CLA-2-84:OT:RR:NC:N4:410
Mr. Yujia Zhang
Farrow
475A Admiral Blvd.
Mississauga L5T 2N1
Canada
RE: The tariff classification and country of origin determination of the point of sale machine kit
Dear Mr. Zhang:
In your letter dated July 29, 2019 you requested a tariff classification and country of origin ruling. Photographs, descriptive literature were submitted.
The subject merchandise is referred to as the Luxe 6200m point of sale machine kit. The kit consists of a point of sale terminal (POS terminal) model Luxe 6200m and accessories. The POS terminal is a complete, self-contained, POS terminal that reads data from cards (magstripe read, chip card reader, and NFC contactless read) and communicates directly with the banks for authorization via built-in Wi-Fi, Bluetooth, 4G LTE or Ethernet/Dial Network. In Mexico, the POS terminal is packed with a power supply, a power cable, a data cable and a paper roll (used to print receipts if needed). It is stated that all of the items are made in China except for the paper roll which is made in Canada or Mexico.
The applicable subheading for the Luxe 6200m point of sale machine kit will be 8470.50.0020, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Calculating machines…ticket-issuing machines and similar machines…cash registers: Cash registers: Point-of-sale terminals.” 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 the World Wide Web at https://hts.usitc.gov/current.
You also request a determination on the country of origin for the subject Luxe 6200m point of sale machine kit.
General Note (GN) 12(b), HTSUS, sets forth the criteria for determining whether a good is originating under the NAFTA. To be an “originating good” the non-originating materials incorporated into the good must satisfy a rule set forth in HTSUS GN 12(b)(ii)(A) in the territory of a NAFTA Party. HTSUS GN 12(t) 84.189 states, in its pertinent part:
189. (A) A change to heading 8470 from any other heading, except from heading 8473; or
(B) A change to heading 8470 from heading 8473, 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
As the POS terminal and accessories, with the exception of the paper roll, are manufactured in China and the operations performed in Mexico are limited to packaging, HTSUS General Note 12(t) 84.189, above, is not met. Accordingly, the subject good does not originate and is thus ineligible for NAFTA preferential duty treatment.
Pursuant to 19 Code of Federal Regulations (CFR) 134.1(b), “country of origin” means the country of manufacture, production, or growth of any article of foreign origin entering the United States. Per 19 CFR 134.1(b), for a good of a NAFTA country, the NAFTA Marking Rules (19 CFR 102) will determine the country of origin.
The 19 CFR 102, NAFTA Marking Rules, are applied hierarchically. Since the good is not wholly obtained or produced, nor produced exclusively from domestic materials, we proceed to 19 CFR 102.11(a)(3) which provides that for the purposes of determining the country of origin of an imported good other than a textile and apparel product, each foreign material incorporated into the good must undergo a change in tariff classification set out in section 102.20.
Part 102.20 states that, for goods of heading 8470.50.0020 to be of a Canadian or Mexican origin, the non-originating materials must meet the following rule (pertinent portion excerpted):
8470.10-8471.50
A change to subheading 8470.10 through 8471.50 from any subheading within that group or from heading 8473, provided that the change is not the result of a simple assembly; or
A change to subheading 8470.10 through 8471.50 from any other subheading outside that group, except from heading 8473.
Since the POS terminal does not undergo the aforementioned tariff shift in Mexico, the rule is not met. Proceeding through the 19 CFR 102.11 hierarchy, 19 CFR 102.11(b)(1) tells us that “The country of origin of the good is the country or countries of origin of the single material that imparts the essential character to the good”. The single item that imparts the essential character is the POS terminal and the country of origin of said machine is China. Therefore, the country of origin of the subject merchandise is China.
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 Michael Chen at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division