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NY N013255




July 19, 2007

CLA-2-39:RR:NC:N2:221

CATEGORY: CLASSIFICATION

TARIFF NO.: 3917.32.0020; 3917.32.0050; 3923.21.0095; 3923.29.0000; 3926.90.9980

Mr. Bob Forbes
ROE Logistics
660 Bridge Street
Montreal, Quebec, Canada H3K 3K9

RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA) of perforated film, lay-flat tubing and packaging bags from Canada; Article 509

Dear Mr. Forbes:

In your letter dated June 20, 2007, on behalf of Ultraperf Technologies Inc., Canada, you requested a ruling on the status of perforated film, lay-flat tubing and packaging bags from Canada under the NAFTA.

Ultraperf Technologies purchases polyethylene or polyethylene terephthalate (PET) film from manufacturers in Canada or the United States. Some of the film may be printed in the United States or Canada. In Canada the film undergoes processing where it is perforated over its entire surface with very small holes. The perforated film is used primarily to package fresh fruits and vegetables. It may also be used to package fresh fish in trays. The small hole size controls oxygen and carbon dioxide exchange while minimizing moisture loss, thus extending the shelf life of fresh food products.

After perforation the film is rewound. Some film is converted into lay-flat tubing for later further manufacture into packaging bags. Other film is converted into packaging bags with no handles or into carton liners for bulk produce. The film, tubing or packaging bags are then exported to the United States.

You suggest classification for the PET film in subheading 3920.62.0090, Harmonized Tariff Schedule of the United States (HTSUS), which provides for other plates, sheets, film, foil and strip, of plastics, noncellular and not reinforced, laminated, supported or similarly combined with other materials: of polyethylene terephthalate, other. Legal note 10 to chapter 39 states: “In headings 3920 and 3921, the expression ‘plates, sheets, film, foil and strip’ applies only to plates, sheets, film, and strip (other than those of chapter 54) and to blocks of regular geometric shape, whether or not printed or otherwise surface-worked, uncut or cut into rectangles (including squares) but not further worked (even if when so cut they become articles ready for use).” The perforation is considered to be a further working of the sheet that excludes it from classification in heading 3920.

The applicable subheading for the perforated sheet, whether of polyethylene or of polyethylene terephthalate, will be 3926.90.9980, Harmonized Tariff Schedule of the United States (HTSUS), which provides for other articles of plastics, other. The general rate of duty will be 5.3 percent ad valorem.

The applicable subheading for the perforated polyethylene in the form of lay-flat tubing will be 3917.32.0020, HTSUS, which provides for tubes, pipes and hoses and fittings therefore (for example, joints, elbows, flanges), of plastics: other tubes, pipes and hoses: other, not reinforced or otherwise combined with other materials, without fittings, of polyethylene. The general rate of duty will be 3.1 percent ad valorem.

The applicable subheading for the perforated PET in the form of lay-flat tubing will be 3917.32.0050, HTSUS, which provides for tubes, pipes and hoses and fittings therefore (for example, joints, elbows, flanges), of plastics: other tubes, pipes and hoses: other, not reinforced or otherwise combined with other materials, without fittings, other. The general rate of duty will be 3.1 percent ad valorem.

The applicable subheading for the perforated polyethylene in the form of container liners or packaging bags will be 3923.21.0095, HTSUS, which provides for articles for the conveyance or packing of goods, of plasticssacks and bags (including cones): of polymers of ethylene, other. The general rate of duty will be 3 percent ad valorem.

The applicable subheading for the perforated PET film in the form of container liners or packaging bags will be 3923.29.0000, HTSUS, which provides for articles for the conveyance or packing of goods, of plasticssacks and bags (including cones): of other plastics. The general rate of duty will be 3 percent ad valorem.

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 on World Wide Web at http://www.usitc.gov/tata/hts/.

General Note 12(b), HTSUS, sets forth the criteria for determining whether a good is originating under the NAFTA. General Note 12(b), HTSUS, (19 U.S.C. § 1202) states, in pertinent part, that

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; or

(iv) they are produced entirely in the territory of Canada, Mexico and/or the United States but one or more of the nonoriginating materials falling under provisions for "parts" and used in the production of such goods does not undergo a change in tariff classification because--

(A) the goods were imported into the territory of Canada, Mexico and/or the United States in unassembled or disassembled form but were classified as assembled goods pursuant to general rule of interpretation 2(a), or

(B) the tariff headings for such goods provide for and specifically describe both the goods themselves and their parts and is not further divided into subheadings, or the subheadings for such goods provide for and specifically describe both the goods themselves and their parts,
provided that such goods do not fall under chapters 61 through 63, inclusive, of the tariff schedule, and provided further that the regional value content of such goods, determined in accordance with subdivision (c) of this note, is not less than 60 percent where the transaction value method is used, or is not less than 50 percent where the net cost method is used, and such goods satisfy all other applicable provisions of this note.

In a telephone conversation you stated that the sheet is made in either Canada or the United States. You also indicated that you believe that the resin from which the sheet is made originates in either Canada or the United States. Based on the facts provided, the goods described above qualify for NAFTA preferential treatment as long as the Regional Value Requirements are met. Even if the resin or the precursor components of the resin do not originate in Canada or the United States, the sheet component meets the requirements of HTSUS General Note 12(b)(ii)(A) because each of the potentially non-originating materials used in the production of such goods undergoes the change in tariff classification set out in General Note subdivision 12(t)(39.1), provided there is a Regional Value Content (RVC) of not less than 60 percent where the transaction value method is used or 50 percent where the net cost method is used. The goods will therefore be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements, including the RVC requirements specified in General Note 12(t)(39.1).

This ruling letter has not addressed the RVC of the subject goods. If you desire a ruling regarding the RVC of your goods and their eligibility for NAFTA preferential treatment, provide the information noted in Section 181.93(b) of the Customs Regulations (19 CFR 181.93(b)) to the Director, International Trade Compliance Division, Headquarters, U.S. Customs and Border Protection, 1300 Pennsylvania Ave. N.W., (Mint Annex), Washington, D.C. 20229, along with a copy of this letter. That information should include the country of origin of the resin as well as the country of origin of all precursor materials used to produce the resin. You should also include a breakdown showing the cost of each component, the country of each processing step and the cost of each processing step in the manufacture of the finished products.

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 646-733-3023.

Sincerely,

Robert B. Swierupski
Director,

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