MAR-2-05 RR:CR:SM 561210 RSD
Mr. Bob Babiak
Purchasing & Production Manager
Meditel Inc.
8605 Darnley
Town of Mount Royal
Quebec H4T 1X2
Canada
RE: Country of Origin Marking of a Titanic Puzzle; NAFTA Marking Rules; 19 CFR Part 102; Article 509
Dear Mr. Babiak
This is in response to your letter dated October 27, 1998, concerning the country of origin marking of two puzzles which comprise a replica of the Titanic floating on the ocean. Previously, you forwarded a sample of the puzzles and the packaging in which they are sold.
FACTS:
The subject merchandise consists of two puzzles which are packaged together in one box with printed instructions. One puzzle is a three dimensional (3 D) replica of the ship “Titanic”, which is made in the United States of foam with cardboard parts. The other puzzle is a two dimensional (2 D) picture of the ocean, which is made of cardboard in Canada. When the puzzles are fully put together, the three dimensional Titanic foam puzzle is designed to be displayed on the top of the two dimensional ocean puzzle. It is stated that when the puzzles enter the United States, they will be classified under subheading 9503.60.20 of the Harmonized Tariff Schedule of the United States (HTSUS).
The Titanic 3 D foam puzzle is produced in the United States by printing sheets and laminating them onto sheets of foam which are die-cut. The cardboard parts of the Titanic puzzle are printed and then also die-cut in the U.S. It is stated that the 3 D Titanic puzzle alone would be classifiable under subheading 9503.60.20 of the HTSUS. The 2 D cardboard puzzle of the ocean is produced in Canada by printing sheets and laminating them onto cardboard, which is then completely die-cut and bagged. It is stated that the 2 D puzzle alone also would be classified
under subheading 9503.60.20, HTSUS. All the other materials included with the two puzzles are made in Canada. These materials are the assembly instructions, a sheet of clear doubled sided tape, and the retail box. The puzzles and other materials are packaged (inserted in the box) in Canada and then imported into the United States.
The proposed country of origin marking for the retail box is as follows:
3 D Puzzle made in U.S.A.
2 D Puzzle and packaging made in Canada
ISSUE:
What are the country of origin marking requirements for the imported puzzles described above?
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 §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 United States. 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).
Pursuant to section 134.35(b), Customs Regulations (19 CFR §134.35(b)), goods of a NAFTA country are excepted from marking if they are to be processed in the U.S. in a manner that would result in the good becoming a good of the U.S. under the NAFTA Marking Rules. That is, if an article undergoes processing after its importation so as to become a good of the U.S., it will not have to be marked. Furthermore, if such a good is processed by the importer or on its behalf, its outermost container is excepted from marking as well. Id.
The country of origin marking requirements for a "good of a NAFTA country" are determined in accordance with Annex 311 of the North American Free Trade Agreement ("NAFTA"), as implemented by section 207 of the North American Free Trade Agreement Implementation Act (Pub. L. 103 182, 107 Stat. 2057) (December 8, 1993). Section 134.1(g),
Customs Regulations (19 CFR §134.1(g)), 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 set out at Part 102, Customs Regulations (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. That 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 section 102.1(e), Customs Regulations (19 CFR §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.”
Because the 2 D cardboard ocean puzzle is made in Canada while the 3 D Titanic puzzle is made in United States, the imported good is neither wholly obtained or produced, nor produced in Canada exclusively from domestic materials as those terms are defined in section 102.1, Customs Regulations (19 CFR 102.1). Accordingly, we must determine whether the country of origin of the puzzles can be determined under section 102.11(a)(3), Customs Regulations (19 CFR 102.11(a)(3)).
Pursuant to section 102.11(a)(3), the country of origin of a good is the country in which each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20, Customs Regulations (19 CFR 102.20). Section 102.20 sets forth the specific tariff classification changes and/or other operations which are specifically required for the country of origin to be determined on the basis of operations performed on the foreign materials contained in a good.
As previously noted, it is stated that the imported merchandise is classified under subheading 9503.60.20, HTSUS. We will assume for the purposes of this ruling that this classification is correct. The applicable rule under 19 CFR 102.20 (s) section XX chapter 94 through 96 states the following:
9503.50-9503.60................A change to subheading 9503.50 through 9503.60 from any other subheading including
another subheading within that group.
Therefore, each foreign material (non-Canadian) incorporated into the imported merchandise must come from another subheading. In the instant case, the 3 D Titanic foam puzzle (the only foreign material in the article) would be classified in subheading in 9503.60, HTSUS, while the merchandise imported into the U.S. is also classified under subheading 9503.60, HTSUS. As the 3 D Titanic foam puzzle is not classifiable in a different subheading than the completed article imported into the United States, the change in tariff classification requirement under section 102.11(a)(3) of the NAFTA marking rules is not satisfied.
Since no country of origin determination can be made applying section 102.11(a), the analysis continues with section 102.11(b) which instructs us to examine the article's essential character to determine its country of origin. Section 102.11(b) provides that where the country of origin cannot be determined under section 102.11(a), and the good is not specifically described a set pursuant to the Harmonized System nor classified as a set under General Rule of Interpretation (GRI) 3, HTSUS the country of origin of the article is "the country or countries of origin of the single material that imparts the essential character of the good. . .." The packaged puzzles involved here are neither described as a set in the HTSUS nor classified as a set under GRI 3, HTSUS.
“Material” is defined in section 102.1(1) of the interim regulations as “a good that is incorporated into another good as result of production with respect to that other good, and includes parts ingredients, subassemblies and components.”
In determining the "essential character" of the puzzles, section 102.18(b)(2) of the regulations provides as follows:
For purposes of applying 102.11, only domestic
and foreign materials (including self produced
materials) that are classified in a tariff provision
from which a change in tariff classification is not
allowed in the rule for the good set out in 102.20
shall be taken into consideration in determining the
essential character of the good.
Taking into consideration only those domestic and foreign materials that are classified in a tariff provision from which a change in tariff classification is not allowed in the rule for the good under section 102.20, we note that neither the Canadian-made 2 D ocean puzzle (a domestic material) nor the 3 D Titanic puzzle (a foreign material) undergoes a change a tariff classification as a result of the processing performed in Canada. Therefore, we must consider whether one of these two materials provides the essential character to the finished good. Section 102.18(b)(2) provides:
(2) For purposes of determining which one of two or more materials described in paragraph (b)(1) of this section imparts the essential character to a good under §102.11, various factors may be examined depending upon the type of good involved. These factors include, but are not limited to the following:
(i) The nature of each material such as its bulk, quantity, weight or value; and
(ii) The role of each material in relation to the use of the good.
In this instance, we believe that the 3 D Titanic puzzle provides the essential character to the finished good. The Titanic puzzle clearly plays the major role in the use of the finished good. The 2 D ocean puzzle essentially only serves as a background on which the 3 D Titanic puzzle is displayed. In our opinion, the major inducement for a consumer to purchase the product is to obtain the unique three dimensional Titanic puzzle. This is supported by the fact that the name of the product is “Titanic 3-D Puzzle”which is prominently displayed on the packaging to promote the sale of the product. The Titanic 3 D puzzle also accounts for approximately 57 percent of the value of the finished good.
Accordingly, because the material that imparts the essential character to the good, the
3 D Titanic puzzle, is of U.S. origin, pursuant to section 102.11(b)(1), the country of origin of the entire imported good is the United States. As the marking requirements of 19 U.S.C. 1304 apply only to imported articles of foreign origin, there is no requirement that the article be marked with its origin. However, you should be aware that the Federal Trade Commission ("FTC") has jurisdiction concerning the use of the phrase "Made in the U.S.A.", or similar words denoting U.S. origin. Consequently, any inquiries regarding the use of such phrases reflecting U.S. origin should be directed to the FTC, at the following address: Federal Trade Commission, Division of Enforcement, 6th & Pennsylvania Avenue, N.W., Washington, D.C. 20508.
HOLDING:
Based on the information provided, under the NAFTA Marking Rules, the country of origin of the two puzzles is the United States. Consequently, pursuant to 19 U.S.C. 1304, the product is excepted from country of origin marking.
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