OT:RR:CTF:VS H341684 JH
Jae Chung
President
QS Customs Brokers, Inc.
2020 Piper Ranch Rd,
San Diego, CA 92154-0000
RE: Classification; Country of Origin Marking; USMCA; Cargo Container
Dear Mr. Chung:
This is in response to your August 19, 2024 ruling request, filed on behalf of
Hyundai Translead San Diego (or “importer”), regarding the classification, eligibility for
preferential tariff treatment under the United States-Mexico-Canada Agreement
(“USMCA”), and country of origin marking of the Hyundai cargo container.
FACTS:
The importer produces a cargo container for use with heavy trucks. The cargo
container is stated to be sold as an aftermarket part for heavy trucks. The cargo container
is assembled in Mexico with the following parts that consist of USMCA originating and
non-USMCA originating materials:
• Front Wall Assembly
• Top Rail
• Bottom Rail
• Rear Frame Assembly and Installation
• Side Wall Assemblies
• Floor Assembly
• Roof Assembly & Installation
• Rear Door Installation
• Electrical Harness
All of the non-USMCA originating materials used in the production of the parts
are classifiable outside of heading 8707. The cargo container is built in Mexico using a
seven-step process:
1. Side wall assemblies are installed onto the floor assembly for the container;
2. the front wall assembly is installed onto the floor assembly and onto the side
walls with the top rail’s connecters;
3. the rear frame assembly is connected onto the floor assembly, top rail, and
bottom rail, and prepared for future installations;
4. the roof assembly is installed and secured with rivets;
5. the electrical harness is installed, connected, and routed to necessary electrical
components of the assembly;
6. the rear door assembly is installed; and
7. the cargo container is labelled for compliance, and inspection.
Once the cargo container is assembled, additional hardware (also originating from
USMCA and non-USMCA countries) consisting of washers, nuts, bolt brackets, mud flap
bracket/retainers, mud flaps, HH bolts, H lock nuts, washer fenders, space fillers, and the
rear bumper assembly are sent along with the cargo container to be used for the truck
body assembly. The cargo container and the additional hardware are sent to authorized
dealers in the United States (“U.S.”) (California, Texas, Michigan, Georgia, Utah,
Illinois, Pennsylvania) who will conduct the process of assembling the cargo container
onto the truck body assembly for heavy trucks.
ISSUES:
What is the tariff classification for the cargo container?
What is the country of origin for marking purposes of the cargo container?
Whether the cargo container is eligible for USCMA preferential tariff treatment?
LAW AND ANALYSIS:
Classification
Classification under the HTSUS is made in accordance with the General Rules of
Interpretation (“GRIs”). GRI 1 provides that classification shall be determined first
according to the terms of the headings of the tariff schedule and any relative section or
chapter notes. In the event that the goods cannot be classified solely on the basis of GRI
1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2
through 6 may be applied in order. Pursuant to GRI 6, classification at the subheading
level uses the same rules, mutatis mutandis, as classification at the heading level.
The Explanatory Notes of the Harmonized Commodity Description Coding
System (“ENs”) constitute the official interpretation of the Harmonized System. While
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not legally binding nor dispositive, the ENs provide a commentary on the scope of each
heading of the Harmonized System and are generally indicative of the proper
interpretation of these headings. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23,
1989).
EN 87.07 states, in relevant parts that “[t]his heading covers bodies (including
cabs) for the motor vehicles of headings 87.01 to 87.05.” The cargo container is eo
nomine classified under heading 8707, HTSUS, which provides for “[b]odies (including
cabs), for the motor vehicles of headings 8701 to 8705.” Given the cargo container will
be used in vehicles for the transport of goods of heading 8704, HTSUS, the cargo
container is classifiable under subheading 8707.90.50, HTSUS, which provides, in
relevant part, for “other bodies for vehicles of heading 8704.”
Country of Origin Marking
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 cargo
container) imported into the United States shall be marked in a conspicuous place as
legibly, indelibly and permanently as the nature of the article (or its cargo container) will
permit, in such a manner as to indicate to the ultimate purchaser in the United States the
English name of the country of origin of the article. Part 134 of the U.S. Customs and
Border Protection (“CBP”) Regulations (19 C.F.R. Part 134) implements the country of
origin marking requirements and exceptions of 19 U.S.C. § 1304.
To provide a more seamless transition to the USMCA for Canadian and Mexican
traders, at this time, CBP continues to utilize the marking rules in 19 C.F.R. Part 102,
with the exception of 19 C.F.R. § 102.19, for purposes of country of origin marking with
respect to goods of those countries. Title 19, C.F.R. § 102.11(a) provides 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 § 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 19 C.F.R. § 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.” Here, sections 102.11(a)(1) and
102.11(a)(2) do not apply because the product will neither be wholly obtained or
produced nor produced exclusively from “domestic” (Mexican, in this case)
materials. Accordingly, each non-Mexican material must meet the applicable
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change in tariff classification set out in Section 102.20 in order for the product to
qualify to be marked as a product of Mexico.
The relevant tariff shift requirement in Part 102.20 for the cargo container requires:
8707-8708 A change to heading 8707 from any other heading, except from
subheading 8708.29 when that change is pursuant to General Rule
of Interpretation 2(a)
Based on the information from the diagrams in your submission, all of the foreign
materials of the cargo container are classified outside of heading 8707. Therefore, the
tariff shift requirement is met. As such, the country of origin of the cargo container for
marking purposes will be Mexico.
Eligibility for Preferential Tariff Treatment under USCMA
The United States-Mexico-Canada Agreement (“USMCA”) was signed by the
Governments of the United States, Mexico, and Canada on November 30, 2018. The
USMCA was approved by the U.S. Congress with the enactment on January 29, 2020, of
the USMCA Implementation Act, Pub. L. 116-113, 134 Stat. 11, 14 (19 U.S.C. §
4511(a)). GN 11 of the HTSUS implements the USMCA. GN 11(a) provides:
(i) Goods that originate in the territory of Mexico, Canada or the United
States (hereinafter referred to as “USMCA country” or “USMCA
countries” as further defined in subdivision (l)(xxiv) of this note) under
the terms of subdivision (b) of this note and regulations issued by the
Secretary of the Treasury (including Uniform Regulations provided for in
the USMCA), and goods enumerated in subdivision (p) of this note, when
such goods are imported into the customs territory of the United States and
are entered under a subheading for which a rate of duty appears in the
“Special” subcolumn, followed by the symbol “S” in parentheses, are
eligible for such duty rate, in accordance with section 202 of the United
States-Mexico-Canada Agreement Implementation Act; and
(ii) Goods that originate in the territory of a USMCA country under the terms
of subdivision (b) of this note and regulations issued by the Secretary of
the Treasury, when such goods are imported into the customs territory of
the United States and are entered under a subheading for which a rate of
duty appears in the “Special” subcolumn, followed by the symbol “S+” in
parentheses, or under a subheading whose article description provides for
originating goods of one or more USMCA countries, as the case may be,
are eligible for such duty rate, in accordance with section 202 of the
United States-Mexico-Canada Agreement Implementation Act.
GN 11(b) sets forth the criteria for determining whether a good is an originating
good for purposes of the USMCA. GN 11(b) states:
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For the purposes of this note, a good imported into the customs territory of
the United States from the territory of a USMCA country, as defined in
subdivision (l) of this note, is eligible for the preferential tariff treatment
provided for in the applicable subheading and quantitative limitations set
forth in the tariff schedule as a "good originating in the territory of a
USMCA country" only if—
(i) the good is a good wholly obtained or produced entirely in the territory of
one or more USMCA countries;
(ii) the good is a good produced entirely in the territory of one or more
USMCA countries, exclusively from originating materials;
(iii) the good is a good produced entirely in the territory of one or more
USMCA countries using nonoriginating materials, if the good satisfies all
applicable requirements set forth in this note (including the provisions of
subdivision (o)); or …
Here, the merchandise will be produced in Mexico using non-originating
materials. Therefore, the merchandise will not qualify as originating pursuant to GN
11(b)(i) or (ii). We must therefore consider whether the merchandise qualifies as
originating pursuant to GN 11(b)(iii).
As noted above, the classification of the cargo container at issue that are intended
to be used for heavy trucks falls within subheading 8707.90.50, HTSUS.
GN 11(o)/87.18, provides the following product-specific rule of origin for these
goods:
(A) A change to heading 8707 from any other chapter, or
(B) A change to heading 8707 from heading 8708, whether or not there is also a
change from any other chapter, provided there is a regional value content of
not less than 70 percent under the net cost method
Since none of the material used in the production of the cargo container are
classified in heading 8707, the conditions for A are met, and we look to heading rule
8707 which states:
The underscoring of the designations in subdivisions 14 through 16 pertain
to goods provided for in heading 8706. If the good is for use in a
passenger vehicle or light truck, Articles 3.2 and 3.3 of the automotive
appendix apply. If the good is for use in a heavy truck, Article 4.2 of the
automotive appendix applies. If the good is for use in a vehicle specified
in paragraphs 1 and 2 of Article 10, Articles 10.1 and 10.2 of the
automotive appendix apply.
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Here, the cargo container is intended to be used with heavy trucks. As a result,
Article 4.2 of the automotive appendix applies, which states:
Notwithstanding Article 2 (Product-Specific Rules of Origin for Vehicles)
and the Product-Specific Rules of Origin in Annex 4-B, each Party shall
provide that the regional value content requirement for a part listed in
Table D of this Appendix that is for use in a heavy truck is:
(A) 60 percent under the net cost method or 70 percent under the
transaction value method, if the corresponding rule includes a
transaction value method, beginning on January 1, 2020, or the date of
entry into force of this Agreement, whichever is later;
(B) 64 percent under the net cost method or 74 percent under the
transaction value method, if the corresponding rule includes a
transaction value method, beginning on January 1, 2024, or four years
after the date of entry into force of this Agreement, whichever is later;
and
(C) 70 percent under the net cost method or 80 percent under the transaction
value method, if the corresponding rule includes a transaction value
method, beginning on January 1, 2027, or seven years after the date of
entry into force of this Agreement, whichever is later, and thereafter.
However, in addition to the provisions of the automotive appendix and GN 11, as
indicated in GN 11(a)(i), the trilaterally agreed USMCA Uniform Regulations in Appendix A
of 19 C.F.R. Part 182 provide further guidance on the interpretation and application of the
USMCA rules of origin. The Note to Table D in the Uniform Regulations clarifies that:
The Regional Value Content requirements set out in sections 13 or 15 or
Schedule I (PSRO Annex) apply to a good for use as “original equipment” in
the production of a heavy truck. For an “aftermarket part”, the applicable
product-specific rule of origin set out in section 13 or Schedule I (PSRO
Annex) is the alternative that includes the phrase “for any other good.”
Accordingly, the Uniform Regulations draw a distinction between aftermarket parts
and automotive parts that are used as original equipment in the production of a vehicle. See
Section 12(1) (“aftermarket part means a good that is not for use as original equipment in the
production of passenger vehicles, light trucks or heavy trucks as defined in these
Regulations.”). Here, as stated above, the cargo containers will be used as aftermarket parts.
In accordance with the Note to Table D, since the merchandise is used as aftermarket
parts, we look to the applicable product-specific rule of origin which is the rule in section 13
or Schedule I (PSRO Annex) of the Uniform Regulations instead of the RVC. Schedule I
provides that “[t]his schedule is deemed to be the contents of Sections A, B and C of Annex
4-B of the Agreement, as implemented in General Note 11 of the Harmonized Tariff
Schedule of the United States…” Here, section 13 of the Uniform Regulations does not
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contain a product-specific rule of origin for goods of 8707.90.50, HTSUS. Therefore, the
rule applicable to the merchandise when used as aftermarket parts is contained in GN
11(o)/87.18, which requires “a change to heading 8707 from any other chapter.”
You have provided the information necessary to determine whether the tariff shift
rule in GN 11(o)/87.18 has been satisfied—namely, a complete bill of materials listing the
tariff classification and originating status of each material used in production. As noted
above, this rule requires “a change to heading 8707 from any other chapter.” Based on the
information provided, no non-originating materials are classified in the same heading.
Accordingly, provided that all other requirements are met, the cargo container will be eligible
for preferential tariff treatment under the USMCA when used as aftermarket parts.
HOLDING:
By application of GRIs 1 and 6, the cargo container will be classified under
subheading 8707.90.50, HTSUS, which provides for “other bodies for vehicles of
heading 8704.” The general, column one rate of duty is four percent. Also, the cargo
container may be considered a product of Mexico for purposes of marking. Lastly, the
goods at issue will also be deemed USMCA originating pursuant to GN 11(o).
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is
issued on the assumption that all of the information furnished in connection with the
ruling request and incorporated in the ruling letter, either directly, by reference, or by
implication, is accurate and complete in every material respect. The application of a
ruling letter by a CBP field office to the transaction to which it is purported to relate is
subject to the verification of the facts incorporated in the ruling letter, a comparison of
the transaction described therein to the actual transaction, and the satisfaction of any
conditions on which the ruling was based.”
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,
Monika R. Brenner, Chief
Valuation and Special Programs Branch
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