CLA-2-39:OT:RR:NC:TA:350
Ms. Colleen Campbell
ECP Engineered Coated Products
369 Elgin Street
Brantford, Ontario N3S 7P5
Canada
RE: The tariff classification, country of origin and status under the North American Free Trade Agreement (NAFTA), of Flex-Gard Aspire Housewrap material, from Canada; Article 509
Dear Ms. Campbell:
In your undated reply letter, which was returned because we needed additional information, you requested a ruling on the status of a coated nonwoven housewrap material, from Canada under the NAFTA.
In your letter you write that spunbonded nonwoven fabric and certain plastic coatings (polyolefin) are produced in the United States and then shipped to Canada. In Canada, the plastics material is extrusion coated onto one side of the nonwoven fabric. Finally, ink of Canadian origin is used to print the coated side of the material. While you state that the plastic portion is not microporous or cellular in nature, bench tests indicate the plastics coating is indeed cellular.
The literature you provided indicates the Flex-Gard™ Aspire Housewrap is designed to be used on the exterior wall systems of buildings and other structures to retard the passage of water in the liquid state and allow the passage of water in the form of vapor, thereby improving the building’s durability and reducing the risk of moisture-related problems such as bugs, moulds mildew and rot. The product literature also indicates the plastic coating acts as a water and air resistant barrier while the nonwoven component functions as reinforcement.
Chapter 56 note 3 (c) excludes from that chapter “plates, sheets or strip of cellular plastics or cellular rubber combined with felt or nonwovens, where the textile material is present merely for reinforcing purposes (chapter 39 or 40).” The Explanatory Notes to chapter 39 (specifically note (d)), regarding “Plastics and Textile Combinations”, states chapter 39 includes “Plates, sheets and strip of cellular plastics combined with textile fabrics (as defined in Note 1 to Chapter 59), felt or nonwovens, where the textile is present merely for reinforcing purposes. In this respect, unfigured, unbleached, bleached or uniformly dyed textile fabrics, felt or nonwovens, when applied to one face only of these plates, sheets or strip, are regarded as serving merely for reinforcing purposes.”
The applicable tariff provision for the material will be 3921.19.0000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for other plates, sheets, film, foil and strip, of plastics, cellular, of other than polymers of styrene, vinyl chloride, polyurethanes or regenerated cellulose. The rate of duty will be 6.5 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. 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.
Based on the information provided in your letter, the product described above qualifies for NAFTA preferential treatment, because it meets the requirements of HTSUS General Note 12(b)(i) as being wholly produced in the territory of NAFTA. The goods will therefore be entitled to a Free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.
You have inquired about the country of origin for marking purposes and for duty purposes. 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.
Section 134.1(b), Customs Regulations (19 CFR 134.1(b)), defines the 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 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. Paragraph (a) of this section states that the 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 or origin as the country in which the good is produced." Spunbonded nonwoven fabric and plastic coatings (polyolefin) of U.S. origin are exported to Canada for additional processing prior to the importation of the finished housewrap material into the U.S. Because the housewrap material is processed in Canada of U.S. components, the housewrap is 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. In this case, because the finished housewrap material imported into the U.S. from Canada are classified under subheading 3921.19.0000, HTSUS, the change in tariff classification must be made in accordance with section 102.20(g), Section VII: Chapters 39 through 40, subheadings 3920.10-3921.90, HTSUS, which requires a change to subheading 3920.10 through 3921.90 from any other subheading, including another subheading within that group.
As the nonwoven material of U.S. origin is classifiable in tariff subheading 5603.12.0090 and the plastic coating substances fall somewhere in subheadings 3901 through 3906 and the ink used is classifiable in tariff subheadings 3206 and 3215.11 through 3215.90, the tariff shift requirement has been met and the country of origin for marking purposes would be Canada.
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 Deborah Walsh at 646-733-3044.
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, 1300 Pennsylvania Ave. N.W., (Mint Annex), Washington, D.C. 20229.
Sincerely,
Robert B. Swierupski
Director,
National Commodity
Specialist Division