CLA-2-85:OT:RR:NC:N1:109
Mr. Nigel Harris
Chief Executive Officer
Ecosolar Solar Technologies
29 Camelot Drive, Suite 100
Ottawa, Ontario, Canada K2G 5W6
RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA) for a PowerTrip™ 16GB from Canada
Dear Mr. Harris:
In your letter dated March 21, 2011, you requested a NAFTA Advance Ruling Request on the status of a PowerTrip™ 16GB from Canada under NAFTA.
The merchandise subject to this ruling is a PowerTrip™ 16GB. The PowerTrip™ 16GB is a portable, microprocessor-controlled power source and electronic data-storage that provides an electrical charge for most mobile devices including cell phones, tablets, personal cameras, entertainment devices, and games, and provides for electronic data storage similar to many common memory-stick products. It can simultaneously provide power and charge the batteries of the mobile devices. The PowerTrip™ 16GB is similar to the PowerTrip™ 4GB ruled upon in New York Ruling N156149, dated April, 18, 2011. However, the PowerTrip™ 16GB has been modified to include a 16GB flash memory as opposed to a 4GB flash memory.
The PowerTrip™ 16GB can be recharged about 1,000 times with 3 different methods. It can be recharged with a USB connector, standard North America wall outlet and/or through PV panel using solar energy, thereby greatly reducing consumer reliance on chemical batteries that typically contain heavy-metals and other toxins. The PowerTrip™ 16GB recharges a myriad of electrical devices. It transfers electrical energy to other device through an electrical connecting wire. Through use of its USB port, it can store data that needs to be transferred to another device.
The PowerTrip™ 16GB has eight major components. It contains a printed circuit board (PCB) that is populated with approximately four-dozen electronic components, a lithium polymer battery, and a liquid crystal display. In addition, it also contains an AC/DC converter module, a PV panel and a NEMA 1-15 AC prong. All of these components are contained within a 4-piece plastic housing secured with a 4 stainless steel fastener.
The PowerTrip™ 16GB is produced in Canada from originating materials from Canada and the United States and non-originating materials from China. The originating material from Canada is housing labels. The originating materials from the United States are various integrated circuits (IC microcontroller, IC battery monitor, IC battery charger, IC input overvoltage protection, IC DC/DC converter, IC LDO voltage regulator, IC MOSFET PMOS switch, and IC current limit switch), a dual MOSFET, a ceramic capacitor, an 16GB flash memory, a power indicator, a connector for PV panel, a connector for an AC/DC converter, a connector for a battery, and a current sense resistor. The non-originating materials from China are a TN liquid crystal display (LCD), a mini USB connector, a tact switch, a female USB connector, a lithium polymer battery, a printed circuit board, wire connectors, a plastic housing, an AC/DC converter module, a PV panel, a NEMA 1-15 AC prong, and a housing membrane.
The initial manufacturing occurs in China, which produces a populated printed circuit (aka printed circuit assembly). Afterwards, the populated printed circuit is shipped to ECOSOL Solar Technologies Inc., in Ottawa, Ontario, Canada for further manufacturing. Once that manufacturing process is complete the PowerTrip™ 16GB is ready for shipment from Canada to the United States. The entire manufacturing process is as follows:
In China
The bare PCB goes through a surface mounting process (referred to as SMT) where the electronic components are mounted directly onto the surface of a PCB.
The partially populated PCB is x-rayed to ensure that there are no flaws during the mounting of the components onto the PCB.
The partially populated PCB is electronically tested.
Following successful interim testing, the liquid crystal display (LCD) and a lithium polymer battery is added to the PCB whereupon a second test is conducted.
The completed PCB is then placed in one of the plastic pieces whereupon a heat staking method is applied to secure the PCB.
The completed PCB unit is shipped from China to Ecosol Solar Technologies Inc. in Ottawa, Ontario, Canada for further manufacturing.
In Canada
The completed PCB (aka printed circuit assembly) is mechanically assembled into its four-piece plastic housing along with the AC/DC converter module, a NEMA 1-15 AC prong, and a PV panel, thus, yielding the PowerTrip™16GB, a different article of commerce.
The PowerTrip™ 16GB is then tested.
After successful testing, the PowerTrip™ 16GB is bundled with its paperboard packaging and a set of operating instructions in English, Spanish, and French.
Connecting wires are then added to the package. (At this point, the manufacturing process is finished.)
The finished PowerTrip™ 16GB is ready for shipping from Canada to the United States.
The applicable tariff provision for the PowerTrip™ 16GB will be 8504.40.95, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for “Static converters: Other: Rectifiers and rectifying apparatus.” The general rate of duty will be 1.5 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/.
The PowerTrip™ 16GB was produced from originating and non-originating goods. The non-originating AC/DC converter module used in the production of the PowerTrip™ 8GB did not undergo a change in tariff classification in Canada, as described in subdivision (r), (s), and (t) of General Note 12 (b) (ii) (A), [specifically GN 12 (b) (ii) (A) (t) Chapter 85, Chapter rule 5, 6. (A)], which states:
“A change to subheading 8504.40 from any other heading”
Since the AC/DC converter module is classified in subheading 8504.40 it did not make the necessary tariff shift in accordance with GN 12 (b) (ii) (A) (t) Chapter 85, Chapter rule 5, 6 (A). As such, the PowerTrip™ 16GB would not be eligible for NAFTA preferential treatment. However, the AC/DC converter module does not interfere with NAFTA preferential treatment eligibility of the PowerTrip™ 16GB when applying the De minimis Rule in accordance with GN 12 (f) (i) (B), which states:
“(f) De minimis
Except as provided in subdivision (f) (iii) through (vi), inclusive, a good shall be considered to be an originating good if the value of all non-originating materials used in the production of the good that do not undergo an applicable change in tariff classification set out in subdivision (t) of this note is not more than 7 percent of the transaction value of the good, adjusted to a F.O.B. basis, or, if the transaction value is unacceptable under section 402(b) of the Tariff Act of 1930, as amended, the value of all such non-originating materials is not more than 7 percent of the total cost of the good, provided that –
(B) The good satisfies all other applicable requirements of this note.
Therefore, since the value of the AC/DC converter module, which was a non-originating material that did not undergo the applicable change in tariff classification set out in subdivision (t) of GN 12, was not more than 7 percent of the total cost of the good and satisfied all other applicable requirements, the PowerTrip™ 16GB will be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.
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 Linda M. Hackett at (646) 733-3015.
Sincerely,
Robert B. Swierupski
Director
National Commodity Specialist Division