CLA-2-64:OT:RR:NC:N1:447
Mr. Kenneth M. Carmon
Bay Brokerage Inc.
42832 State Route 12
Alexandria Bay, NY 13607
RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of overshoes from Canada; Article 509
Dear Mr. Carmon:
In your letters dated July 21, 2015 and August 10, 2015, you requested a ruling on the status of overshoes from Canada under the NAFTA.
The items to be imported into the United States are rubber/plastics overshoes with steel toe caps. They measure 1-1/2 inches tall at the lowest point and do not cover the top of the foot, except at the toes. The overshoes are manufactured in Canada and valued ranging from $2.06 to $3.03 per pair. The steel toe caps, made in China at a price of $1.50 per pair, are glued to the overshoes in Canada. In your letter you state the cost of the glue is 19 cents per pair and the labor is estimated at $0.94 per pair. You provided F.O.B values of $11.80 to $13.25 per pair.
The applicable tariff provision for the overshoes will be 6401.10.0000, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for waterproof footwear with outer soles and uppers of rubber or plastics, the uppers of which are neither fixed to the sole nor assembled by stitching, riveting, nailing, screwing, plugging or similar processes; and which has a protective metal toe-cap. The general rate of duty will be 37.5 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…
General Note 12(t)/64.1 provides for a change from heading 6401 through 6405 from any heading outside that group, except from subheading 6406.10, provided there is a regional value content (RVC) not less than 55 percent under the net cost method.
In your letter you classified the non-originating steel toe cap component in heading 7326, HTSUS, which is the provision for articles of steel. We disagree. If imported separately, the steel toe caps would be more specifically provided for in subheading 6406.10.9090, HTSUS, the provision for parts of footwear uppers. Since the steel toe caps are classified in subheading 6406.10, the goods do not meet the tariff shift rule.
Additionally, the de minimis rule set forth in GN 12(d)(i) provides: Except as provided in subdivisions (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—
(A) if the good is subject to a regional value-content requirement, the value of such non-originating materials shall be taken into account in calculating the regional value content of the good; and (B) the good satisfies all other applicable requirements of this note.
The cost information submitted with your letter shows the non-originating toe caps comprises more than 7 percent of the transaction value of the completed shoe. Therefore the toe caps would not be considered originating.
Based on the facts provided, the goods described above do not qualify for NAFTA preferential treatment, because they will not meet the requirements of HTSUS General Note 12(b)(ii)(A). The goods will therefore not be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements
The overshoes may still qualify for preferential tariff treatment under the NAFTA by satisfying the RVC; however, these issues are addressed by the Valuation and Special Programs Branch. Their address is 90 K, N.E.; 10th Floor, Mailstop 1177, Washington DC 20229. Attn: Monika Brenner
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 Stacey Kalkines at: [email protected].
Sincerely,
Gwenn Klein Kirschner
Director
National Commodity Specialist Division