CLA-2-84:OT:RR:NC:1:405
Ms. Toni Proietto
Schenker of Canada Limited
7540 Jane Street
Vaughan, ON, Canada L4K 0A6
Dear Ms. Proietto:
RE: The tariff classification, country of origin, and status under the North American Free Trade Agreement (NAFTA) of air conditioner hoses and parts from Canada. Article 509
Dear Ms. Proietto:
In your letter dated September 20, 2013, you requested a ruling on behalf of Mobile Climate Control, Inc., on the classification, country of origin, and NAFTA status of air conditioner hose assemblies imported from Canada.
The items under consideration are three different air conditioner refrigerant hose assemblies. Referred to as Part Numbers 27-2997, 27-3611 and 27-3948, these assemblies will be used in the HVAC system of automobiles. You state that these items are assembled in Canada from both U.S. and foreign components.
Three samples were provided with your letter and are being returned. Part Number 27-2997 is identified as Refrigerant Hose Assembly #6. The product is described as consisting of a neoprene rubber barrier hose reinforced with textile braid, with a nitrile based friction layer to bond to the polyester braid and a chloro-butyl cover compound. It includes rubber O-rings, steel fittings and plastic caps. The hose is covered with plastic spiral wrap. The rubber barrier hose, rubber O-rings, steel fittings and plastic caps are of U.S. origin. The plastic hose wrap is of Australian origin.
Part Number 27-3611 is described as Refrigerant Hose Assembly #6 with Pressure Switch Assembly. It consists of an A/C barrier hose assembly that has been permanently combined with a pressure switch assembly. The barrier hose, rubber O-rings, steel straight fittings and plastic caps are of U.S. origin. The pressure switch assembly is of Chinese origin.
Part Number 27-3948 is described as Tubeline Hose Assembly #10. It consists of an A/C barrier hose assembly that has been permanently combined with a long bent steel tube line. The barrier hose, rubber O-rings, steel straight fittings, bent steel tube line and plastic caps are of U.S origin. The plastic hose wrap is of Australian origin. The steel tube line is bent to its specific configuration prior to its importation into Canada.
You request classification of all three air conditioner assemblies in subheading 8415.90.8045, Harmonized Tariff Schedule of the United States (HTSUS), as parts of automotive air conditioners. Tariff classification under the HTSUS is governed by the principles set forth in the General Rules of Interpretation and, in the absence of special language or context which otherwise requires, by the Additional U.S. Rules of Interpretation. The General Rules of Interpretation and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law for all purposes. Additional U.S. Rule of Interpretation 1(c) states that in the absence of special language or context which otherwise requires, a provision for parts of an article covers products solely or principally used as a part of such articles but a provision for “parts” or “parts and accessories” shall not prevail over a specific provision for such part or accessory. The hose components in Part 27-3611 and Part 27-3948 have been combined with additional components that contribute significantly to the weight, value, bulk and function of the assemblies. The processing in Canada changes the nature of the barrier hose in both Part 27-3611 and Part 27-3948 to the extent that it loses its identity as a hose, and in both cases the resulting composite becomes a part of the HVAC system. In contrast, Part 27-2997 has merely been modified from a hose without fittings to a hose with fittings and with an additional reinforcing layer of the plastic spiral wrap material. Since there is a specific tariff provision for rubber hoses with fittings and reinforcement, classification of Part 27-2997 falls in the specific provision for rubber hoses with fittings rather than in the more general provision for air conditioner parts, in accordance with Additional U.S. Rule of Interpretation 1(c).
The applicable subheading for Part 27-3611 and Part 27-3948 will be 8415.90.8045, HTSUS, which provides for air conditioning machines, comprising a motor-driven fan and elements for changing the temperature and humidity, including those machines in which the humidity cannot be separately regulated; parts thereof, parts, other, other, of automotive air conditioners. The general rate of duty will be 1.4 percent ad valorem.
The applicable subheading for Part 27-2997 will be 4009.42.0050, HTSUS, which provides for tubes, pipes and hoses, of vulcanized rubber other than hard rubber, with or without their fittings (for example, joints, elbows, flanges): reinforced or otherwise combined with other materials: with fittings, other. The general rate of duty will be 2.5 percent ad valorem.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at http://www.usitc.gov/tata/hts/.
General Note 12(b), HTSUS, sets forth the criteria for determining whether a good is originating under the NAFTA. Since the subject assemblies have been transformed in the territory of Canada, we look towards Note 12(b)(ii)(A), which states that 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 if they have been transformed in the territory of Canada, Mexico and/or the United States so that, except as provided in subdivision (f) of the 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 the note or the rules set forth therein.
General Note 12(t)/84.35 requires a change to subheading 8415.90 from any other heading. In accordance with this note, we find that the non-originating pressure switch assembly in Part 27-3611 and the non-originating hose wrap in Part 27-3948 both undergo the required tariff shift.
General Note 12(t)/40.3G (A) requires a change to tubes, pipes or hoses of subheading 4009.42, of a kind for use in a motor vehicle of tariff items 8702.10.01, 8702.10.02 or 8702.90.01 through 8702.90.03, subheadings 8703.21 through 8703.90, 8704.21 or 8704.31 or heading 8711 from any other heading, except from headings 4010 through 4017. The non-originating plastic hose wrap from Australia undergoes the required tariff shift.
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.
Section 134.1(j), Customs Regulations (19 CFR 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), 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 United States as determined under the NAFTA Marking Rules, set forth at 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. This 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.
Section 102.1(e), Customs Regulations (19 CFR 102.1(e)), defines "foreign material" 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 each of these three styles is processed in Canada of U.S. and Australian or U.S. and Chinese material, the assemblies are neither wholly obtained or produced, nor produced exclusively from domestic materials. Accordingly, neither 19 CFR 102.11(a)(1) or 102.11(a)(2) may be used to determine the origin of the finished articles, and analysis must continue to 19 CFR 102.11(a)(3).
Pursuant to 19 CFR 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 as set forth in 19 CFR 102.20, and satisfies any other applicable requirements of that section.
For Part 27-3611 and Part 27-3948, which are classified in subheading 8415.90.8045, the change in tariff classification described in 102.11(a)(3) must be in accordance with section 102.20(o), Section XVI: Chapters 84 through 85, subheading 8415.90, which requires a change to subheading 8415.90 from any other subheading, except from heading 7411, 7608, 8414, 8501, or 8535 through 8537 when resulting from a simple assembly. Since the pressure switch assembly in Part 27-3611 and the bent tube in Part 27-3948 do not make these required shifts, the country of origin of the good may not be determined in accordance with 102.11(a)(3). Since the country of origin of these parts cannot be determined by the rules of 102.11(b) or 102.11(c), country of origin must be determined in accordance with 102.11(d)(3), as the last country in which the good underwent production.
Since Canada is the last country in which Part 27-3611 and Part 27-3948 underwent production, Canada is considered to be the country of origin for these assemblies for both duty and marking purposes.
Based on the facts above, Part 27-3611 and Part 27-3948 are entitled to the NAFTA "CA" special duty rate of "Free" upon compliance with all applicable laws, regulations and agreements.
For Part 27-2997, which is classified in subheading 4009.32, the change in tariff classification described in 102.11(a)(3) must be in accordance with section 102.20(g), Section VII: Chapters 39 through 40, heading 4006-4010, which requires a change to heading 4006 through 4010 from any other heading, including another heading within that group. For Part 27-2997, there is a change in tariff classification for all of the components except the U.S. origin barrier hose, so the country of origin of the good may not be determined in accordance with this provision. Because 19 CFR 102.11(a) (incorporating section 102.20), is not determinative of origin, the next step is section 102.11(b)(1), Customs Regulations, which states, in part, that except for a good that is specifically described in the Harmonized Tariff Schedule as a set, or is classified as a set pursuant to General Rule of Interpretation 2, where the country of origin cannot be determined under paragraph (a), the country of origin of the good is the country of origin of the single material that imparts the essential character of the good.
The U.S. origin rubber hose is the single material that imparts the essential character to the finished good pursuant to section 102.11(b)(1). Accordingly, for country of origin marking purposes, the country of origin of the hose, Part 27-2997, is the United States. Therefore, Part 27-2997 is not subject to the marking requirements of 19 U.S.C. 1304.
However, the NAFTA Preference Override set forth in 19 CFR 102.19 is applicable to the subject merchandise. Specifically, 19 CFR 102.19(b) states that if the country of origin of a good which is originating is determined to be the United States and that good has been exported from, and returned to, the United States after having been advanced in value or improved in condition in another NAFTA country, the country of origin of such good for Customs duty purposes is the last NAFTA country in which that good was advanced in value or improved in condition.
Because Part 27-2997 is being returned to the U.S. after having been advanced in value or improved in condition in Canada, the country of origin of the hose, Part 27-2997, for Customs duty purposes is Canada, pursuant to 19 CFR 102.19(b).
Based on the facts above, Part 27-2997 is entitled to the NAFTA "CA" special duty rate of "Free" upon compliance with all applicable laws, regulations and agreements.
This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 C.F.R. 181).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding Part 27-2997, contact National Import Specialist Joan Mazzola at 646-733-3023. If you have any questions regarding Part 27-3611 or Part 27-3948, contact National Import Specialist J. Sheridan at 646-733-3012.
Sincerely,
Gwenn Klein Kirschner
Acting Director
National Commodity Specialist Division