MAR 2-10 RR:TC:SM 558729 KBR
Ms. Sue Klabunde
Spots Pots
135-6050 Almon Street
Halifax, Nova Scotia, Canada B3K 138
RE: Marking of Ceramic Articles, NAFTA, Article 509.
Dear Ms. Klabunde:
This is in response to your letters dated March 10, 1994,
July 25, 1994, and September 13, 1994, concerning the country of
origin and the eligibility for special tariff treatment un the
North American Free Trade Agreement ("NAFTA") of ceramic pots and
tableware from Canada. We regret the delay in responding.
FACTS:
Spots Pots wishes to import into the U.S. several types of
ceramic articles, and wishes to know the country of origin of the
articles.
Type A products are ceramic and wood articles manufactured
in Canada from 100 percent Canadian materials.
Type B products are ceramic articles manufactured in, and
purchased from the United States and imported into Canada.
In Canada, each piece is hand-decorated using ceramic paint
and/or glazed and then fired in pottery kilns.
Type C products are flower pots, saucers and tableware
trays. Type C products are processed in Canada from Italian
red clay flower pots, saucers and trays which have been
fired but are not glazed or decorated. In Canada, the
flower pots, saucers and trays are decorated, glazed, fired,
and then exported to the U.S. You state that the red clay
flower pots are imported into Canada under subheading
6815.99.91, as other clay items.
Type D products are tableware items such as tea pots, cups
and saucers, cream and sugar bowls, mugs, cake stands,
platters and trays. They are processed in Canada from
Portuguese unglazed white earthenware. You state that the
articles imported into Canada are unassembled' because
without glaze they are unusable and will not hold water. In
Canada, the articles are decorated, glazed and fired, and
then imported into the U.S.
For each of the types of ceramic, you state that after
importation into Canada, the ceramic is called a "bisque" and
remains porous. Because it is porous, the glaze will adhere to
the pot. The pot is hand dipped into the glaze and allowed to
dry. The ceramic is then hand decorated by using brushes and
using three to six colors. The glaze is purchased from U.S.
suppliers. The pots are then fired.
In a conversation with this office on August 8, 1995, you
indicated that you are no longer interested in importing
glassware and that that part of your request need not be
considered.
For Type A products, you wish to put an adhesive label that
reads "Spots Pots Handmade in Canada" or for smaller items,
"Canada Spots Pots". You wish to place an adhesive label that
reads "Canada Spots Pots". You wish to place an adhesive label
on Type C products that reads "Spots Pots hand-decorated in Nova
Scotia Canada" or "Spots Pots, Product of Italy, hand-decorated
in Canada". You wish to place an adhesive label on Type D
products which reads "Spots Pots hand-decorated in Canada".
ISSUES:
1. Are the ceramic articles eligible for NAFTA duty
preferences?
2. What is the country of origin of the ceramic articles
imported into the U.S.?
LAW AND ANALYSIS:
NAFTA Preference
To be eligible for tariff preferences under the NAFTA, goods
must be "originating goods" pursuant to the rules of origin in
General Note 12(b), Harmonized Tariff Schedule of the United
States (HTSUS). Based on the facts provided, types A and B are
considered "goods originating in the territory of a NAFTA party"
pursuant to General Note 12(b)(i), HTSUS, because the articles
are "goods wholly obtained or produced entirely in the territory
of Canada, Mexico and/or the United States." The phrase "goods
wholly obtained or produced in the territory of Canada, Mexico
and/or the United States", means, in pertinent part:
(i) mineral goods extracted in the territory
of one or more of the NAFTA parties;...
(x) goods produced in the territory of one or
more of the NAFTA parties exclusively
from goods referred to in subdivisions
(n)(i) through (ix), inclusive, or from
their derivatives, at any stage of
production.
See, General Note 12(n), HTSUS. "Production" is defined by
General Note 12(p), as "growing, mining, harvesting, fishing,
trapping, hunting, manufacturing, processing or assembling a
good."
The information submitted indicates that the wood, and
ceramic are "goods wholly obtained or produced entirely in the
territory of Canada and/or the United States". Therefore, the
articles listed under Type A and Type B are eligible for NAFTA
tariff preference.
Type C and Type D products are not "originating goods"
pursuant to the rules of origin in General Note 12(b)(i), HTSUS.
The second method for determining "originating goods" is that
they be "transformed in the territory of Canada, Mexico and/or
the United States" pursuant to General Note 12(b)(ii)(A), HTSUS,
which states in pertinent part as follows:
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 or the rules
set forth therein....
The Type C flower pots, and saucers are classified under
subheading 6913.90.50, HTSUS, as other ornamental articles of
ceramic. See, New York Ruling (NY) 895976 dated April 8, 1994,
and NY 860020 dated February 27, 1991. The Type C trays and the
Type D white earthenware products are classified under heading
6912, HTSUS, as "Ceramic tableware, kitchenware, other household
articles and toilet articles, other than porcelain or china...."
Classification to the exact eight digit level is dependant upon
the actual article being imported.
As the Type C and Type D products are classified under
chapter 69, HTSUS, a transformation is evident when a change in
tariff classification occurs that is authorized by General Note
12(t) 69, HTSUS. General Note 12(t) 69, HTSUS, states:
A change to headings 6901 through 6914 from any other
chapter.
Therefore, any non-originating materials must come from a chapter
other than chapter 69.
In the case of the Type C products, the non-originating
materials are the Italian red clay pots, saucers and trays, and
for the Type D products, the non-originating materials are the
Portuguese white earthenware. All of these products when
imported into Canada are classified under heading 6912, HTSUS.
See, NY 860020. A change in tariff classification does not
occur. Therefore, the finished Type C products manufactured from
non-originating red clay pots saucers and trays, and the Type D
products manufactured from non-originating white earthenware are
not eligible for preferential tariff treatment under the NAFTA.
We note that you state that the Italian red clay pots enter
Canada under subheading 6815.99.91, HTSUS, as other clay items.
The only supporting evidence submitted appears to be a computer
generated Brokerage bill listing "Red clay products" and the
subheading 6815.99.91.00, HTSUS. We do not find this evidence
compelling. Heading 6815, HTSUS, provides for:
Articles of stone or of other mineral substances (including
articles of peat), not elsewhere specified or included....
In understanding the language of the Harmonized Tariff
Schedule (HTSUS), Harmonized Commodity Description and Coding
System (HCDCS) Explanatory Notes (ENs) may be consulted. The
ENs, although not dispositive, provide a commentary on the scope
of each heading of the HTSUS and are generally indicative of the
proper interpretation of these headings. See, T.D. 89-90, 54
Fed. Reg. 35127, 35128 (August 23, 1989). EN 68.15 (pgs. 909-910) states that:
This heading covers articles of stone or of other mineral
substances, not covered by the earlier headings of this
Chapter and not included elsewhere in the Nomenclature; it
therefore excludes, for example, ceramic products of Chapter
69 (emphasis in original).
The Italian red clay pots, as well as the other Type C and
Type D products, are ceramic products classified in Chapter 69,
HTSUS. They are not of the class or kind of stone or mineral
substances classifiable under heading 6815, HTSUS. Therefore,
the Type C and Type D products are excluded from classification
under heading 6815, HTSUS. Therefore, Spots Pots products
manufactured from non-originating materials are not eligible for
the NAFTA tariff preference because the required tariff shift
does not occur.
Country of Origin Marking
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C.
1304), provides that unless excepted, every article of foreign
origin 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. Congressional intent in
enacting 19 U.S.C. 1304 was "that the ultimate purchaser should
be able to know by an inspection of the marking on the imported
goods the country of which the goods is the product. The evident
purpose is to mark the goods so that at the time of purchase the
ultimate purchaser may, by knowing where the goods were produced,
be able to buy or refuse to buy them, if such marking should
influence his will." United States v. Friedlander & Co., 27
C.C.P.A. 297 at 302; C.A.D. 104 (1940). Part 134, Customs
Regulations (19 CFR Part 134), implements the country of origin
marking requirements and the exceptions of 19 U.S.C. 1304.
Section 134.1(b) of the regulations, 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 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), of the regulations, provides that the
"NAFTA marking rules" are the rules promulgated for purposes of
determining whether a good is a good of a NAFTA country. Section
134.1(g) of the regulations, defines a "good of a NAFTA country"
as an article for which the country of origin is Canada, Mexico,
or the U.S. as determined under the NAFTA marking rules.
Part 102 of the regulations sets forth the "NAFTA Marking
Rules" for purposes of determining whether a good is a good of a
NAFTA country for marking purposes. Section 102.11 of the
regulations, sets forth the required hierarchy for determining
country of origin for marking purposes. Section 102.11(a) of the
regulations states that "[t]he 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
requirements of these rules are satisfied."
In the instant case, as you state that the Type A articles
are made in Canada from 100% Canadian materials, these articles
are products of Canada pursuant to 102.11(a)(1) or (2).
Type B, Type C and Type D articles are neither wholly
obtained or produced in a single country nor produced exclusively
from domestic materials, and therefore, 102.11(a)(1) and (2) are
not applicable for purposes of determining whether the articles
are goods of Canada. Therefore, it must be determined whether
pursuant to 102.11(a)(3), the foreign materials incorporated
into the ceramic articles meet the specific tariff rule of
102.20.
As discussed above, the Type B pots and Type C flower pots,
and saucers are classified under subheading 6913.90.50, HTSUS, as
other ornamental articles of ceramic. See, New York Ruling (NY)
895976 (April 8, 1994), NY 860020 (February 27, 1991). The Type
B tray, Type C trays and the Type D white earthenware products
are classified under heading 6912, HTSUS, as "Ceramic tableware,
kitchenware, other household articles and toilet articles, other
than porcelain or china...." Classification to the exact eight
digit level is dependant upon the actual article being imported.
Thus, the specific tariff rule for these goods is set out in
section 102.20(m) (Section XIII: Chapters 68 through 70) of the
regulations, which states:
A change to headings 6901 through 6914 from any other
chapter.
Therefore, the foreign materials must come from a chapter other
than chapter 69.
In the case of the Type B products, the foreign materials
are the ceramic tray and pot; for the Type C products, the non-originating materials are the Italian red clay pots, saucers and
trays; and for the Type D products, the non-originating materials
are the Portuguese white earthenware. All of these products when
imported into Canada are classified under heading 6912, HTSUS.
See, NY 860020. A change in tariff classification does not
occur.
The next step in the hierarchy, 19 CFR 102.11(b), states
that, where 102.11(a) is not applicable, the country of origin
will be the country or countries of origin of the single material
that imparts the essential character to the good. Section
102.18(b), states that the only materials to be considered for
purposes of identifying the material that imparts the essential
character to a good are those domestic or foreign materials that
are classified in a provision from which a change in tariff
classification is not allowed under the specific rule or other
requirements. In this case, the Type B, Type C and Type D
ceramic articles imported from Italy and Portugal impart the
essential character to the finished ceramics.
Therefore, the country of origin of these articles will be the
country of origin of the ceramic which is imported into Canada.
Therefore, Type C products must be marked to indicate that Italy
is the country of origin of the finished article, and Type D
products must be marked to indicate that Portugal is the country
of origin of the finished article. However, for Type B products,
since the ceramic imported into Canada is from the U.S., this
would lead to a country of origin designation of U.S. after it is
finished in Canada and exported to the U.S. Therefore, for
purposes of country of origin marking, the country of origin of
the Type B products is the U.S., and the articles are excepted
from the marking requirements under 19 U.S.C. 1304.
Pursuant to 19 CFR 102.19(b), however, if an originating
good of U.S. origin has been exported from, and returned to, the
U.S. after having been advanced in value or improved in condition
in another NAFTA country, the country of origin for such good for
Customs duty purposes only is the last NAFTA country in which
that good was advanced in value or improved in condition before
its return to the U.S. Therefore, for purposes of the assessment
of duties at a NAFTA duty rate, the country of origin for Type B
articles will be Canada.
You submitted several samples of adhesive labels that you
wished to use to mark the country of origin on the articles.
Type A and Type B articles may be marked with the adhesive labels
which indicate Canada as the country of origin. "CANADA SPOTS
POTS", "SPOTS POTS HANDMADE IN CANADA" or "SPOTS POTS HAND
DECORATED IN NOVA SCOTIA CANADA" are all acceptable markings.
For the Type C and Type D articles, you must use a label
that indicates Italy and Portugal, respectively, as the country
of origin. The adhesive label you wish to use for such a
situation is "SPOTS POTS PRODUCT OF ITALY HAND DECORATED IN CANADA".
Section 134.46, Customs Regulations (19 CFR 134.46), requires
that when the name of any city or locality in the U.S., or the
name of any foreign country or locality other than the name of
the country or locality in which the article was manufactured or
produced, appears on an imported article or its container, there
shall appear, legibly and permanently, in close proximity to such
words, letters or name, and in at least a comparable size, the
name of the country of origin preceded by "Made in," "Product
of," or other words of similar meaning. Customs has ruled that
in order to satisfy the close proximity requirement, the country
of origin marking must appear on the same side(s) or surface(s)
in which the name of the locality other than the country of
origin appears. HQ 708994 (April 24, 1978). The purpose of 19
CFR 134.46 is to prevent the possibility of misleading or
deceiving the ultimate purchaser as to the origin of the imported
article. On the instant adhesive label, "CANADA" appears in
larger print than the country of origin, "ITALY" and therefore is
not acceptable pursuant to 134.46. If the print size is changed
so that "ITALY" is in comparable size print to "CANADA", the
additional language indicating that additional decoration was
done in Canada would be an acceptable country of origin marking.
HOLDING:
Pursuant to General Note 12(b)(i), HTSUS, Type A and Type B
articles are eligible for NAFTA tariff preference as goods wholly
obtained or produced entirely in the territory of Canada and/or
the United States. Type C and Type D articles do not satisfy the
required change in tariff classification and are, therefore, not
eligible for NAFTA tariff preference.
Based on the information submitted, the Type A articles are
products of Canada and must be marked to indicate such. The
suggested adhesive labels are acceptable for Type A. Type C
articles are products of Italy, Type D articles are products of
Portugal and they must be marked to indicate that origin,
respectively. The adhesive label for Type C and Type D articles
may indicate that additional decoration was performed in Canada;
however, the print size used for the country of origin must be at
least of comparable size to "CANADA". For purposes of marking ,
Type B articles are products of the U.S. and are thus excepted
from marking requirements under 19 U.S.C. 1304. However, for
purposes of Customs duties only, pursuant to section 102.19(b),
Type B articles are considered products of Canada.
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
Tariff Classification Appeals
Division