VAL RR:IT:VA 546305 CRS
Mr. Allan Sutter
Director, Import/Export Operations
J.W. Hampton, Jr. & Co., Inc.
15, Park Row
New York, NY 10038
RE: Article 509; NAFTA
Dear Mr. Sutter:
This is in reply to your letter, dated March 13, 1996, on behalf of the Process Plants Division of BOC Group, Inc., a U.S. importer, in which you requested an advance ruling, pursuant to article 509 of the North American Free Trade Agreement (NAFTA), in respect of whether a certain "cold box" imported from Canada qualifies as an originating good.
FACTS:
The cold box is produced in Canada from both originating and non-originating materials and is classified in subheading 8419.60.1000, Harmonized Tariff Schedule of the United States (HTSUS). The non-originating materials used in the production of the cold box consist of columns, classified in subheading 8419.90.3000, HTSUS, and heat exchangers, classified in subheading 8419.50.1000, HTSUS. Based on the information submitted, the transaction value of the cold box is $******* and the value of non-originating materials is $*******.
ISSUE:
The issue presented is whether the cold box described above qualifies as an originating good under the NAFTA.
LAW AND ANALYSIS:
Section 4(2) of the NAFTA Rules of Origin Regulations (ROR) provides, inter alia, that a good originates in the territory of a NAFTA country where:
(a) each of the non originating materials used in the production of the good undergoes the applicable change in tariff classification as a result of production that occurs entirely in the territory of one or more of the NAFTA countries, where the applicable rule in Schedule I for the tariff provision under which the good is classified specifies only a change in tariff classification, and the good satisfies all other applicable requirements of this Appendix; [or]
(b) each of the non originating materials used in the production of the good undergoes the applicable change in tariff classification as a result of production that occurs entirely in the territory of one or more of the NAFTA countries and the good satisfies the applicable regional value content requirement, where the applicable rule in Schedule I for the tariff provision under which the good is classified specifies both a change in tariff classification and a regional value content requirement, and the good satisfies all other applicable requirements of this Appendix.
19 C.F.R. pt. 181, app.
The cold box is classified in subheading 8419.60.1000, HTSUS. The rule of origin applicable to a good classified in subheading 8419.60.1000, HTSUS, states that the good will originate in the territory of a NAFTA country provided there is:
(A) A change to subheadings 8419.11 through 8419.89 from any other heading; or
(B) A change to subheadings 8419.11 through 8419.89 from subheading 8419.90, whether or not there is also a change from any other heading, provided there is a regional value content of not less than:
(1) 60 percent where the transaction value method is used, or
(2) 50 percent where the net cost method is used.
19 C.F.R. pt. 181, app., Schedule I.
Based on the information submitted, the cold box does not satisfy the rule of origin in (A) above because the non-originating materials used in the production of the good are classified within heading 8419, HTSUS, and, therefore, do not undergo a change in classification. Similarly, the cold box does not satisfy the alternative rule set forth in (B) above because while the columns undergo a change from subheading 8419.90.3000, HTSUS, the non-originating heat exchangers, classified in 8419.50.1000, HTSUS, do not undergo a change in classification. Accordingly, the issue of regional value content does not arise in respect of the alternative rule set forth in (B) above.
Consequently, the cold box does not qualify as an originating good for purposes of NAFTA under sections 4(2)(a)-(b) of the ROR, nor, based on the information submitted, does it qualify as an originating good under any of the exceptions to the change in tariff requirement set forth in sections 4 and 5 of the ROR.
HOLDING:
Based on the information submitted, the cold box does not qualify as an originating good under the NAFTA.
Sincerely,
Acting Director
International Trade Compliance Division