CLA-2-82:OT:RR:NC:N1:118
Mr. John Shuey
Cyclone Diamond Products Ltd.
7973 Enterprise St.
Burnaby, British Columbia V5A 1V5
CANADA
RE: The tariff classification, status and country of origin under the North American Free Trade Agreement (NAFTA) of Diamond Saw Blades
Dear Mr. Shuey:
In your letter, dated July 20, 2017, you requested a country of origin and trade program status ruling. The ruling was requested on diamond saw blades. Samples and product information were submitted for our review.
In your submission, you describe a scenario wherein U.S. sourced steel saw blade cores are imported into Canada. The saw blade cores, also referred to as steel blanks, range from 12” to 60” in diameter and .125” to .5” in thickness. In Canada, segments will be attached to the peripheral of the steel cores through a laser welding process. The diamond saw blade segments, which consist of synthetic diamonds agglomerated with metal, are sourced from the United Kingdom, China, South Korea and Israel.
While in Canada, the steel cores are cleaned using a heavy duty industrial degreaser. The bottom of the segments are ground to ensure a clean and flush area for the welding process. The steel cores and segments are then loaded into a laser welding machine. After the welding process is completed, a torque test is performed on each segment to ensure proper weld and strength. The finished saw blades are then loaded into a dressing machine, which further grinds the segments and sets the direction of the blade for optimum cutting. The saw blades are then cleaned, polished and sharpened. A clear-coat of acrylic lacquer paint is also applied to prevent rust and give the blade a finished look.
The applicable subheading for the finished diamond saw blades will be 8202.39.0010, Harmonized Tariff Schedule of the United States (HTSUS), which provides for handsaws, and metal parts thereof; blades for saws of all kinds (including slitting, slotting or toothless saw blades), and base metal parts thereof: circular saw blades (including slitting or slotting saw blades), and parts thereof: other, including parts: with diamond working parts. The general rate of duty will be free.
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 https://hts.usitc.gov/current.
Because manufacturing of the diamond saw blades is completed in Canada, we consider North American Free Trade Agreement (NAFTA) rules.
General Note 12, HTSUS, incorporates Article 401 of the NAFTA into the HTSUS. General Note 12(a)(i) provides, in pertinent part:
(a) Goods originating in the territory of a party to the North American Free Trade Agreement (NAFTA) are subject to duty as provided herein. For the purposes of this note--
(i) Goods that originate in the territory of a NAFTA party under the terms of subdivision (b) of this note and that qualify to be marked as goods of Canada under the terms of the marking rules set forth in regulations issued by the Secretary of the Treasury (without regard to whether the goods are marked), and goods enumerated in subdivision (u) 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 "CA" in parentheses, are eligible for such duty rate, in accordance with section 201 of the North American Free Trade Agreement Implementation Act.
General Note 12(b), HTSUS, sets forth the criteria for determining whether a good is originating under the NAFTA. General Note 12(b), HTSUS, (19 U.S.C. § 1202) states, in pertinent part, that:
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—
(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 subdivisions (r), (s) and (t) of this note or the rules set forth therein, or
(B) the goods otherwise satisfy the applicable requirements of subdivisions (r), (s) and (t) where no change in tariff classification
is required, and the goods satisfy all other requirements of this note;
Under Section A above, the non-originating materials used in the production of such goods must undergo a change in tariff classification. Subdivision (t) states that, in order to be subject to NAFTA, the manufacturing in a NAFTA country must result in a change as follows: A change to subheadings 8202.39 through 8202.99 from any other chapter. Because the diamond segments imported into Canada are classifiable under heading 6804, HTSUS, and because the final diamond saw blades are classified in heading 8202, HTSUS, this rule is met. Therefore, the diamond saw blades qualify for NAFTA preferential treatment.
Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Pursuant to 19 CFR Section 134.1(b), the country of origin is the country of manufacture, production or growth of any article of foreign origin entering the U.S. However, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin.
Part 102 of the regulations sets forth the NAFTA Marking Rules. Section 102.11 of the regulations sets forth the required hierarchy for determining country of origin for marking purposes. Section 102.11(a) 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 as set out in section 102.20 and satisfies any other applicable requirements of that section.
Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the diamond saw blades. Section 102.20 for 8201.10-8202.40 requires a change to subheading 8201.10 through 8202.40 from any other subheading, including another subheading within that group. Since the diamond saw blades do not undergo the appropriate tariff shift, section 102.11(a)(3) does not apply.
Section 102.11(b) states that except for a good that is specifically described in the Harmonized System as a set, or classified as a set pursuant to General Rule of Interpretation 3, where the country of origin cannot be determined under paragraph (a) of section 102.11, then 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. This section does not apply to the diamond saw blades.
Section 102.19 states that except in the case of a good of paragraph (b), if a good which is originating within the meaning of 181.1(q) of this chapter is not determined under section 102.11(a) or (b) to be a good of a single NAFTA country, the country of origin of the good is the last NAFTA country in which the good underwent processing other than minor processing. Therefore, under Section 102.19, the NAFTA Preference Override, the country of origin of the diamond saw blades is Canada for both duty and marking purposes.
With regard to country of origin marking of the diamond saw blades, 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.
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 the ruling, contact National Import Specialist Anthony E. Grossi at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division