CLA-2-44:OT:RR:NC:1:230
Mr. Steve Clyde
Axxess International Inc.
3041 Commerce Drive
Suite A-1
Fort Gratiot, MI 48059
RE: The country of origin, classification, and applicability of NAFTA for multilayer flooring panels from Spain
Dear Mr. Clyde:
In your letter, dated June 13, 2017, you requested, on behalf of your client, Mercier Wood Flooring, a binding ruling for classification, country of origin for marking purposes, and applicability of the North American Free Trade Agreement (NAFTA). The ruling was requested on multilayer wood flooring. Product and manufacturing information, as well as a sample, were submitted for our review.
The product in question is wood flooring panels consisting of three layers. The face ply consists of a 0.6mm-thick wood veneer, the core is high density fiberboard (HDF), and the back ply is a 0.4mm-thick wood veneer. You state that the face ply may consist of a white oak, red oak, maple, or American walnut veneer. The back ply will be a radiata pine veneer. The panels measure approximately 86” long by 5.7” wide by 10mm in thickness. Each is continuously shaped on edges and ends with an interlocking tongue-and-groove-type profile. The panels are stained and coated with UV-cured aluminum oxide.
The Explanatory Notes (ENs) to the Harmonized System for heading 4412 specifically define “veneered panels” as “panels consisting of a thin veneer of wood affixed to a base, usually of inferior wood, by gluing under pressure.” The flooring panels meet this description, as the veneer gives the panel its essential character, and the veneer is affixed to a base of HDF and pine. Veneered panels are specifically provided for in the language of heading 4412, Harmonized Tariff Schedule of the United States (HTSUS).
The applicable subheading for the multilayer wood flooring will be 4412.99.5105, HTSUS, which provides for Plywood, veneered panels and similar laminated wood: Other: Other: With at least one outer ply of nonconiferous wood: Other: Other: Wood flooring. The rate of duty will be free.
You present a set of circumstances wherein the flooring panels will be manufactured in Spain and will be subsequently shipped to Canada for additional manufacturing. The face ply veneers originate in the United States, with the exception of the white oak veneer, which originates in Poland. The HDF core originates in Spain, and the pine back ply is from New Zealand. The face ply, back ply, and HDF core are assembled in Spain. From the information submitted, it appears that the flooring is cut into strips and tongued and grooved in Spain, as well. You state that the completed panels will then be shipped to Canada, where they will be sanded and finished with 10 coats of stain and UV-cured aluminum oxide clear coat. We note that the flooring panels, prior to and after finishing, will be classified in heading 4412, HTSUS. The manufacturing in Canada does not effect a change of heading. Because there is manufacturing completed in Canada, we consider North American Free Trade Agreement (NAFTA) rules.
General Note 12, HTSUS, incorporates Article 401 of the NAFTA into the HTSUS. General Note 12(a)(i) provides, in pertinent part:
(a) Goods originating in the territory of a party to the North American Free Trade Agreement (NAFTA) are subject to duty as provided herein. For the purposes of this note--
(i) Goods that originate in the territory of a NAFTA party under the terms of subdivision (b) of this note and that qualify to be marked as goods of Canada under the terms of the marking rules set forth in regulations issued by the Secretary of the Treasury (without regard to whether the goods are marked), and goods enumerated in subdivision (u) of this note, when such goods are imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appears in the "Special" subcolumn followed by the symbol "CA" in parentheses, are eligible for such duty rate, in accordance with section 201 of the North American Free Trade Agreement Implementation Act.
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—
(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;
Subdivision (t) states that, in order to be subject to NAFTA, the manufacturing in a NAFTA country must result in a change as follows: A change to headings 4401 through 4421 from any other heading, including another heading within that group. Because the flooring panels from Spain are classifiable in heading 4412, HTSUS, and after manufacturing in Canada, are still classifiable in heading 4412, HTSUS, the rule is not met; the panels therefore do not qualify for NAFTA preferential treatment. The country of origin for duty purposes in Spain.
With regard to country of origin for marking of the flooring panels, 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.
Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Pursuant to 19 CFR Section 134.1(b), the country of origin is the country of manufacture, production or growth of any article of foreign origin entering the U.S. Further work or material added to a foreign article in the United States must effect a substantial transformation in order to render the final product a good of the U.S. No operations take place in the U.S. However, the panels are manufactured in part in a NAFTA country, and thus, the NAFTA Rules of Origin (set forth in 19 CFR Part 102) will determine the country of origin for marking purposes.
Section 102.20 provides that, for goods of heading 4412, HTSUS, the manufacturing in a NAFTA country must result in “a change to heading 4412 from any other heading, except from plywood of subheading 4418.71 through 4418.79; or, a change to surface-covered plywood of heading 4412 from any other plywood that is not surface-covered or is surface-covered only with a clear or transparent material which does not obscure the grain, texture, or markings of the face ply.” Because the panels entering Canada from Spain are classified in heading 4412, HTSUS, and the panels being exported from Canada are also classified in heading 4412, HTSUS, the first rule is not met. The second rule is also not met; while a clear surface covering is applied to the panels in Canada, the rule requires that the product be plywood. The instant panels do not meet the definition of “plywood” as set forth in the ENs. “Plywood” is defined as panels “consisting of three or more sheets of wood glued and pressed one on the other and generally disposed so that the grains of successive layers are at an angle”; the instant panels consist of three layers, but the grain of each layer does not run at an angle to that of the successive layers. The HDF layer has no grain. The product, therefore, is not plywood, and the rule is not met. The country of origin of the flooring panels, for marking purposes, is Spain.
In summary, the country of origin for duty purposes is Spain. Therefore, the duty rate for the goods entered from Canada into the United States will be the rate for goods imported from Spain. The country of origin for marking purposes is also Spain. The flooring panels shall be marked with Spain as the country of origin. The panels do not qualify for NAFTA preferential treatment.
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 the World Wide Web at https://hts.usitc.gov/current.
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 Laurel Duvall at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division