CLA-2-84:OT:RR:E:NC:1:104
Mr. Douglas A. Kalvig
FTZ Director
Decatur Mold Tool & Engineering, Inc.
3330 N SR 7
North Vernon, IN 47265
RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of a horizontal machining center from Canada; Article 509
Dear Mr. Kalvig:
In your letter dated March 26, 2008 you requested a ruling on the status of a horizontal machining center from Canada under the NAFTA.
The machine in question is a used Makino 5 Axis Horizontal Machining Center Model MCC-2013. The machine was originally manufactured in Japan. It was subsequently purchased in late 2004 and imported into Canada in early 2005 at which time the appropriate Canadian duties were paid. The machine was used in production for three years. Your firm is purchasing this machine from a U.S. company on a “sold as is/where is” basis. The machine will be imported from Missasauqua, Ontario, Canada.
In your letter, you propose classification in subheading 8457.10.0065, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Machining centers, unit construction machines (single station) and multistation transfer machines, for working metal: Machining centers…Other: With automatic tool changers: Horizontal-spindle machines with a Y-axis travel of – Over 1,016 mm. Subheading 8457.10.0065, HTSUS, provides for new machines. As you indicate that the machine in question is “used”, subheading 8457.10.0065, HTSUS, is not applicable.
The applicable tariff provision for the used Makino 5 Axis Horizontal Machining Center Model MCC-2013. will be 8457.10.0005, HTSUS, which provides for Machining centers, unit construction machines (single station) and multistation transfer machines, for working metal: Machining centers…Used or rebuilt. The general rate of duty will be 4.2 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/.
In your letter, you indicate that you are aware that the machine is classified in a provision which carries a general duty rate of 4.2%. You ask whether this transaction is eligible for any reduction in duties under NAFTA as Canadian duties were paid at the time of original importation of the machine into Canada.
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 facts provided, the merchandise does not qualify for preferential treatment or duty reduction under the NAFTA because none of the above stated requirements are met. Regardless of the length of time in use in Canada, the Makino 5 Axis Horizontal Machining Center Model MCC-2013.remains a machine of Japanese origin. The used machine is no longer in the same condition as imported into Canada. According to Note 12(n)(ix)(B), HTSUS, used goods are considered originating provided they are fit only for the recovery of raw materials. Used machines that can be reused are not considered originating by virtue of being collected in a NAFTA territory. As there is no statutory basis allowing for any reduction in duty, the general duty rate of 4.2% applies.
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 Patricia O’Donnell at 646-733-3011.
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