Mr. Steven B. Zisser
Law Offices of Steven B. Zisser
2155 Paseo De Las Americas
San Diego, CA 92173
RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of a rechargeable battery system PS AA Quad from Mexico; Article 509
Dear Mr. Zisser:
In your letter dated March 29, 1999, you requested a ruling on a rechargeable battery system from Mexico under the NAFTA on behalf of Saft America, Inc., Valdosta, GA. You inquire as to the tariff classification, NAFTA eligibility and the country of origin marking of this product.
As per the information contained in your letter and the submitted sample the rechargeable battery system PS AA Quad is a set that is packaged for retail sale. It contains four AA size rechargeable NICAD batteries and a battery charger. The batteries are manufactured in Mexico. The submitted bill of materials indicates that the origin of the components and materials, from which the batteries are manufactured, is the U.S.A., France, and Germany. The battery charger consists of two sections: a charger, made in China, and an adapter, made in Hong Kong. The charger is designed to plug into a wall socket. It rectifies AC to DC and has an input of 120 VAC, 60Hz, 5W, and outputs of 10.1 VDC, 12MA Max. and 3.0 VDC, 150MA Max. The adapter is designed to hold and make electrical connection to four AA size batteries. The charger and adapter are designed to join together and mate electrically for the purpose of charging batteries. The battery charger is capable of charging any rechargeable NICAD size AA battery, not just the batteries contained in the set. It is noted that the instructions suggest that extra batteries be kept on charge until they are needed.
HQ 083672, May 16, 1989, addresses the classification of a similar set under GRI 3(b). The battery charger, in the set under consideration, is classified in item 8504.40.9550 and the batteries are classified in item 8507.30.80. As in the above-cited ruling, we believe that the battery charger imparts the set’s essential character.
The applicable tariff provision for the rechargeable battery system PS AA Quad will be 8504.40.9550, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for “[s]tatic converters: [o]ther: [r]ectifiers and rectifying apparatus: [o]ther.” The general rate of duty will be 1.5 percent ad valorem.
Both the non-originating battery charger and the imported rechargeable battery system are classified under subheading 8504.40, HTSUS. The rule applicable to goods of subheading 8504.40, HTSUS, is found in General Note 12(t)/85.6(A), HTSUS, which provides for the following:
6. (A) A change to subheading 8504.40 from any other heading
Since the non-originating battery charger does not undergo the required transformation, the imported set will not qualify for NAFTA Preference upon importation.
The rechargeable battery system PS AA Quad does not qualify for preferential treatment under the NAFTA, because the battery charger, which is non-originating under NAFTA, does not undergo the change in tariff classification required by General Note 12(t)/85.6(A), HTSUSA.
Country of Origin Marking
The submitted sample is marked as follows:
· Charger – “SAFT AMERICA INC., VALDOSTA, GA. 31601” in small letters and in close proximity “MADE IN CHINA” in large letters.
· Adapter – “SAFT,” “VALDOSTA, GA. 31601” in large letters and in close proximity “MADE IN HONG KONG” in very small letters.
· Batteries – “SAFT America Inc.,” “San Diego, CA 92173” in small letters and in close proximity “Made in Mexico” in letters of a comparable size.
· Retail package – “CHARGER MADE IN CHINA,” “Adapter Made in Hong Kong,” “Battery asm. in Mexico,” and “Packaged in Mexico.” All these markings are visible and in close proximity to one another on the same side of the package insert. The marking “Packaged in Mexico” is in the same size letters or smaller than the country of origin markings.
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 C.F.R. Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. §1304.
The country of origin marking requirements for a "good of a NAFTA country" are also 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) and the appropriate Customs Regulations. The Marking Rules used for determining whether a good is a good of a NAFTA country are contained in Part 102, Customs Regulations. The marking requirements of these goods are set forth in Part 134, Customs Regulations.
Section 134.1(b) of the regulations, defines "country of origin" as
the country of manufacture, production, or growth of any article of foreign origin entering the U.S. 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 this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin. (Emphasis added).
Section 134.1(j) of the regulations, 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) of the regulations, 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. Section 134.45(a)(2) of the regulations, provides that a "good of a NAFTA country" may be marked with the name of the country of origin in English, French or Spanish.
You state that the imported rechargeable battery system PS AA Quad are packaged in a NAFTA country "Mexico" prior to being imported into the U.S. Since, "Mexico" is defined under 19 C.F.R. §134.1(g), as a NAFTA country, we must first apply the NAFTA Marking Rules in order to determine whether the imported rechargeable battery system PS AA Quad is a “good of a NAFTA country", and thus subject to the NAFTA marking requirements.
Part 102 of the regulations (19 C.F.R. Part 102), sets forth the “NAFTA Marking Rules” for purposes of determining whether a good is a good of a NAFTA country. Section 102.11 of the regulations (19 C.F.R. §102.11) sets forth the required hierarchy for determining country of origin for marking purposes. Section 102.11(a) provides that “[t]he 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
(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 requirements of these rules are satisfied.”
“Foreign Material” is defined in section 102.1(e) of the regulations 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.”
As the set is classified under subheading 8504.40, HTSUS, the change in tariff classification must be made in accordance with the applicable rule set forth in section 102.20(o), Customs Regulations (19 C.F.R. §102.20(o)), Section XVI: Chapters 84 through 85. This rule provides as follows:
A change to subheading 8504.10 through 8504.50 from any other subheading outside that group.
Since the rechargeable battery system PS AA Quad includes the battery charger which is classified under subheading 8504.40, HTSUS, and which therefore does not undergo a tariff shift, the country of origin cannot be determined under 19 C.F.R. §102.11(a)(3). Furthermore, since the battery charger is merely packaged together with the batteries for importation without more than minor processing, it will not be considered to have met the applicable change in tariff classification set out in 19 C.F.R. §102.20. See 19 C.F.R. §102.17. Section 102.11(b) cannot be used to determine origin since it is not applicable to “sets” classified as such under the HTSUS.
Where the country of origin cannot be determined under 19 C.F.R. §102.11(a) or (b), and the article is specifically described in the Harmonized System as a set or mixture, or classified as a set, mixture or composite good pursuant to GRI 3, 19 C.F.R. §102.11(c) is the rule which must then be applied. Under this rule, the country of origin is the country or countries of origin of all materials that merit equal consideration for determining the essential character of the good. All of the components of the set, foreign and domestic, which merit equal consideration, must be considered. In this case, the charger, adapter, and batteries merit equal consideration in determining the essential character of the rechargeable battery system PS AA Quad. Therefore, the country of origin of the set is the country of origin of these components, i.e., China, Hong Kong, and Mexico.
Section 134.46, Customs Regulations (19 C.F.R. §134.46), deals with cases in which the words "United States," or "American," the letters "U.S.A.," any variation of such words or letters, or the name of any city or locality in the United States, or the name of any foreign country or locality other than the country or locality in which the article was manufactured or produced, appears on an imported article or its container, and those words, letters or names may mislead or deceive the ultimate purchaser as to the actual country of origin. In such a case, there shall appear, legibly and permanently, in close proximity to such words, letters, or name, and in at least a comparable size, the name of the country of origin preceded by "Made in," Product of," or other words of similar meaning.
In order to satisfy the close proximity requirement, the country of origin marking must generally appear on the same side(s) or surface(s) in which the name or locality other than the actual country of origin appears.
The marking of the submitted sample, as described above, does not satisfy the marking requirements of 19 U.S.C. §1304 and 19 C.F.R. Part 134 in that the country of origin marking on the adapter is not of a comparable size to the importer’s U.S. address. Also the marking on the retail package “Battery asm. in Mexico” does not clearly indicate the origin of the batteries. Although your letter does not provide a detailed description of the battery production process, this does appear to be a manufacturing operation. Accordingly, the retail package should be marked “Batteries made in Mexico.” The marking “Packaged in Mexico” is not required and could be removed. However, since it appears on the sample provided, it must satisfy the requirements of 19 C.F.R. §134.46 as cited above. In this situation this marking, which appears in close proximity to the country of origin markings and in the same size or smaller lettering, is found to be acceptable under the aforementioned regulation.
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 Eileen S. Kaplan at 212-637-7048.
Should you wish to request an administrative review of this ruling, submit a copy of this ruling and all relevant facts and arguments within 30 days of the date of this letter, to the Director, Commercial Rulings Division, Headquarters, U.S. Customs Service, 1300 Pennsylvania Ave. N.W., Washington, D.C. 20229.
Robert B. Swierupski