CLA-2 CO:R:C:S 556054 KCC
District Director of Customs
111 West Huron Street
Buffalo, New York 14202-2378
RE: Internal Advice No. 31/91; camera and gyroscopically
stabilized housing unit; CFTA; General Note 3(c)(vii)(C)(3);
circumvention of the rules of origin; configuration of
merchandise
Dear Sir:
This is in response to your memorandum of May 21, 1991,
forwarding the above-referenced request for Internal Advice No.
31/91, initiated by PBB USA Inc., on behalf of Istec Inc.,
regarding the tariff classification under the Harmonized Tariff
Schedule of the United States (HTSUS) and the applicability of
the United States-Canada Free Trade Agreement (CFTA), to a
camera and gyroscopically stabilized housing unit.
FACTS:
Istec Inc. manufactures airborne surveillance systems mainly
for use in the law enforcement field. The system under
consideration consists of a broadcast quality television camera
mounted within a gyroscopically stabilized housing (pod). The
pod consists of a camera housing along with the electronic
components that move the camera in a desired direction. Istec
manufactures this system in Canada using United States, Canadian,
and third country components and materials. The majority of the
components and materials are obtained or produced in Canada or
the United States. However, the television camera is
manufactured in Japan. Upon completion of the final assembly and
testing of the system, the foreign made broadcast camera will be
removed and shipped to the U.S. separately from the pod.
Istec is concerned that separately shipping the camera and
the pod may be construed as circumventing the CFTA rules of
origin in General Note 3(c)(vii)(C)(3), HTSUS. Istec contends
that separating the camera from the pod is not done to
circumvent the CFTA rules origin but, rather, allows Istec to
take full advantage of the benefits provided for in the CFTA.
Your office would classify the camera and the pod, if
imported as an assembled unit, as a functional unit pursuant to
Note 4, Section XVI, HTSUS, under subheading 8525.30.00, HTSUS,
which provides for "...Television cameras." CFTA eligibility of
the entire system would be denied since the system incorporates a
Japanese-origin camera which was classifiable under subheading
8525.30.00, HTSUS, when imported into Canada, and upon
importation into the U.S. the system would not be "transformed in
the territory of Canada" into an "originating good" pursuant to
General Note 3(c)(vii)(B)(2), HTSUS. However, the pod, if
imported separately from the Japanese-origin camera, would be
considered an "originating good" pursuant to General Note
3(c)(vii)(B), HTSUS.
Additionally, Istec contends that the camera, if permitted
to be shipped separately, should be classified under subheading
8525.30.00, HTSUS. Istec further submits that the pod should
then be classified under either subheading 8529.90.30, HTSUS, or
subheading 8479.89.90, HTSUS.
ISSUE:
I. Whether separate importation of the camera and the pod into
the U.S. is construed as circumventing the CFTA rules of origin
in General Note 3(c)(vii)(C)(3), HTSUS?
II. What is the proper tariff classification of the pod and the
camera under the HTSUS when imported separately?
LAW AND ANALYSIS:
I. Eligibility for Preferential Treatment under the CFTA
Articles which meet the definition of "originating goods"
are subject to reduced rates of duty under the CFTA, provided
they are classified under an eligible tariff provision. The
rules of origin in the CFTA prohibit, both implicitly and
explicitly, processes that could circumvent the purposes of the
rules of origin. General Note 3(c)(vii)(C)(3), HTSUS, states
that:
Goods shall not be considered to originate in the territory
of Canada...merely by virtue of having undergone...any
process or work in respect of which it is established, or in
respect of which the facts as ascertained clearly justify
the presumption, that the sole object was to circumvent the
provisions of subdivision (c)(vii) of this note.
In this case, the Japanese-origin camera will be imported
into Canada, inserted into the pod for testing, and then removed
so that the camera can be imported into the U.S. separately from
the pod. We are of the opinion that the removal of the camera
from the pod and the separate importation of the two items is not
a "circumvention" of the CFTA rules of origin as contemplated by
General Note 3(c)(vii)(C)(3), HTSUS. Prior to the insertion of
the camera into the pod for testing, the pod qualified for
special tariff treatment under the CFTA as an "originating good."
The removal of the camera from the pod is not designed to obtain
CFTA treatment for a non-originating good (the camera), but
merely is designed to retain "originating goods" status for the
pod. Therefore, under the specific circumstances of this case,
we conclude that the separation of the camera from the pod in
Canada and the separate importation of the two items will not
affect the pod's entitlement to CFTA treatment.
II. Tariff Classification
The classification of merchandise under the HTSUS is
governed by the General Rules of Interpretation (GRI's). GRI 1,
HTSUS, states in part that "for legal purposes, classification
shall be determined according to the terms of the headings and
any relative section or chapter notes."
The pod is classified under subheading 8529.90.30, HTSUS,
which provides for "Parts suitable for use solely or principally
with the apparatus of headings 8525 to 8528...Other...Of
television apparatus...Other...Parts of television cameras."
Explanatory Note 85.29 of the Harmonized Commodity Description
and Coding System (HCDCS) indicates that motorized rotors as well
as cases and cabinets specialized to receive cameras are
classifiable within heading 8529, HTSUS. HCDCS, Vol. 4, p. 1379.
This tariff provision is eligible for preferential tariff
treatment under the CFTA. As an "originating good" pursuant to
General Note 3(c)(vii)(B), HTSUS, the pod would be dutiable at
the rate of 0.8 percent ad valorem.
The camera is properly classified under subheading
8525.30.00, HTSUS, which provides for "Transmission apparatus for
radiotelephone, radiotelegraphy, radiobroadcasting or television,
whether or not incorporating reception apparatus or sound
recording or reproducing apparatus; television
cameras...Television cameras," dutiable at the rate of 4.2
percent ad valorem.
HOLDING:
The removal in Canada of the Japanese-origin camera from the
pod, which qualifies as an "originating good" under the CFTA, and
the separate importation of the two items into the U.S. is not
the type of circumvention operation contemplated by General Note
3(c)(vii)(C)(3), HTSUS. The camera and the pod may be separately
entered into the U.S.
The pod is classified under subheading 8529.90.30, HTSUS,
which provides for "Parts suitable for use solely or principally
with the apparatus of headings 8525 to 8528...Other...Of
television apparatus...Other...Parts of television cameras."
The camera is classified under subheading 8525.30.00, HTSUS,
which provides for "Transmission apparatus for radiotelephone,
radiotelegraphy, radiobroadcasting or television, whether or not
incorporating reception apparatus or sound recording or
reproducing apparatus; television cameras...Television cameras."
Sincerely,
John Durant, Director
Commercial Rulings Division