MAR-2-05 RR:TC:SM 560372 MLR
Steven B. Zisser, Esq.
Stein, Shostak, Shostak & O'Hara, P.C.
Suite 1200
515 South Figueroa Street
Los Angeles, CA 90071-3329
RE: Country of origin marking for Q-Clip packages from
Mexico; NAFTA; Article 509
Dear Mr. Zisser:
This is in reference to your letter of October 21,
1996, requesting a ruling on behalf of your client, Yakima
Products, Inc., concerning the country of origin marking of
Q-Clip packages.
FACTS:
You state that the Q-Clip packages are made from a
combination of U.S. and Mexican components, with some
processing performed in Mexico on the U.S. components. The
Q-Clips are packaged in Mexico and imported into the U.S.
It is stated that the Q-Clip package qualifies as a
originating article of the North American Free Trade
Agreement (NAFTA), since all materials and components are
manufactured in either the U.S. or Mexico and meet the
origin requirements of Article 401, NAFTA.
You state that the Q-Clip package is classifiable
under subheading 8708.99.80, Harmonized Tariff Schedule of
the United States (HTSUS), which provides for "parts and
accessories of motor vehicles...Other;, Other, Other".
Each Q-Clip package will contain the following components:
two U.S.-origin stainless steel Q-Clips, four Mexican-origin base pads, and four U.S.-origin vinyl clip pads.
You also state that the stainless steel Q-Clip and the
vinyl pads are classifiable under subheading 8708.99.80,
HTSUS.
In Mexico, a protective powder coating is applied to
the stainless steel Q-Clips, and the Mexican base pads are
made from a rubber mold. No processes are performed to the
vinyl clips pads in Mexico. You state that Yakima produces
over 70 different types of stainless steel Q-Clips. Each
Q-Clip is specially designed to attach a Yakima automobile
rack to a specific automobile make and model. Users
require four Q-Clips, which are designed to grab onto the
door frame of the automobile. Each Q-Clip package is sold
with two Q-Clips. The base pads and vinyl clip pads are
generically designed and work with virtually all Q-Clips.
Yakima has seven different sizes of base pads and two sizes
of vinyl clips. After processing in Mexico, the components
are packaged together in retail packaging in Mexico along
with U.S. printed instructions.
ISSUE:
What are the country of origin marking requirements
applicable to the finished
Q-Clip packages?
LAW AND ANALYSIS:
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 19 U.S.C. 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 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 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.)
Section 134.1(j), Customs Regulations (19 CFR
134.1(j)), provides that the "NAFTA Marking Rules" are the
rules promulgated for purposes of determining whether a
good is a good of a NAFTA country. A "good of a NAFTA
country" is defined in 19 CFR 134.1(g) 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 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.
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.
Since the finished Q-Clip packages consist of U.S. and
Mexican components, these goods are neither wholly obtained
or produced, nor produced exclusively from domestic
materials. Accordingly, neither 19 CFR 102.11(a)(1) or (2)
are applicable. Accordingly, 19 CFR 102.11(a)(3) is the
next rule that must be applied to determine the origin of
the finished Q-Clip packages.
You state that the finished Q-Clip packages are
classifiable under subheading 8708.99.80, HTSUS. In this
case, the article consists of two steel Q-Clips, four
rubber base pads, and four vinyl clip pads, and we find
that it is a "set" under General Rule of Interpretation
(GRI) 3(b) because it consists of components that are prima
facie classifiable in different headings which are put up
together for retail sale in order to meet a particular
need. Under GRI 3(b), we find that the essential character
is imparted to the whole by the Q-Clips as they perform the
actual assembly or fastening function. Since these
"packages" are classifiable as if consisting only of the Q-Clips which are of stainless steel, we find that they are
classifiable under subheading 8302.30.30, HTSUS as
mountings, fittings, and similar articles suitable for
motor vehicles "of base metal." The applicable change in
tariff classification for subheading 8302.30.30 set out in
section 102.20(n), Section XV, Chapters 72 through 83,
provides:
8302.10 - 8302.60 ... A change to subheading 8302.10
through 8302.60 from any other subheading, including
another subheading within that group.
Since the U.S.-origin stainless steel Q-Clips are also
classifiable under subheading 8302.30.30, HTSUS, all
foreign materials will not undergo the requisite tariff
shift, and 19 CFR 102.11(b) of the hierarchial rules must
be applied. We find that 19 CFR 102.11(b) is not
applicable because, as we found above, the Q-Clip package
is a "set" under GRI 3(b). Therefore, 19 CFR 102.11(c)
must be applied, which provides that:
Where the country of origin cannot be determined under
paragraph (a) or (b) of this section and the good is
specifically described in the Harmonized System as a
set or mixture, or classified as a set, mixture or
composite good pursuant to General Rule of
Interpretation 3, the country of origin of the good is
the country or countries of origin of all materials
that merit equal consideration for determining the
essential character of the good.
In T.D. 94-4, dated December 17, 1993 (59 Fed. Reg.
110, 109), Customs stated the following with regard to
section 102.11(c):
Paragraph (c) of section 102.11 reflects current
practice whereby multiple countries of origin may
exist for goods that are classified as "sets", and for
goods classified as "mixtures" or "composite" goods to
which no single component can be found to impart their
essential character. However, only the countries of
origin of the countries meriting equal consideration
for determining the essential character of the good
would constitute the country or countries of origin of
the good.
An example where an item did not require marking was
in Headquarters Ruling Letter (HRL) 555365 dated September
5, 1990, where foreign-made screws packaged with
U.S.-origin junction boxes abroad were excepted from
country of origin marking because they lost their separate
identity and became an integral part of the U.S.-origin
boxes as a result of their inclusion in the kit. However,
in HRL 559032 dated October 25, 1995, Customs found that
batteries did not lose their identity as a result of their
inclusion in a smoke alarm set, as the smoke alarms could
not function without the power furnished by the batteries.
Accordingly, both the batteries and the smoke alarms
merited "equal consideration" in determining the essential
character of the good. This finding was not based on the
value of the batteries, but rather was based on the
function of the batteries in an operating smoke alarm.
In this case, the articles in the set are U.S. Q-Clips, Mexican base pads, and U.S. vinyl clip pads. We do
not agree that the Mexican rubber base pads lose their
identity as a result of their inclusion in the package.
Although the stainless steel Q-Clip, in one of its 70
different types, performs the actual fastening function,
and the pads are more generic in nature, the base pads do
perform an important protective function. Without the base
pads, it appears that the Q-Clips would not remain as
firmly attached to the vehicle and the Q-Clips could damage
the finish on the vehicle. Furthermore, the base pads do
not represent a de minimis value of the Q-Clip set.
Accordingly, in our opinion, the Q-Clip package must be
marked with the country of origin of the base pads. It
will be appropriate to only mark the package "Made in
Mexico" or "Base pads Made in Mexico". Pursuant to 19 CFR
134.32(m), which provides that products of the U.S.
exported and returned are excepted from country of origin
marking requirements, no marking will be required for the
imported Q-Clips or vinyl pads. Whether or not the
Q-Clips may be labeled "U.S.A." is within the jurisdiction
of the Federal Trade Commission. However, the Customs
Service does not object to a marking which also identifies
the origin of the Q-Clips.
HOLDING:
Based upon the information provided, pursuant to 19
CFR 102.11(c), since the
Q-Clip package is classified as a "set" and the base pads
perform an essential protective function, the Q-Clip
package must be marked with the country of origin of the
base pads. A marking such as "Made in Mexico" or "Base
pads Made in Mexico" will be appropriate for Customs
marking purposes.
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
Tariff Classification Appeals
Division