OT:RR:CTF:VS HQ H323727 UBB
Louise Chevanelle
Formation Douane Louise Chevanelle Inc.
490 Providence Street
Granby, QC J2H 2H6
Canada
RE: USMCA Eligibility of certain chemical products
Dear Ms. Chevanelle,
This is in response to your ruling request dated February 21, 2022, submitted on behalf of your client, TGWT Clean Technologies, Inc. (“TGWT”). You request a ruling regarding United States Mexico Canada Agreement (“USMCA”) preferential tariff treatment for TGWT 3106 products.
You have asked that certain information submitted in connection with this ruling be treated as confidential. Inasmuch as this request conforms to the requirements of 19 C.F.R. § 177.2(b)(7), the request for confidentiality is approved. The information contained within brackets in this ruling or in the attachments to the ruling request, forwarded to our office, will not be released to the public and will be withheld from published versions of this ruling.
FACTS:
TGWT is a leader in green chemistry with expertise in water treatment in steam boilers, cooling towers, closed loop and wastewater. TGWT products are used in steam boilers to prevent corrosion, scavenge oxygen, and prevent scaling. The subject merchandise under consideration is three similar products, TG 3106-C, TG 3106, and TG 3106 PM2. You state that each of these products is classified under subheading 3201.10.00, Harmonized Tariff Schedule of the United States (“HTSUS”). TG 3106-C contains the following inputs and you have provided the following origin and proposed classification information for each input: a concentrated tannin base ([ ]) classified under subheading 3824.99, HTSUS sourced from [ ], and dissolvine ([ ]) classified under subheading 2922.49, HTSUS, and [ ] water classified under subheading 2853.90, HTSUS, all sourced from Canada. TG 3106 and TG 3106 PM2 contain the following inputs and you have provided the following origin and proposed classification information for each input: a concentrated tannin base ([ ]) classified under subheading 3824.99, HTSUS sourced from [ ], and dissolvine ([ ]) classified under subheading 2922.49, HTSUS, [ ] water classified under subheading 2853.90, HTSUS, [ ] classified under subheading 2814.20, HTSUS and [ ] classified under subheading 2814.20, HTSUS, all sourced from Canada. The inputs for each product are added in measured quantities and mixed according to specifications at the TGWT facility in Canada. You state that the three products qualify for preferential treatment under the United States Mexico Canada Agreement (“USMCA”).
Of the various inputs that are combined to create TG 3106, TG 3106-C and TG 3106 PM2, only the [ ] is sourced from a country other than Canada. You state that the [ ] is a mixture of tannins and caustic that works to prevent scaling and prevents corrosion. To this is added [ ] that works to sequester metal ions. When these agents are combined, along with acid and sodium salt, the effect is to create a product with enhanced anti-scaling capacity; the main ingredients, [ ], work together to prevent the corrosive effects of the [ ] and to [ ], thereby improving its anti-scaling capacity. You state that the new product therefore optimizes and enhances the functionality of each of the individual main ingredients, resulting in a final product with superior chemical properties, as well as different properties relevant to its use as boiler water treatment.
ISSUE:
Whether the products TG 3106-C, TG 3106, and TG 3106 PM2 qualify for preferential tariff treatment under the USMCA.
LAW AND ANALYSIS:
The United States-Mexico-Canada Agreement (“USMCA”) was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018. The USMCA was approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act, Pub. L. 116-113, 134 Stat. 11, 14 (19 U.S.C. § 4511(a)). GN 11 of the HTSUS implements the USMCA. GN 11(a)(i) provides:
Goods that originate in the territory of Mexico, Canada or the United States (hereinafter referred to as “USMCA country” or “USMCA countries” as further defined in subdivision (l)(xxiv) of this note) under the terms of subdivision (b) of this note and regulations issued by the Secretary of the Treasury (including Uniform Regulations provided for in the USMCA), and goods enumerated in subdivision (p) of this note, 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 “S” in parentheses, are eligible for such duty rate, in accordance with section 202 of the United States-Mexico-Canada Agreement Implementation Act; and . . .
GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA. GN 11(b) states:
For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, is eligible for the preferential tariff treatment provided for in the applicable subheading and quantitative limitations set forth in the tariff schedule as a “good originating in the territory of a USMCA country” only if—
the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries;
the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials;
the good is a good produced entirely in the territory of one or more USMCA countries using nonoriginating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o)); or
…
You believe that TG 3106, TG 3106-C and TG 3106 PM2 are classified under subheading 3201.10, HTSUS, and will therefore satisfy the chapter specific rule of origin set forth in GN11(o): Chapter 32(1), which states:
(A) A change to subheadings 3201.10 through 3202.90 from any other subheading, including another subheading within that group.
As a preliminary matter, we disagree with the proposed classification for TG 3106, 3106-C and TG 3106 PM2. Based on the information you provided in the ruling request and subsequent questions that we posed, we think the final products will be classified under subheading 3824.99, HTSUS. Should you require confirmation of the classification of the products, please submit a specific ruling request to the National Commodity Specialist Division.
Nonetheless, based on the above, the products TG 3106, TG 3106-C and TG 3106 PM2 will qualify for preferential treatment under GN 11(n)(iv)(D), which states:
A good of chapters 28 through 38, except for a good of chapters 28, 29, or 32, headings 3301 or 3808, or subheadings 3502.11 through 3502.19 is an originating good if the deliberate and proportionally controlled mixing or blending (including dispersing) of materials other than the addition of diluents, to conform to predetermined specifications occurs in the territory of one or more of the USMCA countries, resulting in the production of a good having essential physical or chemical characteristics that are relevant to the purposes or uses of the good and are different from the input materials.
Based on the information provided, the final TG products are goods of chapter 38, HTSUS, and not classified under subheading 3808. You describe the process by which the input materials are combined to create the final products, and we agree that the process meets the criteria for “deliberate and proportionally controlled mixing or blending.” Finally, you explain that the new products combine, enhance and optimize the functions of the main ingredients. The addition of the [ ] to [ ] enhances the anti-scaling capacity of the final products and allows for [ ]. Meanwhile, the combination of [ ] and [ ] prevents the destruction of boiler and boiler-piping surfaces by the [ ]. We agree that the combination of these inputs results goods that each have essential chemical characteristics that are relevant to their use and that are different from the input materials.
As such, the final products TG 3106, TG 3106-C and TG 3106 PM2 all satisfy the alternate rule of origin set forth in GN 11(n)(iv)(D).
HOLDING:
Based on the information provided, the final products will be eligible for preferential tariff treatment under the USMCA when imported into the U.S. from Canada.
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a [CBP] field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.”
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 CBP officer handling the transaction.
Sincerely,
Monika R. Brenner, Chief
Valuation and Special Programs Branch