The country of origin of post-industrial recycling (PIR) polyethylene terephthalate (PET) flakes

N343914 November 20, 2024 OT:RR:NC:N:5:137 CATEGORY: Origin Patrick Caulfield Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP 599 Lexington Avenue, Floor 36New York, NY 10022 RE:  The country of origin of post-industrial recycling (PIR) polyethylene terephthalate (PET) flakes Dear Mr. Caulfield: In your letter dated November 7, 2024, you requested a country of origin ruling onpost-industrial recycling (PIR) polyethylene terephthalate (PET) flakes, on behalf of your client Polarpak Company. The merchandise under consideration is referred to as post-industrial recycling (PIR) polyethylene terephthalate (PET) flakes. They are also sometimes referred to as “regrinds”. The PIR PET flakes are produced as a result of manufacturing operations performed at Polarpak’s Canadian manufacturing facility. Virgin PET pellets will be imported from various countries, including China, to its manufacturing facility. At the Canadian facility, the pellets are melted and extruded into PET sheets. The sheets are heated and stamped; the stamped PET is then formed into finished food packaging containers. The process of transforming the imported virgin PET pellets into PET sheets in Canada results in a substantial transformation. Therefore, the country of origin of the PET sheet, the irregular sheets and the trim scrap will be Canada. After cooling, the remaining Canadian origin PET sheets, which are irregular in shape as well as the trim scrap are ground into flakes. The grinding process, which also takes place at the Canadian facility, results in the production of PIR PET flakes. When determining the country of origin for purposes of applying current trade remedies under Section 301 (insert Section 301, Section 201, or Section 232, as appropriate), the substantial transformation analysis is applicable. See, e.g., Headquarters Ruling Letter (“HQ”) H301619, dated November 6, 2018. The test for determining whether a substantial transformation will occur is whether an article emerges from a process with a new name, character, or use different from that possessed by the article prior to processing. See Texas Instruments Inc. v. United States, 681 F.2d 778 (C.C.P.A. 1982). This determination is based on the totality of the evidence. See National Hand Tool Corp. v. United States, 16 C.I.T. 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993). It is the opinion of this office that the process of grinding Canadian origin irregular PET sheet and trim scrap into PIR PET flakes in Canada results in a substantial transformation. Therefore, the PIR PET flakes are not subject to Section 301 duties. We lack the information to rule on the country of origin marking requirements under the USMCA. Therefore, we cannot issue a ruling regarding the country of origin for marking purposes. The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in Title 19, Code of Federal Regulations (CFR), Section 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, whether directly, by reference, or by implication, is accurate and complete in every material respect. In the event that the facts are modified in any way, or if the goods do not conform to these facts at time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and submit a request for a new ruling in accordance with 19 CFR 177.2. Additionally, we note that the material facts described in the foregoing ruling may be subject to periodic verification by CBP. This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection Regulations (19 C.F.R. 177). 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, please contact National Import Specialist Christina Allen at julie.c.allen@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division