MAR-05 RR:TC:SM 560038 KKV
Mr. Rudy A. Pina
Joffroy Customs Brokers, Inc.
P.O. Box 698
Nogales, AZ 85628-0698
RE: Country of origin determination for metal tubes
manufactured in the U.S. and exported to Mexico
for bending, cutting and polishing
Dear Mr. Pina:
This is in response to your letter dated August 12,
1996 (received by our office on August 21, 1996), on behalf
of Tri Clover, Inc., which requests a binding ruling
regarding the country of origin of certain metal tubes
manufactured in the U.S. and exported to Mexico for
finishing operations prior to importation into the U.S. No
sample has been submitted for our consideration.
FACTS:
We are informed that Tri-Clover, Inc. exports
unfinished metal tubes of U.S. origin, classifiable under
subheading 7307.23.00, Harmonized Tariff Schedule of the
United States (HTSUS), to its maquiladora facility in
Mexico, where the tubes are bent, cut and polished prior to
importation into the U.S.
We are also informed that the finished metal tubes
imported into the U.S. are entering as originating goods
under the North American Free Trade Agreement (NAFTA)
pursuant to General Note 12(b), HTSUS, having satisfied the
requirement of General Note 12(b)(iii), HTSUS, that the
articles are produced entirely in North America exclusively
of originating materials. We are assuming for purposes of
this ruling that the tubes exported to Mexico qualify as
originating materials.
ISSUE:
What is the country of origin for marking and NAFTA
duty rates of metal tubes originally of U.S. origin after
having undergone bending, cutting and polishing operations
in Mexico?
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930, as amended (19
U.S.C. 1304), provides that, unless excepted, every article
of foreign origin imported into the United States shall be
marked in a conspicuous place as legibly, indelibly, and
permanently as the nature of the article (or its container)
will permit, in such a manner as to indicate to the ultimate
purchaser in the United States the English name of the
country of origin of the article. By enacting 19 U.S.C.
1304, Congress intended to ensure that the ultimate
purchaser would be able to know by inspecting the marking on
the imported goods the country of which the goods are the
product. The evident purpose is to mark the goods so that
at the time of purchase the ultimate purchaser may, by
knowing where the goods were produced, be able to buy or
refuse to buy them, if such marking should influence his
will. United States v. Friedlaender & Co., 27 C.C.P.A. 297,
302 C.A.D. 104 (1940).
Section 134.1(b), Customs Regulations (19 CFR
134.1(b)), defines "country of origin" as:
The country of manufacture, production,
or growth of any article of foreign
origin entering the United States.
Further work or material added to an
article in another country must effect a
substantial transformation in order to
render such other country the "country of
origin" within the meaning of this part;
however for a good of a NAFTA country,
the NAFTA Marking Rules will determine
the country of origin.
Section 134.1(j), Customs Regulations (19 CFR 134.1(j),
provides that the "NAFTA Marking Rules" are the rules
promulgated for purposes of determining whether a good is a
good of a NAFTA country. Section 134.1(g), Customs
Regulations (19 CFR 134.1(g)), defines a "good of a NAFTA
country" as an article for which the country of origin is
Canada, Mexico or the United States as determined under the
NAFTA Marking Rules, set forth at 19 CFR Part 102. Section
134.45(a)(2) of the Customs regulations (19 CFR
134.45(a)(2)), provides that a "good of a NAFTA country" may
be marked with the name of the country of origin in English,
French or Spanish.
Section 102.11, Customs Regulations (19 CFR 102.11),
sets forth the required hierarchy for determining whether a
good is a good of a NAFTA country for marking purposes.
This section states that the country of origin of a good is
the country in which:
(1) The good is wholly obtained or produced;
(2 The good is produced exclusively from domestic
materials; or
(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 102.1(e), Customs Regulations (19 CFR 102.1(e))
defines "foreign material" as "a material whose country of
origin as determined under these rules is not the same
country or origin as the country in which the good is
produced."
Based on the information provided, unfinished metal
tubes of U.S. origin are exported to Mexico for additional
processing including bending, cutting and polishing
operations prior to the importation of the finished tubes
into the U.S. Because the metal tubes are processed in
Mexico of U.S. material, the tubes are neither wholly
obtained or produced, nor produced exclusively from domestic
materials. Accordingly, neither 19 CFR 102.11(a)(1) or
102.11(a)(2) may be used to determine the origin of the
finished articles, and analysis must continue to 19 CFR
102.11(a)(3).
Your letter indicates that upon exportation to Mexico
the unfinished metal tubes are classifiable under
7307.23.00, HTSUS. Subsequent to bending, cutting and
polishing operations in Mexico, you indicate that the
finished metal tubes are imported into the U.S. under the
same subheading, which provides for tube or pipe fittings
(for example, couplings, elbows, sleeves), of iron or steel:
other, of stainless steel: butt welding fittings. Because
no sample or other information has been submitted which
would permit us to verify the validity of these
classifications, we will assume they are correct for
purposes of this ruling.
Pursuant to 19 CFR 102.11(a)(3), the country of origin
of a good is the country in which each foreign material
incorporated in that good undergoes an applicable change in
tariff classification as set forth in 19 CFR 102.20, and
satisfies any other applicable requirements of that section.
In the case before us, because the finished metal tubes
imported into the U.S. from Mexico are classified under
subheading 7307.23.00, HTSUS, the change in tariff
classification must be made in accordance with section
102.20(o), Section XV: Chapters 72 through 83, heading 7.01-7307, HTSUS, which requires "[a] change to heading 7301
through 7307 from any other heading, including another
heading within that group."
In the case before us, the unfinished metal tubes,
which are initially classified under heading 7307, HTSUS,
remain classified under heading, 7307, HTSUS, subsequent to
additional processing in Mexico. Thus, there is no
applicable change in tariff classification within the
requirements of section 102.20, and country of origin of the
good may not be determined in accordance with this
provision.
Because 19 CFR 102.11(a) (incorporating section
102.20), is not determinative of origin, the next step is
section 102.11(b), Customs Regulations, which states, in
part:
Except for a good that is specifically
described in the Harmonized Tariff
Schedule as a set, or is classified as a
set pursuant to General Rule of
Interpretation 2, where the country
origin cannot be determined under
paragraph (a), the country of origin of
the good:
(1) Is the country or countries of
origin of the single material
that imparts the essential
character of the good, ...
In the instant case, the imported finished tube is
composed of a metal tube of U.S. origin which has undergone
additional manipulation in the form of bending, cutting and
polishing.
When determining the essential character of a good
under section 102.11, Customs regulations, section
102.18(b)(2), provides that, "for purposes of applying
section 102.11, only domestic and foreign materials
(including self-produced materials) that are classified in a
tariff provision from which a change in tariff
classification is not allowed in the rule
for the good set out in section 102.20 shall be taken into
consideration in determining the parts or materials that
determine the essential character of a good."
Because the finished metal tube consists of only one
material, and because that material is classifiable in a
tariff provision from which a change in tariff
classification is not allowed under the applicable rule in
19 CFR 102.20(o), the U.S. origin tube is the single
material which imparts the essential character to the
finished good pursuant to section 102.18(b)(iii).
Accordingly, for country of origin marking purposes, the
country of origin of the finished metal tube after having
been bent, cut and polished in Mexico is the U.S. Because
the marking requirements of 19 U.S.C. 1304 are applicable
only to articles of "foreign origin," the metal tubes need
not be marked upon entry into the U.S.
Article 401 of the NAFTA, is incorporated into General
Note 12, HTSUS. General Note 12(a) provides in pertinent
part that:
(i) Goods that originate in the territory of a
NAFTA party
under subdivision (b) of this note and that
qualify to be
marked as goods of Canada under the terms of
the marking
rules ....and are entered under a
subdivision for which a rate
of duty appears in the "Special" subcolumn
followed by the
symbol "CA" in parentheses, are eligible for
such duty rate...
(ii) Goods that originate in the territory of a
NAFTA party
under subdivision (b) of this note and that
qualify to be
marked as goods of Mexico under the terms of
the marking
rules....and are entered under a subheading
for which a rate
of duty appears in the "Special" subcolumn
followed by the
symbol "MX" in parentheses, are eligible for
such duty rate....
Thus, by operation of General Note 12, the eligibility of a
particular article for NAFTA duty preference is predicated,
in part, upon an origin determination under the NAFTA
Marking Rules of either Canada or Mexico. As demonstrated
by the foregoing analysis, in the case before us,
application of the NAFTA Marking Rules contained in 19 CFR
102.11 did not yield an origin determination of either
Canada or Mexico, but the United States.
However, the NAFTA Preference Override set forth in 19
CFR 102.19 is applicable to the subject merchandise.
Specifically, 19 CFR 102.19(b) states:
(b) If, under any provision of this
part, the country of origin of a
good which is originating .....
is determined to be the United
States and that good has been
exported from, and returned to,
the United States after having
been advanced in value or
improved in condition in another
NAFTA country, the country of
origin of such good for Customs
duty purposes is the last NAFTA
country in which that good was
advanced in value or improved in
condition.
Based on the facts presented, the metal tubes at issue
are an originating good under NAFTA and have been determined
under section 102.11)b) to be a good of U.S. origin.
Because the articles were returned to the U.S. after having
been advanced in value or improved in condition in Mexico by
virtue of bending, cutting and polishing operations, the
country of origin of the metal tubes for Customs duty
purposes is Mexico, pursuant to 19 CFR 102.19(b).
Accordingly, the "MX" NAFTA rate will be applicable to the
metal tubes.
HOLDING:
On the basis of the information provided, for country
of origin marking purposes, the country of origin of metal
tubes manufactured in the U.S. and exported to Mexico for
bending, cutting and polishing prior to importation into the
United States is the U.S., pursuant to 19 CFR 102.11(b)(1).
Therefore, the imported tubes are not subject to the marking
requirements of 19 U.S.C. 1304.
Metal tubes of U.S. origin which undergo additional
processing in Mexico including bending, cutting and
polishing prior to importation into the U.S. will be
considered of Mexican origin for purposes of Customs duty
pursuant to 19 CFR 102.19(b), provided the metal tubes
qualify as an originating good pursuant to General Note 12,
HTSUS, and may be assessed duties at the "MX" NAFTA rate.
A copy of this ruling letter should be attached to the
entry documents filed at the time the goods are entered. If
the documents have been filed without a copy, this ruling
should be brought to the attention of the Customs officer
handling the transaction.
Sincerely,
John Durant, Director
Tariff Classification
and Appeals Division