CLA-2-40:OT:RR:NC:N2:421
Ms. Paula Degenaars
Watts Water Technologies Company
815 Chestnut Street
North Andover, MA 01845-6098
RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA) of rubber tubes from Mexico; Article 509
Dear Ms. Degenaars:
In your letter dated December 8, 2014, you requested a ruling on the status of rubber pipes from Mexico under the NAFTA.
The imported product (Item number 42146319) is a pre-cut tube composed of natural latex rubber. You describe the tube as a hose, but since it is not reinforced, it is more accurately described as a tube. This tube does not have any fittings. The tubes are manufactured in the United States by an unrelated manufacturer/supplier to Watts. You state that this manufacturer has certified that the tubes are of U.S. origin and qualified for NAFTA. The rubber tubes are purchased in 50-foot lengths and then shipped by Watts to Mexico. In Mexico, the tubes are cut into 10-foot pieces, coiled and labeled. The cut tubes are then packaged five to a box and shipped back to the United States.
The applicable tariff provision for the pre-cut rubber tubes will be 4009.11.0000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for tubes, pipes and hoses, of vulcanized rubber other than hard rubber, with or without their fittings (for example, joints, elbow, flanges); not reinforced or otherwise combined with other materials: without fittings. The general rate of duty will be 2.5 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/.
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." The uncut natural latex tubes of U.S. origin are exported to Mexico to be cut to more manageable lengths prior to importation into the United States. Because the tubes are processed in Mexico of U.S. material, the hoses are 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 hoses, 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 tubes imported into the U.S. from Mexico are classified under subheading 4009.11.0000, HTSUS, the change in tariff classification must be made in accordance with section 102.20(g), Section VII: Chapters 39 through 40, headings 4006-4010, HTSUS, which requires a change to heading 4006 through 4010 from any other heading, including another heading within that group.
The uncut rubber tubes, which are initially classified under subheading 4009.11.0000, HTSUS, remain classified under subheading 4009.11.0000, HTSUS, subsequent to the additional processing in Mexico. Thus, there is no applicable change in tariff classification within the requirements of section 102.20, and the country of origin of the good may not be determined in accordance with this provision.
Since 19 CFR 102.11(a) (incorporating section 102.20), is not determinative of origin, the next step in determining the marking requirements is to apply section 102.11(b), Customs Regulations, which states in part: “Except for a good that is specifically described in the Harmonized Tariff Schedule as a set, or is classified as a set pursuant to General Rule of Interpretation 3, where the country of origin cannot be determined under paragraph (a), the country of origin of the good: (1) Is the country or countries of origin of the single material that imparts the essential character to the good.”
Because the finished rubber tubes consist of only one material, and because that material is classifiable in a tariff provision from which a change in tariff classification is not allowed under the applicable rule in 19 CFR 102.20(g), the U.S. origin tube is the single material which imparts the essential character to the finished good pursuant to section 102.18(b)(iii). Accordingly, for country of origin marking purposes, the country of origin of the finished rubber tubes after they have been cut to 10-foot lengths in Mexico is the United States. Because the marking requirements of 19 U.S.C. 1304 are applicable only to articles of foreign origin, the rubber tubes need not be marked upon entry into the United States.
By operation of General Note 12 of the HTSUS, the eligibility of a particular article for NAFTA duty preference is predicated, in part, upon an origin determination under the NAFTA Marking Rules of either Canada or Mexico. Application of the NAFTA Marking Rules contained in 19 CFR 102.11 did not yield an origin determination of either Canada or Mexico, but the United States. However, the NAFTA Preference Override set forth in 19 CFR 102.19 is applicable to the subject merchandise. Specifically, 19 CFR 102.19(b) states:
(b) If, under any other provision of this part, the country of origin of a good which is originating…is determined to be the United States and that good has been exported from, and returned to, the United States after having been advanced in value or improved in condition in another NAFTA country, the country of origin of such good for Customs duty purposes is the last NAFTA country in which that good was advanced in value or improved in condition before its return to the United States.
Based on the facts presented, the rubber tubes at issue are an originating good under NAFTA and have been determined under section 102.11(b) to be a good of U.S. origin. Because the articles were returned to the U.S. after having been advanced in value or improved in condition in Mexico by virtue of cutting them to manageable lengths, the country of origin of the rubber tubes for Customs duty purposes is Mexico, pursuant to 19 CFR 102.19(b). Accordingly, the free "MX" NAFTA rate will be applicable to the pre-cut rubber tubes, provided the original 50-foot length rubber tubes qualify as an originating good pursuant to General Note 12, HTSUS.
This ruling on the country of origin for marking and duty purposes presupposes that the rubber tubes, upon their exportation to Mexico, are of U.S. origin for NAFTA purposes, as you claim in your request.
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 Joan Mazzola at [email protected]. gov.
Sincerely,
Gwenn Klein Kirschner
Director
National Commodity Specialist Division