CLA-2-73:OT:RR:NC:N1:113
Mr. Robert Bray
Link+ Corporation
#2 – 435 2nd Street West
Cornwall, Ontario
K6J 1H2 Canada
RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of steel wire garment hangers from Canada; Article 509
Dear Mr. Bray:
In your letter dated October 24, 2017, on behalf of Northern Hanger Company Ltd., you requested a ruling on the status of steel wire garment hangers from Canada under the NAFTA. Photographs of the steel hangers were submitted for our review.
The products under consideration are identified as Wire Strut Hangers. You stated in your letter that the hangers are comprised of steel wire and a paper tube. The subject strut hanger is similar to a traditional triangle hanger however, the bottom wire portion is removed and replaced by a paper tube. The top of the hanger is twisted into a hook so the hangers can be hung.
You stated in your letter that “The steel wire is imported from China in coils. The steel wire is formed into a hook with 2 arms that extend out and down at an angle to form the shoulder supports. The paper tube is imported from China cut to size and shape. It is inserted between the ends of the arms to form your Wire Strut Hanger that is capable of supporting clothes.” You indicated that Northern Hanger will buy the wire and raw paper tubes from China. Northern Hanger will cut, bend, twist and coat the wire into the formed wire hanger in a manufacturing plant in Canada. They will assemble the paper tube onto the two formed wire shoulder supports to complete the strut hangers in Canada. Northern Hanger will then package the hangers for sale in the United States market place.
The Strut Hanger in question is a composite article that is comprised of steel wire formed into a hook with two arms that extend out and down at an angle to form shoulder supports, and a paper tube. The steel and paper are classified in different headings. Classification of merchandise under the Harmonized Tariff Schedule of the United States (HTSUS) is in accordance with the General Rules of Interpretation (GRIs), taken in order. GRI 1 provides that classification shall be determined according to the terms of the headings and any relative section or chapter notes. Since no one heading in the tariff schedules covers the steel and paper components that comprise the strut hanger in combination, GRI 1 cannot be used as a basis for classification. GRI 3(b) provides that mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale shall be classified as if they consisted of the material or component which gives them their essential character.
As the strut hanger is a composite good, we must apply rule GRI 3(b), which provides that composite goods are to be classified according to the component that gives the goods their essential character. EN VIII to GRI 3(b) explains that “the factor which determines essential character will vary as between different kinds of goods. It may, for example be determined by the nature of the material or component, its bulk, quantity, weight or the use of the goods.” We must determine whether the steel or paper component imparts the essential character to the strut hanger. It is the role of the constituent materials or components in relation to the use of the good that imparts the essential character. In this case, the function of the formed steel wire is to hold clothes. Therefore, it is the opinion of this office that the steel component imparts the essential character to the strut hanger. In accordance with GRI 3(b), the subject strut hanger will be classified in heading 7326, HTSUS, which provides for other articles of steel.
The applicable tariff provision for the Wire Strut Hangers will be 7326.20.0020, HTSUS, which provides for other articles of iron or steel, articles of iron or steel wire, garment hangers. The general rate of duty will be 3.9 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. 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
(B) the tariff headings for such goods provide for and specifically describe both the goods themselves and their parts and is not further divided into subheadings, or the subheadings for such goods provide for and specifically describe both the goods themselves and their parts,
provided that such goods do not fall under chapters 61 through 63, inclusive, of the tariff schedule, and provided further that the regional value content of such goods, determined in accordance with subdivision (c) of this note, is not less than 60 percent where the transaction value method is used, or is not less than 50 percent where the net cost method is used, and such goods satisfy all other applicable provisions of this note.
You stated in your letter that the steel wire and paper tubes that are used to make the subject strut hangers are manufactured in China. For the purposes of General Note 12(b), HTSUS, (19 U.S.C. § 1202), the wire and tubes are not wholly obtained or produced in Canada and do not meet the requirements of General Note 12(b)(i) or 12(b)(ii) for subdivisions (r) or (s). We note that the wire is cut, bent, twisted and coated into the formed wire hangers in Canada, and the paper tubes are assembled onto the two formed wire shoulder supports to complete the strut hangers in Canada. Since they do not meet the requirements of General Note 12(b)(i) or 12(b)(ii) for subdivisions (r) or (s), the tariff shift rules in General Note 12(t) must be applied. HTSUS General Note 12(t), Chapter 73 (27) requires “A change to headings 7325 through 7326 from any heading outside that group.” Based on the country of origin for the wire and tubes, and the manufacturing operations performed in Canada, the non-originating steel wire and paper tubes meet the requisite tariff shift.
Therefore, the strut hangers described above qualify for NAFTA preferential treatment, because they will meet the requirements of HTSUS General Note 12(b)(ii)(A). The subject hangers will be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.
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 Ann Taub at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division