RR:TC:SM 560297 JML
Mr. James M. Shepard Jr.
Statcorp, Inc.
7037 Commonwealth Avenue
Suite 8B
Jacksonville, FL 32220
RE: Country of origin marking of an infusion device; 19 U.S.C.
1304; 19 CFR 134.1; NAFTA; Marking Rules; 19 CFR Part 102; 19
CFR 134.35(b); subassemblies.
Dear Mr. Shepard:
This is in response to your letter dated January 31, 1997,
concerning the country of origin marking requirements for an
infusion device subassembly to be made in Mexico from United
States ("U.S.")-origin materials and imported into the U.S. for
assembly into the complete product. You have submitted a sample
of the infusion device and the subassembly for our examination,
as well as additional cost information by facsimile dated March
6, 1997.
FACTS:
Statcorp, Inc., intends to produce infusion devices for use
in the medical industry. In general, the infusion device consists
of a nylon bag container which holds fluids ("subassembly"),
plastic tubing, and a hand-bulb pump and gauge ("pump
apparatus"). The pump apparatus removes fluid from the
subassembly and propels it to the patient. You state that all
materials incorporated into the product are of U.S.-origin.
Through its manufacturer, Pacific Device Inc., Statcorp,
Inc. intends to send certain U.S.-origin materials to Mexico for
use in the production of the subassembly. The component
materials of the subassembly are laminated nylon fabric, a
polyvinyl chloride ("PVC") hose loop, a PVC tube out, and a
styrene hook. In Mexico, the nylon fabric is cut to size, the
various components placed in their respective positions, and the
product is bonded together by radio-welding. Upon importation
of the subassembly into the U.S., it is assembled, along with the
pump apparatus, to make the complete infusion device. You state
that the subassembly is custom made in Mexico to Statcorp, Inc.'s
specifications and cannot be reasonably used for anything other
than its intended use. That is, without the pump apparatus, the
subassembly has little if any use. Further, the subassembly will
not be subject to any further processing beyond assembly with the
pump apparatus.
You request a binding ruling on the marking requirements for
the subassembly produced in Mexico. Specifically, you contend
that directly marking the subassembly a product of Mexico is
misleading since the finished infusion device is assembled in the
U.S. exclusively of U.S.-origin materials.
ISSUE:
Whether or not the subassembly has to be marked a product of
Mexico.
LAW AND ANALYSIS:
COUNTRY OF ORIGIN
The marking statute, section 304, Tariff Act of 1930, as
amended (19 U.S.C. 1304), provides that, unless excepted, every
article of foreign origin (or its container) imported into the
U.S. 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 U.S. the English name of the country of origin
of the article. Part 134, Customs Regulations (19 CFR Part 134),
implements the country of origin marking requirements and
exceptions of 1304.
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. (Emphasis
added).
The country of origin marking requirements for a "good of a
NAFTA country" are determined in accordance with Annex 311 of the
North American Free Trade Agreement ("NAFTA"), as implemented by
section 207 of the North American Free Trade Agreement
Implementation Act (Pub. L. 103-182, 107 Stat. 2057) (December 8,
1993). 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 U.S. as determined
under the NAFTA Marking Rules set out at Part 102, Customs
Regulations (19 CFR Part 102).
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. That 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.
"Foreign material" is defined in section 102.1(e), Customs
Regulations (19 CFR 102.1(e)), as "a material whose country of
origin as determined under these rules is not the same country as
the country in which the good is produced."
Since the subassemblies are made in Mexico with materials of
U.S.-origin, they are neither wholly obtained or produced, nor
produced exclusively from domestic materials as those terms are
defined under section 102.1, Customs Regulations (19 CFR 102.1).
Accordingly, section 102.11(a)(3), Customs Regulations (19 CFR
102.11(a)(3)), is the applicable rule that must be applied to
determine the origin of the subassemblies. Pursuant to section
102.11(a)(3), the country of origin of a good is the country in
which each foreign material incorporated in that good under goes
an applicable change in tariff classification set out in section
102.20, Customs Regulations (19 CFR 102.20). Section 102.20 sets
forth the specific tariff classification changes and/or other
operations which are specifically required for the country of
origin to be determined on the basis of operations performed on
the foreign materials contained in a good.
In the instant case, Customs notes that the completed
infusion device is classifiable under subheading 9018.90.80,
Harmonized Tariff Schedule of the United States ("HTSUS"), as
"Instruments and appliances used in medical, surgical, dental or
veterinary sciences...Other instruments and appliances and parts
and accessories thereof...Other..." See Headquarters Ruling
Letter ("HRL") 956785, dated Dec. 6, 1996; HRL 088469, Feb. 26
1991; HRL 955820, dated Dec. 7, 1995.
Note 2(b), Chapter 90, HTSUS, states that parts and
accessories of articles classifiable under that chapter, if
suitable for use solely or principally with a particular kind of
machine, instrument or apparatus of the same heading are to be
classified with the machines, instruments or apparatus of that
kind. Based upon the fact that the subassembly's intended use is
as part of the infusion device, and has little or no value apart
from that intended use, Customs is of the opinion that the
subassembly is classifiable as a part or accessory of the
infusion device within the same subheading, 9018.90.80, HTSUS.
See also HRL 088469, dated Feb. 26, 1991; HRL 953545, dated May
10, 1993.
Therefore, the change in tariff classification for the
subassembly must be made in accordance with section 102.20(q),
Customs Regulations (19 CFR 102.20(q)), Section XVIII: Chapters
90 through 92, subheading 9018.90, HTSUS, which states the
applicable change as:
A change to subheading 9018.90 from any other
subheading, except from subheading 9001.90 or
synthetic rubber classified in heading 4002 when
resulting
from a simple assembly; or [A] change to
defibirillators from
printed circuit assemblies, except when
resulting from a simple
assembly.
Each U.S.-origin material imported into Mexico and
incorporated into the subassembly must undergo a change in tariff
classification from any other subheading than 9018.90, HTSUS,
subject, however, to the other terms of section 102.20(q) for
subheading 9018.90. The constituent materials of the subassembly
are nylon fabric, a PVC hose loop, a PVC tube out, and a styrene
hook. Customs notes that generally, the hose loop and tube out
are classifiable under heading 3917, HTSUS (tubes, pipes and
hoses of plastics), the styrene hook in heading 3924, HTSUS
(tableware, kitchenware, other household articles of plastics),
and the nylon fabric in heading 5407, HTSUS (woven fabrics of
synthetic filament yarn). As each of the constituent materials
is classifiable in a tariff provision other than subheading
9018.90, the applicable change in tariff classification has been
met. Accordingly, for marking purposes, the country of origin of
the subassembly is Mexico.
EXCEPTION FROM MARKING
Pursuant to section 134.35(b), Customs Regulations (19 CFR
134.35(b)), goods of a NAFTA country are excepted from marking
if they are to be processed in the U.S. in a manner that would
result in the good becoming a good of the U.S. under the NAFTA
Marking Rules. That is, if the subassembly undergoes processing
after its importation so as to become a good of the U.S., it
will not have to be marked. Furthermore, if such a good is
processed by the importer or on its behalf, its outermost
container is excepted from marking as well. Id.
The processing in the U.S. consists of assembling the
infusion device by attaching the pump apparatus' tubing to the
subassembly's tube out. Applying the section 102.11 hierarchical
rules in this regard, Customs notes that neither section
102.11(a)(1) or (a)(2) are applicable. Because the subassembly
is of Mexican- origin, the infusion device is neither wholly
obtained or produced in the U.S., or produced exclusively from
domestic materials as those terms are defined under section
102.1.
Applying section 102.11(a)(3), country of origin can be
found in the country where each foreign material incorporated in
the good undergoes an applicable change in tariff classification
or other operation specified in section 102.20 for the good. As
stated earlier, the finished infusion device is classified in
subheading 9018.90.80, HTSUS. Therefore, the applicable rule is
set forth in section 102.20(q) which states:
A change to subheading 9018.90 from any other
subheading, except from subheading 9001.90 or
synthetic rubber classified in heading 4002 when
resulting
from a simple assembly; or [A] change to
defibirillators from
printed circuit assemblies, except when
resulting from a simple
assembly.
Since both the subassembly and the infusion device are
classified in subheading 9018.90, HTSUS, a change in tariff
classification does not occur and the section 102.20(q) rule
cannot be met.
As section 102.11(a) is not applicable, the next step in the
NAFTA Marking Rules hierarchy is section 102.11(b), Customs
Regulations (19 CFR 102.11(b)). That section states:
Except for a good that is specifically described
in the
Harmonized System as a set, or is classified as a set
pursuant to General Rule of Interpretation 3, where the
country of origin cannot be determined under paragraph
(a) of this section:
(1) The country of origin of the good is the
country or countries of origin of the single
material that imparts the essential character to
the good....
"Material" is defined in section 102.1(l), Customs
Regulations (19 CFR 102.1(l)), as "a good that is incorporated
into another good as a result of production with respect to that
other good, and includes parts, ingredients, subassemblies, and
components." Further, pursuant to section 102.18(b)(2),
Customs Regulations (19 CFR 102.18(b)(2)), "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 the good."
As there are only two (2) materials incorporated in the
infusion device -- the pump apparatus and the subassembly -- they
alone are considered in determining whether there is a single
material that imparts the essential character to the infusion
device.
Taking into account the important function each article
serves to the intended use of the infusion device, Customs is of
the opinion that neither the pump apparatus nor subassembly,
alone, imparts the infusion device's essential character. The
pump apparatus removes fluid from the subassembly and propels it
outward. Alternatively, the subassembly container holds the
fluid to be propelled. Each article carries out a critical, if
not essential function to the overall operation of the infusion
device. One component cannot function independent of the other.
In circumstances where the essential character of the
product cannot be determined using section 102.11(a) or (b), and
the good is not, as in the present case, classifiable as a set,
mixture, or composite good as specifically described in General
Rule of Interpretation 3, HTSUS, as required by section
102.11(c), Customs Regulations (19 CFR 102.11(c)), the country of
origin of the good is determined pursuant to section 102.11(d),
Customs Regulations (19 CFR 102.11(d)). Under section
102.11(d)(3), if the good is not produced as a result of minor
processing or simple assembly, the country of origin of the good
is the last country in which the good under went production.
"Minor processing" and "simple assembly" are terms
specifically defined under section 102.1, Customs Regulations.
The definition of "minor processing" in section 102.1(m) sets
forth the exclusive list of operations included within the scope
of that term. See 19 CFR 102.1(m) "Simple assembly" means the
fitting together of five or fewer parts (excluding fasteners),
all of which are foreign, by bolting, gluing, soldering or other
means. 19 CFR 102.1(o) As such, Customs notes that in the
present case, the finished goods are not produced as a result of
either minor processing or simple assembly. The materials
employed in production of the infusion devices are the Mexican-origin subassembly, and the U.S.-origin pump apparatus.
Accordingly, the infusion devices are not produced as a result of
simple assembly. Further, Customs notes that the infusion
devices are not produced as a result of minor processing as the
operations performed to produce the infusion devices far exceed
those identified under section 102.1(m).
On the other hand, the term "production," as illustrated
under section 102.1(n), Customs Regulations (19 CFR 102.1(n)),
expressly includes "growing, mining, harvesting, fishing,
trapping, hunting manufacturing, processing or assembling a
good." Accordingly, the country of origin of the infusion device
is the U.S., the last country in which it under went production.
19 CFR 102.11(d)(3)
As the country of origin of the infusion device has been
determined to be the U.S., the subassembly is excepted from
country of origin marking pursuant to the terms of section
134.35(b), Customs Regulations. That is, the subassembly, as it
is processed in the U.S. so as to become a good of the U.S.-- the
infusion device-- under the NAFTA Marking Rules, is excepted from
country of origin marking. Furthermore, if the processing in the
U.S. is done on behalf of the importer, the outermost container
of the imported subassembly is excepted from marking as well.
HOLDING:
On the basis of the information provided, Customs is of the
opinion that, pursuant to section 134.35(b), Customs Regulations,
the subassembly is processed so as to become a good of the U.S.,
and is thereby excepted from country of origin marking.
Furthermore, if the good is processed in the U.S. on behalf of
the importer, the outermost container of the good is excepted
from marking as well.
A copy of this ruling letter should be attached to the entry
documents filed at the time this merchandise is 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,
Tariff Classification Appeals Division