CLA-2 RR:CR:SM 561370 KSG
Dave Pentland
Carson Customs Brokers (USA) Inc.
1-14th Street, Unit 8
P.O. Box 635
Blaine, Washington 98231
RE: Eligibility of a video surveillance camera for NAFTA preferential tariff treatment; General Note 12
Dear Mr. Pentland:
This is in response to your letter of November 4, 1998, received May 3, 1999, on behalf of your client, Silent Witness Enterprises Ltd., requesting a binding ruling on the eligibility of a black and white video surveillance camera imported from Canada for tariff preference under the North American Free Trade Agreement (“NAFTA”).
FACTS:
Silent Witness Enterprises, Ltd. plans to import black and white video surveillance cameras. The cameras are manufactured in British Columbia, Canada. The articles are comprised of two separate units; the camera and the enclosure. The enclosure is made of heavy-gauge steel and has a powder paint finish. A high-impact resistant hard-coated polycarbonate dome protects the camera. You classified the cameras in
subheading 8525.30.90.60, of the Harmonized Tariff Schedule of the United States (“HTSUS”). You state that the camera has six parts that are manufactured in non-NAFTA countries: 1)part #131.002 which you state is classified in subheading 9002.11, HTSUS; 2) part # 400.0036 which you state is classified in subheading 8536.69, HTSUS; 3) part # 600.0041 which you state is classified in subheading 7318.15, HTSUS; 4) part #604.0015 which you state is classified in subheading 7217.10, HTSUS; 5) part # 626.0001
which you state is classified in subheading 7318.22, HTSUS; and 6) part # 666.0016 which you state is classified in subheading 4016.93, HTSUS.
ISSUE:
Whether the video surveillance camera is eligible for NAFTA duty preference.
LAW AND ANALYSIS:
General Note 12, HTSUS, incorporates Article 401 of NAFTA into the HTSUS. General Note 12(a)(i) provides, in pertinent part:
(i) Goods that originate in the territory of a NAFTA party under the terms of subdivision (b) of this note and that qualify to be marked as goods of Canada under the terms of the marking rules set forth in regulations issued by the Secretary of the Treasury (without regard to whether the goods are marked), when such goods are imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appears in the “Special” subcolumn followed by the symbol “CA” in parentheses, are eligible for such duty rate, in accordance with section 201 of the NAFTA Implementation Act.
Accordingly, the video camera will be eligible for the “Special” “CA” rate of duty provided it is a NAFTA “originating” good under General Note 12(b), HTSUS, and qualifies to be marked as a product of Canada under the marking rules. General Note 12(b), HTSUS, provides, in pertinent part:
for the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as “goods originating in the territory of a NAFTA party only if--
(i) they are goods wholly obtained or produced entirely in the territory of Canada, Mexico, and/or the United States; or
(ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that--
(A) except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note;...
You state that there are parts in the imported cameras that are not produced in a NAFTA country. Thus, we must examine whether the non-originating parts incorporated into the cameras undergo the required change in tariff classification in Canada pursuant to General Note 12(b)(ii)(A), HTSUS. The rule applicable to goods of subheading 8525.30.9060, HTSUS, is provided for in General Note 12(t)/85.74- 12(t)/85.83, HTSUS, which provides:
79. A change to subheading 8525.30 from any other subheading, except from tariff items 8529.90.01, 8529.90.03, 8529.90.06, 8529.90.09, 8529.90.13, 8529.90.16, 8529.90.19, 8529.90.22 or 8529.90.24.
In this regard, we note the tariff classifications of the non-originating parts used in the production of the video cameras: 1) part 131.0002- subheading 9002.11, HTSUS; 2) part 400.0036- subheading 8536.69, HTSUS; 3) part 600.0041- subheading 7318.15, HTSUS; 4) part 604.0015- subheading 7217.10; 5) part 626.0001- subheading 7318.22, HTSUS; and 6) part 666.0016- subheading 4016.93, HTSUS. Because all of the above parts are classified in tariff headings other than subheading 8525.30 or 8529.90, the requirements of the rule have been met. Consequently, the video cameras will be eligible for tariff treatment as NAFTA originating goods under General Note 12(b), HTSUS.
Section 102.11, Customs Regulations (19 C.F.R. §102.11), sets forth the required hierarchy for determining whether a good is a good of a NAFTA country for the purposes of country of origin marking and determining the rate of duty and staging category applicable to an originating good as set out in Annex 302.2. Paragraph (a) of 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.
“Foreign material” is defined in 19 C.F.R. §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.” Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented because there are non-Canadian parts incorporated into the cameras. Since an analysis of sections 102.11(a)(1) and 102.11(a)(2) will not yield a country of origin determination, we look to section 102.11(a)(3).
Section 102.11(a)(3) provides that the country of origin is the country in which “each foreign material incorporated in that good undergoes an applicable change in tariff classification as set forth in 19 C.F.R. §102.20....”
The applicable change in tariff classification rule is set out in section 102.20(o), Customs Regulations (19 C.F.R. §102.20(o)):
8525.30- 8525.40.............. A change to subheading 8525.30 through 8525.40 from any other subheading, including another subheading within that group, except a change to video camera recorders of subheading 8525.40 from television cameras of subheading 8525.30.
Thus, all of the foreign (non-Canadian) parts incorporated into the cameras must meet the above rule. Noting the tariff classification of the parts listed above, the applicable rule is satisfied with regard to these parts as none of them are within subheading 8525.30 through 85.25.40, HTSUS. We assume for the purposes of this ruling that the U.S. parts are also not within subheading 8525.30 through 8525.40. Therefore, based on the information provided, the video cameras would be eligible to be marked as a product of Canada.
Based upon the information submitted, because the video cameras are considered “originating goods” under General Note 12(b), HTSUS, and qualify to be marked as products of Canada as required by General Note 12(a)(i), HTSUS, they are entitled to NAFTA tariff preference at the “CA” duty rate.
HOLDING:
The video cameras will be eligible for NAFTA tariff preference under the “CA” duty rate, as they are considered “originating goods” and qualify to be marked as products of Canada as required by General Note 12, HTSUS.
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
Commercial Rulings Division