CLA-2 CO:R:C:M 955989 MBR
District Director
U.S. Customs Service
111 West Huron Street
Buffalo, New York 14202
RE: Protest 0901-93-100562; Northern Telecom, Inc.; Telephone
Sets; United States - Canada Free Trade Agreement; CFTA; HQs
000413 and 000298
Dear District Director:
This is our response to Protest 0901-93-100562, regarding the
manufacturing and importation of telephone sets under the U.S. -
Canada Free Trade Agreement ("CFTA"). The subject merchandise was
entered in multiple entries between January 3, 1989, and March 1,
1989, and the entries were liquidated between December 24, 1992,
and February 19, 1993. The protest was timely filed on March 11,
1992.
FACTS:
The protestant, Northern Telecom, Inc., manufactures telephone
sets which consist of a console, a handset, a line cord, a handset
cord, and in some models, a transformer. The console (selector or
base) is manufactured in Canada. Some of the handsets are
manufactured in Canada, while others are manufactured in China.
The line cord, handset cord and transformer are all imported from
third countries. These goods are packaged together in Canada to
comprise a complete telephone set, and then are imported into the
United States.
ISSUE:
Are the instant Telephone Sets eligible for CFTA preferential
duty status?
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LAW AND ANALYSIS:
In HQ 000413, issued to your office on June 3, 1994, we
addressed this issue in detail, regarding the same importer and
fact pattern. See also the attached copy of HQ 000298, dated June
3, 1994, for a similar ruling.
In HQ 000413, we held that the telephone sets satisfy the CFTA
rule that all the non-originating materials change classification
as required by the specific rules in General Note
3(c)(vii)(R)(16)(bb). We also held that although the packaging or
combining of the cords, transformers, and, in some cases, the
handsets with the consoles is, when taken by itself, a "simple"
packaging or combining process, it must be considered in connection
with the other processing performed on the goods. In this case,
the telephone sets have been subject to other manufacturing
processes in Canada. Each console, which is a highly significant
component of the complete article, was produced in Canada by
substantial processing other than "simple packaging or combining"
and, therefore, is sufficient to make the prohibition in General
Note 3(c)(vii)(C)(1) inapplicable to the facts in issue.
HOLDING:
The Northern Telecom, Inc., telephone sets, produced from
consoles which are manufactured in Canada and which are
subsequently combined with non-originating handsets, line cords,
handset cords, and, in some cases, transformers, satisfy the change
in tariff classification requirement set out in General Note
3(c)(vii)(B)(2) of the 1993 Harmonized Tariff Schedule of the
United States ("HTSUS"), and are eligible to qualify as originating
goods under the CFTA.
For the reasons stated above, this protest should be allowed
in full. In accordance with Section 3A(11)(b) of Customs Directive
099 3550-065, dated August 4, 1993, Subject: Revised Protest
Directive, this decision, together with the Customs Form 19, should
be mailed by your office to the protestant no later than 60 days
from the date of this letter. Any reliquidation of the entry in
accordance with this decision must be accomplished prior to the
mailing of this decision. Sixty days from the date of this
decision the Office of Regulations and Rulings will take steps to
make this decision available to Customs personnel via the Customs
Rulings Module in ACS and the public via the Diskette Subscription
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Service, Lexis, Freedom of Information Act and other public access
channels.
Sincerely,
John Durant, Director
Commercial Rulings Division