CLA-2-87:OT:RR:NC:N1:101
Mr. Richard Belanger
Sidley Austin LLP
1501 K Street, N.W.
Washington, DC 20005-1401
RE: The tariff classification and North American Free Trade Agreement (NAFTA) status of disassembled alternators from Canada.
Dear Mr. Belanger:
In your letter dated June 17, 2008, you requested a ruling on behalf of Caterpillar, Inc.
In your Ruling Request, you state that Caterpillar, Inc. sells backhoe loaders to Canada and, after time, the Alternators assembled into the loaders fall into disrepair and are removed from them by Canadian dealers of Caterpillar products and shipped to the US for remanufacturing. Your Request also states that the disassembled parts of backhoe loaders and similar machines which are to be remanufactured are known in the industry as Cores.
The applicable classification subheading for the Alternator Cores will be 8511.50.0000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “ … generators … : Other generators”. The rate of duty will be 2.5 %.
In your Ruling Request, you propose that the disassembled Alternator Cores receive NAFTA preferential tariff treatment on the basis that they undergo a change in their tariff classification when they are removed from the backhoe loaders that they were assembled into.
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 are 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 Alternator Cores described above qualify for NAFTA preferential treatment because they will meet the requirements of HTSUS General Note 12(b). The goods will therefore be entitled to a Free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements including Regional Value Content requirements specified in General Note 12(t).
This ruling letter has not addressed the Regional Value Content (RVC) of the subject goods. If you desire a ruling regarding the RVC of your goods and their eligibility for NAFTA preferential treatment, provide the information noted in Section 181.93(b) of the Customs Regulations (19 CFR 181.93(b) to the Director, International Trade Compliance Division, Headquarters, U.S. Customs and Border Protection, 1300 Pennsylvania Ave. N.W., (Mint Annex), Washington, D.C. 20229 along with a copy of this letter.
This ruling is being issued under the provisions of Parts 177 and 181 of the Customs Regulations (19 C.F.R. 177, 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 contact National Import Specialist Richard Laman at 646-733-3017.
Sincerely,
Robert B. Swierupski
Director,
National Commodity
Specialist Division