HQ 956622 - Classification of used salmon gill fish nets cut to material size (6 ft. X 20 ft.) and packaged for garden use; NAFTA eligibility; Article 509 - United States International Trade Commision Rulings

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HQ 956622

October 31, 1994

CLA-2 CO:R:C:T 956622 CMR

CATEGORY: CLASSIFICATION

TARIFF NO.: 5804.10.0020

Mr. Collin Hague
Salt Chuck Fish Net Supplies
1399 Fountain Way, Suite 507
Vancouver, B.C. V4K 2Y8

RE: Classification of used salmon gill fish nets cut to material size (6 ft. X 20 ft.) and packaged for garden use; NAFTA eligibility; Article 509

Dear Mr. Hague:

This ruling is in response to your request of July 24, 1992, regarding the classification of used salmon gill fish netting and it's eligibility for a duty preference under the North American Free Trade Agreement (NAFTA). We regret the delay in responding to your request. Our decision on the matter follows.

FACTS:

You indicate in your letter that you purchase used salmon gill fish nets from local fishermen and commercial net lofts in the province of British Columbia, Canada. The nets are worn to the point that they have no viable use for commercial fishing. Due to the manner in which the nets are acquired, their origin is undeterminable.

After purchasing the nets, you cut the nets into material sizes of netting for use in gardening. No further processing occurs to the netting once cut other than packaging. The submitted sample is sized six feet by 20 feet and is packaged in a plastic bag which indicates its use for supporting flowers or vegetables in a garden. The cutting and packaging occurs in Canada.

A sample of the netting was submitted to a Customs laboratory to determine the decitex of the yarn and whether the construction is a single, double or triple knotted construction. The report indicates that the sample is composed of a multifilament nylon yarn which has a decitex of 3101 (denier 2791). It also indicates the netting is of a double knot construction. -2-

ISSUE:

What is the proper classification of the packaged netting?

Does the netting qualify for the NAFTA duty preference and what is the country of origin for NAFTA marking purposes?

LAW AND ANALYSIS:

Classification of goods under the HTSUSA is governed by the General Rules of Interpretation (GRIs). GRI 1 provides that "classification shall be determined according to the terms of the headings and any relative section or chapter notes and, provided such headings or notes do not otherwise require, according to [the remaining GRIs taken in order]."

The packaged netting is imported ready for use, however, it is not classifiable as a made up article. Note 7(a) of Section XI, HTSUSA, defines the expression "made up" for purposes of the section to mean, among other things:

(a) Cut otherwise than into squares or rectangles.

As the netting is cut into a rectangle (6 feet by 20 feet), it is not considered "made up". Thus, it cannot be classified as an other made up article of Chapter 63. Nor may it be classified as a worn textile article of Chapter 63 because although the netting does show signs of appreciable wear, it is not presented in bulk, bales, sacks or similar packings as required by Note 3, Chapter 63. Therefore, the netting must either be classified as netting of heading 5608, HTSUSA, or a net fabric of heading 5804, HTSUSA.

Heading 5608, HTSUSA, provides for knotted netting of twine, cordage or rope; made up fishing nets and other made up nets, of textile materials. The Harmonized Commodity Description and Coding System Explanatory Notes, which are the official interpretation of the tariff at the international level, provide in pertinent part for heading 5608 as follows:

(1) Knotted netting of twine, cordage or rope.

These products are simply lengths of netting, i.e., open mesh knotted fabric made either by hand or by machine. They differ from the net fabrics of heading 58.04 in that they are made of the twine, cordage or rope of heading 56.07.

Chapter 56 is part of Section XI of the HTSUSA. Note 3, Section XI, states, in relevant part:

(A) For the purposes of this section, and subject to the exceptions in paragraph (B) below, yarns (single, multiple (folded) or cabled) of the following descriptions are to be treated as "twine, cordage, ropes and cables":

(b) Of man-made fibers (including yarn of two or more monofilaments of chapter 54), measuring more than 10,000 decitex;

The Explanatory Note (EN) for heading 5607 refers to parts (I)(B)(1) and (2) of the General EN for Section XI, and in particular Table 1 at page 708 of the General EN. The table makes clear that yarns of man-made fibers which measure 10,000 decitex or less are classifiable in chapters 54 or 55 and those which measure more than 10,000 decitex are classifiable in heading 5607.

Since the multifilament nylon yarn of which the netting at issue is made has a decitex of 3101, the yarn is not classifiable in heading 5607, HTSUSA, and thus, the knotted netting at issue cannot be classified in heading 5608, HTSUSA.

Heading 5804, HTSUSA, provides for, among other things, tulles and other net fabrics, not including woven, knitted or crocheted fabrics. The EN for heading 5804 provides various descriptions of net fabrics. Among the descriptions is the following:

Knotted net fabrics have a uniform square or diamond shaped mesh knotted at each corner so that the threads cannot be pulled apart. They may be hand or machine made.

The EN also indicates the heading does not include nets or netting of heading 5608. In addition, Note 4, Chapter 56, states:

Heading 5804 does not apply to knotted net fabrics of twine, cordage or rope, of heading 5608.

As the netting at issue may not be classified in heading 5608, heading 5804 is the most specific heading which provides for the merchandise. The netting is classified in subheading 5804.10.0020, HTSUSA, which provides for, among other things, tulles and other net fabrics of man-made fibers.

Having determined the proper classification of the netting, we can proceed to the question of NAFTA eligibility. Chapter 4 of the NAFTA sets forth rules for determining whether an imported good qualifies as an originating good of a NAFTA country. A good that qualifies as an originating good is eligible for preferential tariff treatment as provided for under Article 302(2) and Annex 302.2 of the NAFTA. The basic rules of origin in Chapter 4 of the NAFTA, as well as the specific rules of origin found in Annex 401 of the NAFTA, are set forth in General Note 12, Harmonized Tariff Schedule of the United States Annotated (HTSUSA). (See 58 Fed. Reg. 69, 460, December 30, 1993).

Subdivision (b) of General Note 12, HTSUSA, 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 goods 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.

As the origin of the fishing nets from which the netting fabric is cut is unknown, we must treat the fishing nets as non- originating. Therefore, in order to qualify as originating for -5-

NAFTA purposes, the fishing nets used to produce the netting fabric must undergo a change in tariff classification as required by Note

Note 12(t) sets out the specific tariff shift rules for qualifying as an originating good. The netting fabric at issue is classified in subheading 5804.10.0020, HTSUSA. The tariff shift rule for Chapter 58 which is set out in Note 12(t) states:

A change to headings 5801 through 5811 from any other chapter, except from headings 5106 through 5113, 5204 through 5212, 5307 through 5308 or 5310 through 5311, or chapters 54 through 55.

As fishing nets are classifiable in heading 5608, HTSUSA, and the resulting netting fabric which is cut and packaged in Canada is classified in heading 5804, HTSUSA, it appears that the required tariff shift to qualify as an originating good has occurred. Thus, the netting fabric imported into the United States from Canada qualifies for preferential duty treatment under the NAFTA.

Since the netting fabric at issue is processed in the territory of a NAFTA party, i.e., Canada, it is subject to the country of origin marking rules set out in the interim amendments to the Customs Regulations (19 CFR Part 102). The interim amendments to the Customs Regulations were published as T.D. 94- 4 (59 Fed. Reg. 109, January 3, 1994) with corrections (59 Fed. Reg. 5082, February 3, 1994) and T.D. 94-1 (59 Fed. Reg. 69460, December 30, 1993). These interim amendments took effect on January 1, 1994, to coincide with the effective date of the NAFTA.

Section 102.11 sets forth the general rules to determine country of origin. It provides, in pertinent part, in section

(a) The country of origin of a good is the country in which:

(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.

Section 102.20(k), Section XI (Chapters 50 through 63), states the tariff shift requirement for goods of heading 5804 is:

A change to heading 5804 from any other heading; or

A change from greige fabric of heading 5804 to finished fabric of that same heading by dyeing and printing, plus two or more of the following finishing operations--bleaching, shrinking, fulling, napping, decating, permanent stiffening, weighting, permanent embossing, or moireing.

As stated above, the netting fabric undergoes a tariff shift from 5608 (made up fishing nets) to 5804 (netting fabric) in Canada. Since the netting fabric underwent the required tariff shift in Canada, i.e., a change to heading 5804 from any other heading (in this case, heading 5608), the country of origin of the packaged netting fabric is Canada.

HOLDING:

The netting fabric at issue is classified in subheading 5804.10.0020, HTSUSA, which provides for, among other things, tulles and other net fabrics of man-made fibers. Goods classified therein fall in textile category 229 and are dutiable at a rate of 12 percent ad valorem. As an originating good under the NAFTA, the netting fabric at issue is dutiable at 4.8 percent ad valorem. Under 19 CFR Part 102, the netting fabric is a product of Canada for marking purposes. As a product of Canada, the netting fabric does not require a visa for textile category 229.

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

Sincerely,

John Durant, Director
Commercial Rulings Division

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