CLA-2-84:OT:RR:NC:N1:105
James King
Delmar International (N.Y.) Inc.
5 Coton Lane
Champlain, NY 12919
RE: The tariff classification of power washers from Canada
Dear Mr. King:
In your letter dated February 19, 2019, you requested a tariff classification ruling. Descriptive literature and pictures were provided with your request.
The items under consideration have been identified as gas powered pressure washers: Briggs, Rato, and Honda, which are designed for home use applications, vehicles, and industrial/commercial applications. Home wash includes driveways, garage doors, lawn furniture, and kids pay sets; vehicle wash includes light trucks, and compact cars; industrial /commercial includes concretes, graffiti removal, sidewalks, buildings, and window cleaning. They feature a unique chassis design, engine, pump, and spray nozzles. You state that the pressure washers use 80 percent less water than a conventional garden hose.
The applicable subheading for the Briggs, Rato, and Honda gas powered pressure washers will be 8424.30.9000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Mechanical appliances (whether or not hand operated) for projecting, dispersing or spraying liquids or powders; fire extinguishers, whether or not charged; spray guns and similar appliances; steam or sand blasting machines and similar jet projecting machines; parts thereof: Steam or sand blasting machines and similar jet projecting machines: Other.” The rate of duty will be Free.
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 the country of origin of the pressure washers, and whether they 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 pressure washers are comprised of components made in China, the United States, Canada, and Thailand (only for the Honda model). As a result, the power washers 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 8424.30, the specific rule of origin under GN 12(b)(ii) requires: (A) A change to subheadings 8424.10 through 8424.89 from any other heading; or (B) A change to subheadings 8424.10 through 8424.89 from subheading 8424.90, whether or not there is also a change from any other heading, provided there is a regional value content of not less than: (1) 60 percent where the transaction value method is used, or (2) 50 percent where the net cost method is used.
Based on the provided list of non-originating components, price breakdown and pictorial diagrams, it appears that there are some components classifiable in subheading 8424.90, HTSUS, and none of the models meets the regional value content. Accordingly, the applicable tariff shift is not met.
You inquired in your letter if the non-qualifying components would meet the de minimis rule for the NAFTA tariff preference, which states as follows: (f) De Minimis. (i) Except as provided in subdivisions (f)(iii) through (vi), inclusive, a good shall be considered to be an originating good if the value of all non-originating materials used in the production of the good that do not undergo an applicable change in tariff classification set out in subdivision (t) of this note is not more than 7 percent of the transaction value of the good, adjusted to a F.O.B. basis, or, if the transaction value is unacceptable under section 402(b) of the Tariff Act of 1930, as amended, the value of all such non-originating materials is not more than 7 percent of the total cost of the good, provided that (B) the good satisfies all other applicable requirements of this note.
You argue that the frame of the pressure washer is classified outside of heading 8424.90, and thus, becomes a “qualifying” component. This office disagrees. In the ruling cited in your letter, HQ H260942, dated 01/25/2017, CBP was considering the wheels of the pressure washer, not the metal frame. It appears that the frame for the pressure washers under consideration, as well as in HQ H260942, is integral to the pressure washer, as it contains control mechanisms for the washer. As a result, the frame is a non-qualifying component classifiable in subheading 8424.90, HTSUS, and the value of non-qualifying goods is more than 7 percent of the total cost. Accordingly, the pressure washers are not eligible for the preferential duty treatment under NAFTA, pursuant to 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 8424.30, HTSUS, in section 102.20 requires, “A change to subheading 8424.10 through 8424.89 from any other subheading, including another subheading within that group.”
Since none of the non-originating components are classified within the listed subheadings, the tariff shift requirement is met, and the country of origin of the pressure washers for marking purposes is Canada.
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