CLA-2-39:OT:RR:NC:N1:421
Caroline Leski
BCB International
1010 Niagara Street
Buffalo, NY 14213
RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of beauty salon sheets from Canada; Article 509
Dear Ms. Leski:
In your letter dated July 28, 2017, on behalf of your client, Kwickway Products Corp., you requested a ruling on the status of certain beauty salon sheets under the NAFTA. Representative samples, designated as Items F-J, were submitted with your request and will be returned to you under separate cover.
The products under consideration are five variations of hair coloring thermal strips used in beauty salons for the coloring and highlighting of hair. You indicate that the raw material, large rolls of very thin (1/1000”) colored polystyrene foam film, is imported from Malta into Canada where they may or may not be embossed. Then, the rolls are slit and and either die or guillotine cut into the finished product. Finally the processed material is packaged, labeled and shipped to US customers. Throughout the beauty industry, these sheets are also known as thermal color wraps, color papers and quick meches. You state that this merchandise will be “sold mostly to beauty supply distributors and occasionally directly to beauty salons.”
Item F is a box of 75 silver curved irregularly-shaped plain/embossed sheets
Item G is a box of 200 violet plain/embossed rectangular strips measuring 3.75” x 8”
Item H is a box of 150 white plain/embossed rectangular strips measuring 3.75” x 12”
Item I is a box of 150 blue plain/embossed rectangular strips measuring 5”x 12”
Item J is a box containing one bulk roll of gold plain/embossed rectangular strip measuring 3.75” x 450’
You suggest classification of these five products in subheading 3926.90, Harmonized Tariff Schedule of the United States (HTSUS) which provides for Other articles of plastic and articles of other materials of headings 3901-3914: Other: Other. However, we find that the subject products are more specifically provided for elsewhere in Chapter 39.
The applicable tariff provision for Item F will be 3924.90.5650, HTSUS, which provides for Tableware, kitchenware, other household articles and hygienic or toilet articles, of plastics: Other: Other: Other. The general rate of duty will be 3.4 ad valorem.
The applicable tariff provision for Items G- J will be 3921.11.0000, HTSUS, which provides for Other plates, sheets, film, foil and strip, of plastics: Cellular: Of polymers of styrene. The general rate of duty will be 5.3 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 https://hts.usitc.gov/current.
General Note 12(b), HTSUS, sets forth the criteria for determining whether a good is originating under the NAFTA. Since the subject products are a result of raw material being transformed in the territory of Canada, we look towards Note 12(b)(ii)(A), which states that 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 if they have been transformed in the territory of Canada, Mexico and/or the United States so that, except as provided in subdivision (f) of the 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 the note or the rules set forth therein.
General Note 12(t)/39.10 requires a change to headings 3924 through 3925 from any other heading , including another heading within that group, provided there is a regional value content of not less than:
(A) 60 percent where the transaction value method is used, or
(B) 50 percent where the net cost method is used
Based on the information provided, Item F meets the required tariff shift as the foreign raw material has been transformed from a heading 3921 product into a heading 3924 product. As such, Item F will be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements, including the Regional Value Content requirements specified in General Note 12(t)/39.10.
General Note 12(t)/39.2 requires a change to subheadings 3921.11 through 3921.13 from any other heading, provided there is a regional value content of not less than:
(A) 60 percent where the transaction value method is used, or
(B) 50 percent where the net cost method is used
Based on the facts provided, Items G-J described above do not meet the required tariff shift as the foreign raw material has not been transformed from a subheading 3921.11 product. Therefore, Items G-J do not qualify for preferential treatment under the NAFTA.
Section 134.1(j), Customs Regulations (19 CFR 134.1(j), provides that the "NAFTA Marking Rules" are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. Section 134.1(g), Customs Regulations (19 CFR 134.1(g)), defines a "good of a NAFTA country" as an article for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules, set forth at 19 CFR Part 102. 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. This section states that the country of 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 as the country in which the good is produced." Because each of the subject products are produced from Maltese raw material, they are neither wholly obtained or produced, nor produced exclusively from domestic materials. Accordingly, neither 19 CFR 102.11(a)(1) nor 102.11(a)(2) may be used to determine the origin of the finished articles, 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.
For Item F, which is classified in subheading 3924.90.5650, HTSUS, the change in tariff classification described in 102.11(a)(3) must be in accordance with section 102.20(g), Section XII: Chapters 39 through 40, headings 3922-3926, which requires “A change to heading 3922 through 3926 from any other subheading, including another heading within that group…”. Since the non-originating material for Item F is classified in heading 3921, HTSUS, and the final product is classified in heading 3924, HTSUS, Item F meets the required tariff shift. Therefore, Canada is considered to be the country of origin for marking purposes.
For Items G-J, which are classified in subheading 3921.11.0000,HTSUS, the change in tariff classification described in 102.11(a)(3) must be in accordance with section 102.20(g), Section VII: Chapters 39 through 40, subheadings 3920.10-3921.90, which requires “A change to any other good of subheading 3920.10 through 3921.90 from any other subheading, including another subheading within that group. Since the non-originating material for Items G-J is classified in subheading 3921.11, HTSUS, and the final product is also classified in subheading 3921.11, HTSUS, Items G-J do not meet the required shift. Therefore, the country of origin of the goods cannot be determined in accordance with 102.11(a)(3). Since the country of origin of these products also cannot be determined by the rules of either 102.11(b) or 102.11(c), country of origin must be determined in accordance with 102.11(d)(3), as the last country in which the good underwent production. As Canada is the last country in which Items G-J underwent production, other than minor processing defined in 102.1(m), Canada is considered to be the country of origin for marking purposes.
This ruling letter has not addressed the Regional Value Content (RVC) of the subject goods. If you desire a ruling regarding the RVC of your goods and their eligibility for NAFTA preferential treatment, provide the information noted in Section 181.93(b) of the Customs Regulations (19 CFR 181.93(b)), to U.S. Customs and Border Protection, Regulations & Rulings, 799 9th Street N.W. - 7th floor, Washington, DC 20229-1177, along with a copy of this letter.
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 April Cutuli at april.a.cutuli.cbp.dhs.gov.
Should you wish to request an administrative review of this ruling, submit a copy of this ruling and all relevant facts and arguments within 30 days of the date of this letter, to the Director, Commercial Rulings Division, Headquarters, U.S. Customs and Border Protection, Regulations & Rulings, 90 K Street, N.E. – 10th floor, Washington, DC 20229-1177.
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division