CLA-2-39:OT:RR:NC:N2:421
Rick Van Arnam
Barnes, Richardson & Colburn, LLP
100 William Street, Suite 305
New York, NY 10038
RE: The tariff classification and status under the United States-Korea Free Trade Agreement of Ultramid® GWHS BK from Korea
Dear Mr. Van Arnam:
In your letter dated February 4, 2016, on behalf of BASF Corporation, you requested a ruling on the tariff classification and status under the United States-Korea Free Trade Agreement (UKFTA) of Ultramid® GWHS BK.
The merchandise at issue, Ultramid® GWHS BK, is described as a heat-stabilized, black pigmented, fiberglass-reinforced polyamide-6 injection molding compound. The product consists of a polyamide-6 base polymer combined with fiberglass and a small proportion of heat-stabilizing agents, lubricants, and colorants. Based on the information provided, the polyamide-6 comprises more than half of the composition of the finished product. The product, imported in pellet form, is intended for use in applications such as the manufacture of automotive parts.
The applicable subheading for the Ultramid® GWHS BK will be 3908.10.0000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Polyamides in primary forms: Polyamide-6, -11, -12, -6,6, -6,9, -6,10 or -6,12. The general rate of duty will be 6.3% ad valorem.
In your submission you request a determination on the eligibility of the Ultramid® GWHS BK to qualify for preferential treatment under the United States-Korea Free Trade Agreement (UKFTA).
The requirements of the UKFTA are described in General Note 33 of the HTSUS. General Note 33(b) indicates that, for the purposes of this note, subject to the provisions of subdivisions (c), (d), (n) and (o) thereof, a good imported into the customs territory of the United States is eligible for treatment as an originating good of a UKFTA country if-
(i) the good is wholly obtained or produced entirely in the territory of Korea or of the United States, or both.
(ii) the good is produced entirely in the territory of Korea or of the United States, and –
each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (o) of this note; or
the good otherwise satisfies any applicable regional value-content or other requirements set forth in such subdivision (o) and satisfies all other applicable requirements of this note and of applicable regulations; or
(iii) the good is produced entirely of the territory of Korea or the United States, or both, exclusively from materials described in subdivisions (i) or (ii), above.
The documentation that accompanied your ruling request included a detailed description of the production process for Ultramid® GWHS BK. Per the information you provided, production of the merchandise takes place in Korea, though some of the materials used in its formulation may hail from countries other than the United States or Korea. For example, the polyamide-6 base polymer (another BASF product, identified as Ultramid® B27E) may be sourced from Germany.
As noted above, General Note 33(b)(ii) indicates that a good can be considered an originating good of a UKFTA country if the good is produced entirely in the territory of Korea or of the United States, and each of the nonoriginating materials used in its production undergoes an applicable change in tariff classification. While the product at issue meets the former requirement, it does not meet the latter. For goods classified in heading 3908, General Note 33(o) indicates that, in pertinent part, a change to headings 3901 through 3915 from any other heading is required. As both the Ultramid® GWHS BK and the polyamide-6 used in its manufacture are classified in heading 3908, a change in tariff classification does not take place. You suggest that the Ultramid® GWHS BK should qualify as an originating good of a UKFTA country in accordance with the terms of General Note 33(n)(viii)(b), which states that a good of Chapters 30, 31, or 33 through 40 (except for heading 3808) shall be treated as an originating good if the deliberate and proportionally controlled mixing or blending (including dispersing) of materials to conform to predetermined specifications, resulting in the production of a good having different essential physical or chemical characteristics that are relevant to the purposes or uses of the good and are different from the input materials, occurs in the territory of Korea or of the United States, or both.
The description of the manufacturing process of Ultramid® GWHS BK illustrates that the materials used in its production are combined with one another via a very specific method. Measured amounts of Ultramid® B27E, the polyamide-6 base polymer, are added into a compounding extruder, along with fiberglass and the respective compounds that serve as a heat stabilizing agent, lubricant, and colorant. The compounding extruder is programmed with defined parameters, and the ingredients added in predetermined amounts and at specific feed rates, to ensure that the compounds are mixed in a manner that will produce a product that conforms to the desired specifications. The newly mixed compound is extruded into a cooling bath, and is subsequently pelletized before being packaged and shipped to the United States.
Taking the above into account, along with the fact that the Ultramid® GWHS BK has different physical characteristics and uses than that of the input materials (the Ultramid® GWHS BK has a higher density and strength and lower tensile elongation than Ultramid® B27, and is thus used in different applications), this office finds that the finished product meets the definition of an originating good of a UKFTA country in accordance with General Note 33(n)(viii)(b). As a result, Ultramid® GWHS BK produced in Korea will qualify for duty-free treatment under the UKFTA upon compliance with all applicable laws, regulations, and agreements.
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/.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
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 Evan Conceicao at [email protected].
Sincerely,
Deborah C. Marinucci
Acting Director
National Commodity Specialist Division