not gimped, being textile yarn, or strip or the like of heading 5404 or 5405, combined with metal in the form of thread, strip or powder or covered with metal, other. The applicable rate of duty is 15 percent ad valorem and the textile category is 201. The country of origin of the merchandise is Japan.

The designated textile and apparel category may be subdivided into parts. If so, the visa and quota requirements applicable to the subject merchandise may be affected. Since part categories are the result of international bilateral changes, to obtain the most current information available, the Status Report on Current Import Quotas (Restraint Levels), an internal issuance of the U.S. Customs Service which is updated weekly and is available at the local Customs office.

Due to the changeable nature of the statistical annotation (the ninth and tenth digits of the classification) and the restraint (quota/visa) categories, your client should contact the local Customs office prior to importation of this merchandise to determine the current status of any import restraints or requirements.

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 177.9(b)(1), Customs Regulations (19 CFR 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, either directly, by reference, or by implication, is accurate and complete in every material respect.

Should it be subsequently determined that the information furnished is not complete and does not comply with 19 CFR 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, it is recommended that a new ruling request be submitted in accordance with Section 177.2, Customs Regulations (19 CFR 177.2).

Sincerely,

John Durant,
Director

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