MAR-2-05 RR:CR:SM 561244 KSG
Elaine Stevens
Asst. Vice-President/ Customs
Schenker International, Inc.
15800 International Plaza Drive
Suite 100
Houston, Texas 77032
RE: Qualification of imported heavy alkylate as an originating good under NAFTA; Article 509; General Note 12(l); NAFTA transshipment; 19 CFR Part 181, Appendix, section 16; further production
Dear Ms. Stevens:
This is in reference to your letter of November 9, 1998, requesting a binding ruling on behalf of your customer, Petresa International USA Branch, as to whether Canadian heavy alkylate shipped to Spain for distillation qualifies as an originating good under the North American Free Trade Agreement (“NAFTA”) when subsequently imported into the United States.
FACTS:
Petresa International - USA Branch imports a heavy alkylate, P 990-Q. This product is made in Canada and then sent to Spain via Rotterdam, Holland for distillation to adjust the linear alkyl benzene (“LAB”) content from between seven to ten percent (as produced in Canada) to less than one percent. In this distillation process, a portion of the product is removed (typically about 25 percent) but no components are added; it filters the light alkylbenzene component out of the heavy alkylate. The product is then shipped from Spain to the U.S. You state that P 990-Q is
classified in subheading 3817.10.80 of the Harmonized Tariff Schedule of the United States (“HTSUS”) and that the tariff classification does not change as a result of the processing in Spain.
ISSUE:
Whether Canadian heavy alkylate (P 990- Q) shipped to Spain for distillation qualifies as an originating good under NAFTA when subsequently imported into the U.S.
LAW AND ANALYSIS:
Paragraph (b) of General Note 12 of the HTSUS establishes the criteria under which goods imported into the customs territory of the United States qualify as originating goods for NAFTA purposes. General Note 12(l), HTSUS, states that a good shall not be considered to be an originating good by reason of having undergone production that satisfies the requirements of the note if, subsequent to that production, the good undergoes further production or any other operation outside the
territories of the NAFTA parties, other than unloading, reloading or any other operation necessary to preserve it in good condition or to transport the good to the territory of Canada, Mexico and/or the United States. General Note 12(l) is interpreted by section 16 of the NAFTA Rules of Origin Regulations, Appendix to Part 181, Customs Regulations (19 CFR Part 181, App., sec. 16 ). Part VI, section 16 provides, in pertinent part, that:
(1) A good is not an originating good by reason of having undergone production that occurs entirely in the territory of one or more of the NAFTA countries that would enable the good to qualify as an originating good if subsequent to that production
(a) the good is withdrawn from customs control outside the territories of the NAFTA countries; or
(b) the good undergoes further production or any other operation outside the territories of the NAFTA countries, other than unloading, reloading or any other operation necessary to preserve the good in good condition, such as inspection, removal of dust that accumulates during shipment, ventilation, spreading out or drying, chilling, replacing salt, sulphur dioxide or other aqueous solutions, replacing damaged packing materials and containers and removal of units of the good that are spoiled or damaged and present a danger to the remaining units of the good, or to transport the good to the territory of a NAFTA country.
(2) A good that is a non-originating good by application of subsection (1) is considered to be entirely non-originating for purposes of this appendix.
In Headquarters Ruling Letter (“HRL”) 558977, dated March 31, 1995, Customs held that coveralls assembled in the Dominican Republic from U.S. origin components constitutes “further production” of the components outside the territories of the NAFTA parties and therefore, the coveralls are not considered “originating goods” for purposes of qualifying for preferential tariff treatment under NAFTA. In this case, the P 990 Q clearly undergoes further production (distillation) outside the territories of the NAFTA parties (Spain). Therefore, pursuant to General Note 12 (l), HTSUS, and 19 CFR Part 181, App., sec. 16, the P 990 Q would not be considered an “originating good” for purposes of qualifying for preferential tariff treatment under NAFTA when imported into the U.S.
HOLDING:
Pursuant to General Note 12(l), HTSUS, and 19 CFR Part 181, App., sec. 16, the Canadian P 990 Q sent to Spain for distillation would not be considered an “originating good” for purposes of qualifying for preferential tariff treatment under NAFTA when imported into the U.S.
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, Director
Commercial Rulings Division