The tariff classification and status under the North America Free Trade Agreement (NAFTA) of plastic sheeting from Canada

N181435 September 13, 2011 CLA-2-39:OT:RR:NC:N4:421 CATEGORY: Classification TARIFF NO.: 3920.10.0000 Mr. Thomas W. Singer iCustom Broker, Inc. 2211 Sheridan Drive, Suite 203 Buffalo, NY 14223 RE: The tariff classification and status under the North America Free Trade Agreement (NAFTA) of plastic sheeting from Canada Dear Mr. Singer: In your letter dated August 15, 2011, on behalf of Roechling Engineering Plastics Ltd., you requested a ruling on the status of polyethylene sheets from Canada under NAFTA. The merchandise consists of plastic sheets imported in the form of rectangular sheets that have not been further processed. A sample of a rigid sheet measuring ¼ inch in thickness was provided with your request. The sheets are marketed as Polystone® to imply the toughness of stone. The formulation does not contain any stone material. The letter following the term “Polystone” denotes the type of resin used in constructing the sheet. This particular formulation, Polystone M, is manufactured with Ultra-High Molecular Weight Polyethylene (UHMW-PE). The sheets are used to produce linings for aggregate dump trailer boxes and machine parts for wear resistance and friction reduction. The applicable subheading for the Polystone M polyethylene sheets in rectangular form will be 3920.10.0000, 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 polymers of ethylene. The general rate of duty will be 4.2 percent ad valorem. You indicate that until recently the sheets had been produced from polyethylene resin pellets of United States origin. Due to short supply, some of the specialized resin will be sourced from countries outside North America, in particular, Brazil and China. The percentages of non-United States origin pellets will vary depending on supply and actual usage will be recorded during production. You request a ruling on whether the sheets that incorporate non-originating resin qualify as originating goods under the NAFTA. 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 non-originating 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. General Note 12(t)/39.1, which is applicable to the polyethylene sheets, requires: “A change to headings 3901 through 3920 from any other heading, including another heading within that group, provided there is a regional value content of not less than 60 percent where the transaction value method is used, or 50 percent where the net cost method is used. Based on the facts provided, the goods described above qualify for NAFTA preferential treatment because they will meet the requirements of HTSUS General Note 12(b)(ii)(A). The non-originating resin pellets will undergo the tariff shift specified in General Note 12(t)/39.1. 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 Regional Value Content requirements specified in General Note 12(t)/39.1. This ruling letter has not addressed the Regional Value Content (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 U.S. Customs and Border Protection, Regulations & Rulings, 799 9th Street N.W. - 7th floor, Washington, DC 20229-1177, along with a copy of this letter. That information should include all of the cost figures used to determine the percentages of originating and non-originating components. Note that for the resin that is said to originate in the United States, you must also indicate the country of origin of all precursor materials and provide the costs of each processing step in converting those materials into resin pellets. 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 National Commodity Specialist Division