CLA-2-83:OT:RR:NC:1:113
Mr. John Welch
Eaton Corporation
Cooper Crouse-Hinds Division
1201 Wolf Street
Syracuse, NY 13208
RE: The tariff classification, status and country of origin marking under the North American Free Trade Agreement (NAFTA), of braided hose with couplings from Mexico; Article 509
Dear Mr. Welch:
In your letter dated December 18, 2017, on behalf of Cooper Crouse-Hinds, you requested a ruling on the tariff classification, NAFTA eligibility and country of origin marking of braided hose with couplings. A sample, photographs, technical drawings, material specification sheets and product information were submitted for our review.
The subject articles are identified as insulated braided hose with couplings. You stated in your letter that “We purchase Material #1650200 description: H12-3RAN COUPLING SIZE which includes reinforced copper wire mesh and the flexible corrugated pipe. This material is U.S. country of origin.” The function of the reinforced copper wire mesh is as a cover for the flexible corrugated pipe and its purpose is to cover the pipe to prevent any leakage. All of the materials that comprise the couplings are brass. The function of the coupling is to join with the other fittings using the threads. It is designed for hazardous areas where a flexible member is required in a conduit system to accomplish difficult bends, or to allow for movement or vibration of connected equipment or units.
You indicated that the braided hose and couplings of U.S. origin are sent to Mexico for the couplings to be assembled on the hose. Manufacturing processes are performed on the braided hose and couplings in Mexico to arrive at the finished product. You stated that the “complete process of the flexible tube include cutting brass braided mesh in the length required, cutting the inner in the correct length, welding both couples with braided mesh, hydrostatic test, and identifying and packaging.” Upon completion, the finished products are sent back to the U.S.
The intended use of the completed article is as a flexible electric coupling. It is used in hazardous areas where a flexible electric coupling is needed in a conduit system to allow for movement or vibration of connected equipment or units. It is designed to be used in a variety of applications, but mainly in electrical conduit systems.
In your submission, you proposed that the finished products (braided hose assembled with couplings) be classified in subheading 8307.10.3000 or 8307.90.3000, Harmonized Tariff Schedule of the United States (HTSUS), depending on the material. The ½” to 1”assembled product has a bronze braided covering (8307.90) and a flexible brass inner core. The 2½” to 4” product has a stainless steel braid (8307.10). You noted that the coupling material is also classified in subheading 8307.10 or 8307.90, HTSUS, depending on the material/size of the coupling order.
The applicable subheading for the flexible stainless steel tubing will be 8307.10.3000, HTSUS, which provides for flexible tubing of base metal, with or without fittings: of iron or steel: with fittings. The rate of duty will be 3.8 percent ad valorem.
The applicable subheading for the flexible copper tubing will be 8307.90.3000, HTSUS, which provides for flexible tubing of base metal, with or without fittings: of other base metal: with fittings. The rate of duty will be 3.8 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 https://hts.usitc.gov/current.
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--
(i) they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; or
(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; or
(iii) they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials; or
(iv) they are produced entirely in the territory of Canada, Mexico and/or the United States but one or more of the nonoriginating materials falling under provisions for “parts” and used in the production of such goods does not undergo a change in tariff classification because--
(A) the goods were imported into the territory of Canada, Mexico and/or the United States in unassembled or disassembled form but were classified as assembled goods pursuant to general rule of interpretation 2(a), or
(B) the tariff headings for such goods provide for and specifically describe both the goods themselves and their parts and is not further divided into subheadings, or the subheadings for such goods provide for and specifically describe both the goods themselves and their parts,
provided that such goods do not fall under chapters 61 through 63, inclusive, of the tariff schedule, and provided further that the regional value content of such goods, determined in accordance with subdivision (c) of this note, is not less than 60 percent where the transaction value method is used, or is not less than 50 percent where the net cost method is used, and such goods satisfy all other applicable provisions of this note.
As mentioned above, the braided hose with the couplings assembled on the hose is classified under subheading 8307.10.3000 or 8307.90.3000, HTSUS, depending on the material. With respect to General Note 12(b)(ii)(A), the applicable tariff shift rule under General Note 12(t), Chapter 83/6 states that a change to headings 8306 through 8307 from any other heading, including another heading within that group. In your submission you stated “It is my belief that the assembly of the material should be coded as 8307.10.3000 and 8307.90.3000 depending on the size. ½” to 1” have bronze braided covering (8307.90) and flexible brass inner core; 2½” to 4” have a Type 304 stainless steel braid (8307.10). Since the coupling Material…is also coded as 8307.10 and 8307.90 (depending on the material/size of the coupling orders) we are unable to claim NAFTA on the material when it is brought back to the United States per tariff shift rules. The processing and assembly on the material is done in our Mexico plant but there is no tariff shift.” Based on the information you provided, our office agrees that the braided hose and couplings do not undergo a tariff shift in Mexico, and thus do not meet the terms of General Note 12(b)(ii). As a result, the braided hose with couplings does not qualify for preferential treatment under NAFTA.
You have also requested a ruling on the country of origin marking of the braided hose with couplings. 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 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. Part 134, Customs Regulations (19 CFR Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.
The country of origin marking requirements for a “good of a NAFTA country” are also determined in accordance with Annex 311 of the North American Free Trade Agreement (“NAFTA”), 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 appropriate Customs Regulations. The Marking Rules used for determining whether a good is a good of a NAFTA country are contained in Part 102, Customs Regulations. The marking requirements of these goods are set forth in Part 134, Customs Regulations.
Section 134.1(b) of the regulations defines “country of origin” as the country of manufacture, production, or growth of any article of foreign origin entering the U.S. 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) of the regulations provides that the “NAFTA Marking Rules” are the rules promulgated for the purposes of determining whether a good is a good of a NAFTA country. Section 134.1(g) of the regulations, 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. Section 134.45(a)(2) of the regulations, provides that “a good of a NAFTA country” may be marked with the name of the country of origin in English, French or Spanish.
The braided hose with couplings is processed in Mexico prior to being imported into the United States. Since Mexico is defined under 19 CFR 134.1(g) as a NAFTA country, we must apply the NAFTA Marking Rules in order to determine if the goods are subject to the NAFTA marking requirements.
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 braided hose with couplings. Section 102.20 for 8306 through 8307 requires a change to any good of heading 8306 through 8307 from any other heading, including another heading within that group. Since the braided hose with couplings does 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 braided hose with couplings.
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. Noting that the last NAFTA country in which the braided hose with couplings underwent processing other than minor processing is Mexico, under Section 102.19, the NAFTA Preference Override, the country of origin of the braided hose with couplings is Mexico for both duty and marking purposes.
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 Ann Taub at [email protected].
Should you wish to request an administrative review of this ruling, submit a copy of this ruling and all relevant facts and arguments within 30 days of the date of this letter, to the Director, Commercial Rulings Division, Headquarters, U.S. Customs and Border Protection, Regulations & Rulings, 90 K Street, N.E. – 10th floor, Washington, DC 20229-1177.
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division