CLA-2 OT:RR:CTF:TCM H079220 TNA
Mr. Alex Romero
A.F. Romero Co., Inc.
1749 Stergios Road
Calexico, CA 92231
RE: NAFTA Eligibility and Country of Origin Marking of Lamp Ballasts from Mexico
Dear Mr. Romero:
This letter is in response to your September 21, 2009, request on behalf of Panasonic Electric Works Corp., for reconsideration of New York Ruling Letter (“NY”) N047656, dated January 21, 2009, regarding whether lamp ballasts were eligible to be marked as a good of a North American Free Trade Agreement (“NAFTA”) country and whether they were entitled to NAFTA duty preference. Because NY N047656 has been revoked by operation of law as a result of Presidential Proclamation 8405, 74 Fed. Reg. 45529, which amended the rules of origin for NAFTA, we are treating your request for reconsideration as a request for a prospective ruling under 19 C.F.R. Part 177.
FACTS:
Panasonic imports lamp ballasts, devices that limit the amount of current in an electric circuit, into the United States. The ballasts are assembled at a maquiladora in Mexicali, Mexico. They are composed of transformers, screws, chokes, compounds, capacitators, tape, spacers, bushing, labels, resistors, diodes, circuit boards, current fuses, microprocessors, resonators and wires imported from various non-NAFTA countries. Some of the cases, covers, and one type of capacitator are sourced domestically in Mexico, and two types of labels and an insulated sheet are imported from the United States.
ISSUES:
Whether ballasts assembled in Mexico are eligible to be marked as a good of Mexico when imported into the United States.
Whether Panasonic’s lamp ballasts are eligible for preferential treatment as a good of a NAFTA country.
LAW AND ANALYSIS:
NAFTA Eligibility:
General Note 12 of the HTSUS incorporates Article 401, North American Free Trade Agreement, as implemented by section 207 of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057) (December 8, 1993) and the interim amendments to the U.S. Customs and Border Protection (CBP) Regulations, published as T.D. 94-4 (59 Fed. Reg. 109, Jan 3, 1994), into the Harmonized Tariff Schedule of the United States (HTSUS). Note 12(b) provides in relevant part:
For the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as “goods originating in the territory of a NAFTA party” only if-
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ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that—
(A) 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 subdivision (r), (s) and (t) of this note or the rules set forth therein, or
(B) the goods otherwise satisfy the applicable requirements of subdivision (r), (s) and (t) where no change in tariff classification if required, and the goods satisfy all other requirements of this note[.]
Originating good status is conferred on lamp ballasts classified under subheading 8504.10, HTSUS, by GN 12(t), Chapter 85, Chapter Rule 5/4, which allows:
A change to subheading 8504.10 from any other subheading.
Therefore, in order for the ballasts to qualify for NAFTA duty preference, all of their non-originating materials must undergo a change in tariff classification. While a complete ballast is classified in subheading 8504.10, HTSUS, all of its components are classified outside of that subheading. As a result, the subject merchandise meets the tariff shift criterion of GN 12(t)/Chapter 85, Chapter Rule 5/4 and is therefore eligible for preferential treatment under NAFTA.
Marking:
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. §1304), requires 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 manner as to indicate to the ultimate purchaser the English name of the country of origin of the article. The regulations implementing the requirements and exceptions to 19 U.S.C. §1304 are set forth in Part 134, CBP Regulations (19 C.F.R. Part 134).
Section 134.1(b), CBP Regulations (19 C.F.R. §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 this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin.
Section 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. Section 134.1(g) defines a “good of a NAFTA country” as an article for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules.
Part 102 of the CBP Regulations sets forth the NAFTA Marking Rules. Section 102.11 sets forth the required hierarchy for determining country of origin for marking purposes:
The following rules shall apply for purposes of determining the country of origin of imported goods other than textile and apparel products covered by § 102.21.
(a) 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 § 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
(b) Except for a good that is specifically described in the Harmonized System as a set, or is classified as a set pursuant to General Rule of Interpretation 3, where the country of origin cannot be determined under paragraph (a) of this section:
(1) The country of origin of the good is the country or countries of origin of the single material that imparts the essential character to the good, or (2) If the material that imparts the essential character to the good is fungible, has been commingled, and direct physical identification of the origin of the commingled material is not practical, the country or countries of origin may be determined on the basis of an inventory management method provided under the appendix to part 181 of this chapter.
(c) 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. (d) Where the country of origin of a good cannot be determined under paragraph (a), (b) or (c) of this section, the country of origin of the good shall be determined as follows:
(1) If the good was produced only as a result of minor processing, the country of origin of the good is the country or countries of origin of each material that merits equal consideration for determining the essential character of the good; (2) If the good was produced by simple assembly and the assembled parts that merit equal consideration for determining the essential character of the good are from the same country, the country of origin of the good is the country of origin of those parts; or
(3) If the country of origin of the good cannot be determined under paragraph (d)(1) or (d)(2) of this section, the country of origin of the good is the last country in which the good underwent production.
The imported lamp ballasts are neither “wholly obtained or produced,” (19 C.F.R. §102.11(a)(1)) nor “produced exclusively from domestic [Mexican] materials” (19 C.F.R. § 102.11(a)(2)). The §102.20 rule for subheading 8504.10, HTSUS, requires a “change to subheading 8504.10 through 8504.50 from any
other subheading outside that group.” Some of the subject merchandise’s components fall within the listed subheadings (e.g., transformers are classified in subheading 8504.31, HTSUS) and do not undergo the tariff shift required by 19 C.F.R. §102.20. As a result, the ballasts cannot be marked as goods of Mexico by application of 19 C.F.R. §102.11(a)(3).
The ballasts are made of several components with no single component imparting the merchandise’s essential character. Accordingly, we find that the ballasts cannot be marked as goods of Mexico using 19 C.F.R. §102.11(b). The same is true of 19 C.F.R. §102.11(c) because the ballasts are not a set or mixture, or classified as a set, mixture or composite good pursuant to GRI 3.
In addition, the production of the good in Mexico involved the combination of 114 components of different origins to make a new product. This process was more than a “minor processing” operation or a “simple assembly.” See 19 C.F.R. §102.1(m) and (o). Therefore, the ballast cannot be marked as goods of Mexico using section 102.11(d)(1) or (2).
Under paragraph 102.11(d)(3), the ballasts can be marked as originating in Mexico because it was the last country in which they underwent production. Specifically, the ballasts were assembled or manufactured in Mexico under a process that constituted more than simple assembly. See 19 C.F.R. 102.1(n): “Production.”
HOLDING:
The lamp ballasts assembled in Mexico from components of both NAFTA and non-NAFTA countries are eligible for preferential treatment as a good of a NAFTA country (i.e., Mexico) pursuant to GN 12(t)/Chapter 85, Chapter Rule 5/4.
Under 19 C.F.R. Part 102 (19 C.F.R. §102.11(d)(3)), the ballasts qualify to be marked as goods of a NAFTA country, i.e., Mexico.
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 CBP officer handling the transaction.
Sincerely,
Gail Hamill, Chief
Tariff Classification and Marking Branch