CLA-2-87:OT:RR:NC:N2:206
Oscar Vildosola
Osvil International, LLC
1047 West Demuro Drive
Douglas, AZ 85607
RE: The tariff classification of steel rims from Mexico
Dear Mr. Vildosola:
In your letter dated December 6, 2018, you requested a tariff classification ruling on behalf of your client, Taskmaster Components of Mt. Pleasant, Texas. Descriptive literature and pictures were provided with your request.
The items under consideration have been identified as an ArcWheel 22.5 and 24.5, and ArcWheel Heavy Duty Series, which are steel rims, used in on-road vehicles such as pick-up trucks, trailers, heavy-duty trucks and other on-road type vehicles. You state that the steel is imported from China to Mexico, where it is made into rims of various sizes and types.
The applicable subheading for the ArcWheel 22.5 and 24.5, and ArcWheel Heavy Duty Series will be 8708.70.6030, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Parts and accessories of the motor vehicles of headings 8701 to 8705: Road wheels and parts and accessories thereof: For other vehicles: Parts and accessories: Wheel rims for vehicles of subheading 8701.20, or heading 8702, 8703, 8704, or 8705.” The general rate of duty will be 2.5% 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.
You also requested this office to make a determination on whether the ArcWheels are eligible for the preferential treatment under the North American Free Trade Agreement (NAFTA).
Article 401 of the NAFTA provides, in relevant part, that a good shall originate in the territory of a Party where: (b) each of the non-originating goods used in the production of the good undergoes an applicable change in tariff classification set out in Annex 401 as a result of production occurring entirely in the territory of one or more of the Parties, or the good otherwise satisfies the requirements of that Annex where no change in tariff classification is required.
General Note (GN) 12, Harmonized Tariff Schedule of the United States (HTSUS), incorporates Article 401 of NAFTA into the HTSUS. GN 12(b) provides, in pertinent part: 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 (emphasis added), 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.
You state in your letter that the steel to be used in manufacturing the rims is sourced in China and sent to Mexico. The steel arrives in Mexico either in plate form (primary form), where it is cut in circular plates, or it is already cut in circular plates when sent to Mexico. These circular plates are processed through various steps until they are formed completely into parts for rims. A video of the stamping process was provided with your request. In some of the processes, two or more parts are assembled by welding the components together.
The ArcWheels will not be eligible for NAFTA originating treatment as goods wholly obtained or produced entirely in a NAFTA territory pursuant to GN 12(b)(i). Therefore production of the parts must satisfy tariff shift rules and meet other applicable requirements as prescribed in GN 12(b)(ii).
For goods classified in subheading 8708.70, the specific rule of origin under GN 12(b)(ii) requires:
(A) A change to subheading 8708.70 from any other heading; or
(B) A change to subheading 8708.70 from subheading 8708.99, whether or not there is also a change from any other heading, provided there is a regional value content of not less than 50 percent under the net cost method.
Based on the pictorial diagrams submitted, this office finds that the steel from China, whether cut into circular plates or in primary form, is correctly classified in Chapter 73, HTSUS. Accordingly, the applicable tariff shift is met; thus, the steel rims are eligible for the preferential duty treatment under NAFTA, provided that the Center Director is satisfied with the documentary requirements described in GN 12, HTSUS.
The country of origin marking requirements for a "good of a NAFTA country" are also determined in accordance with Annex 311 of the North American Free Trade Agreement, as implemented by section 207 of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat 2057) (December 8, 1993) and the appropriate Customs Regulations. The Marking Rules used for determining whether a good is a good of a NAFTA country are contained in Part 102, Customs Regulations. The marking requirements of these goods are set forth in Part 134, Customs Regulations.
Section 134.1(b) of the regulations, defines "country of origin" as the country of manufacture, production, or growth of any article of foreign origin entering the U.S. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the "country of origin" within this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin. Part 102 of the regulations, sets forth the "NAFTA Marking Rules" for purposes of determining whether a good is a good of a NAFTA country for marking purposes. Section 102.11 of the regulations, sets forth the required hierarchy for determining country of origin for marking purposes. Applied in sequential order, the required hierarchy establishes that the country of origin of a good is the country in which: (a)(1) The good is wholly obtained or produced; (a)(2) The good is produced exclusively from domestic materials; or (a)(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. Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because the imported rims are neither wholly obtained nor produced exclusively from “domestic” (Mexican, in this case) materials. Because the analysis of sections 102.11(a) (1) and 102.11(a) (2) does not yield a country of origin determination, we look to section 102.11(a) (3). “Foreign material” is defined in 19 C.F.R. § 102.1(e) 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.” The applicable rule for subheading 8708.70, HTSUS, in section 102.20 requires, “A change to subheading 8708.70 from any other subheading.”
Since the steel plates from China are classified in Chapter 73, HTSUS, the tariff shift requirement is met, and the country of origin of the ArcWheels for marking purposes is Mexico.
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, please contact National Import Specialist Liana Alvarez at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division