CLA 2-OT:RR:NC:N3:351
Ms. Allison Gray
Mustang Survival ULC
7525 Lowland Drive
Burnaby, B.C.
Canada V5J 5L1
RE: Classification, country of origin determination and status under the North American Free Trade Agreement (NAFTA) for an inflatable life preserver unit from Canada; 19 CFR 102.21(c)(5); Article 509
Dear Ms. Gray:
This is in reply to your letter dated November 5, 2019, received on January 6, 2020, requesting country of origin and status under the North American Free Trade Agreement (NAFTA) determinations for an inflatable life preserver unit which will be imported into the United States. A sample was provided with your letter and will be returned per your request.
FACTS:
The RATIS™ SOF Life Preserver Unit (LPU) with manual inflator, item number MD1502, is an integrated lightweight tactical LPU designed for military and law enforcement to attach to a modular lightweight load-carrying equipment (MOLLE) vest but, alternatively, may be used with the included chest harness. The U-shaped LPU has an outer surface of woven nylon fabric and knit nylon mesh. It is worn around the back of the neck and features zippered compartments to house the integrated bladder assembly, CO2 cylinder and manual inflator. Webbed straps and buckles are attached to the top and bottom of the LPU to facilitate attachment through the MOLLE slots on the carrier. The sternum strap buckles the two ends of the apparatus together to secure the bladder lobes in the inflated condition.
To inflate, the wearer pulls a beaded handle attached to the apparatus with hook and loop fasteners on the left lobe causing the bladder to fill with CO2. As the bladder fills, a breakaway zipper that goes around the outside edge of the cover opens to allow for full inflation.
The manufacturing operations for the Ratis™ LPU are as follows:
Taiwan
Thermoplastic polyurethane bladder material is manufactured.
Bladder material is exported to Canada and warehoused until needed for production at which time it is exported to the United States.
Sweden
Inflator sealing ring, inflator body and inflator cap are manufactured.
Inflator sealing ring is exported to the United States.
Inflator body and cap are exported to Canada.
Austria
CO2 cylinder is manufactured.
CO2 cylinder is exported to the United States and subsequently exported to Canada.
United States
Remaining components are manufactured including: coated woven nylon fabric of Chapter 59, Harmonized Tariff Schedule of the United States (HTSUS); knit nylon mesh fabric of Chapter 60, HTSUS; nylon webbing; plastic buckles; thread; cordage; hook and loop fastener; beads; zippers; brass ring; oral tube and valve; reflective tape; elastic and epoxy adhesive.
Bladder (SA1500) sub-assembly involving:
Cutting the bladder material
Die punch holes in the bladder material for oral tube and valve and for welding alignment.
Spot weld the oral tube and valve to bladder material.
Perimeter weld the bladder material.
Die cut the bladder shape.
Weld the attachment panels onto the bladder.
Install the oral inflation tube and valve.
Bladder sub-assembly exported to Canada.
Canada
CO2 cylinder with body (SA7905) sub-assembly.
Screw cylinder into inflator body.
Print and attach appropriate warning labels to cylinder body.
Manual inflator (SA7907) with handle sub-assembly.
String beads onto cord and sew onto nylon mesh body with hook and loop.
Attach end of lace cord onto manual inflator cap.
Cover (SA1501) sub-assembly.
Cut cover panels to shape and size.
Sew panels together.
Attach hardware, i.e. buckles, zippers, etc…)
Chest harness (SA1505) sub-assembly.
Cut textile components to shape and size.
Sew textile components together.
Attach hardware, i.e. plastic buckles, D-rings, etc…
Final assembly of Ratis™ LPU.
ISSUE:
What are the classification, country of origin and status under the NAFTA for the subject merchandise?
CLASSIFICATION:
The applicable subheading for the Ratis™ LPU will be 6307.20.0000, (HTSUS), which provides for “Other made up articles, including dress patterns: Lifejackets and lifebelts.” The general rate of duty will be 4.5 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.
NAFTA – LAW AND ANALYSIS:
General Note 12, HTSUS, incorporates Article 401 of NAFTA into the HTSUS. General Note 12(a)(i) provides, in pertinent part:
(i) Goods that originate in the territory of a NAFTA party under the terms of subdivision (b) of this note and that qualify to be marked as goods of Canada under the terms of the marking rules set forth in regulations issued by the Secretary of the Treasury (without regard to whether the goods are marked), when such goods are imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appears in the “Special” subcolumn followed by the symbol “CA” in parentheses, are eligible for such duty rate, in accordance with section 201 of the NAFTA Implementation Act.
Accordingly, the assembled Ratis™ LPU will be eligible for the “Special” “CA” rate of duty provided they are NAFTA “originating” goods under General Note 12(b), HTSUS, and qualify to be marked as a product of Canada under the marking rules.
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 non-originating 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.
The rule for subheading 6307, HTSUS, in GN 12(t)/63(4) states:
A change to headings 6304 through 6310 from any other chapter, except from headings 5106 through 5113, 5204 through 5212, 5307 through 5308 or 5310 through 5311, chapters 54 through 55, or headings 5801 through 5802 or 6001 through 6006, provided that the good is both cut (or knit to shape) and sewn or otherwise assembled in the territory of one of more of the NAFTA parties.
Chapter Rule 1 of GN 12(t), Chapter 63, states:
For purposes of determining the origin of a good of this chapter, the rule applicable to that good shall only apply to the component that determines the tariff classification of the good and such component must satisfy the tariff change requirements set out in the rule for the good.
“[T]he component that determines the tariff classification of the good,” in the language of the above rule for heading 6307, is the coated woven nylon fabric (heading 5903) that provides the essential character of the cover for the inflatable bladder, inflator and CO2 cylinder. Based on the facts provided, the LPU described above originates under NAFTA because it meets the requirements of HTSUS General Note 12(b)(ii)(A). Assuming the LPU qualifies to be marked as a good of Canada, it is entitled to the special “CA” duty rate, Free, upon compliance with all applicable laws, regulations, and agreements.
COUNTRY OF ORIGIN - LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), requires that, unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. The term "country of origin" is defined in § 134.1(b), Customs Regulations (19 CFR 134.1(b)), as the "country of manufacture, production, or growth of any article of foreign origin entering the U.S." The country of origin marking requirements for a "good of a NAFTA country" are determined under the NAFTA Marking Rules.
Section 334 of the Uruguay Round Agreements Act (codified at 19 U.S.C. 3592), enacted on December 8, 1994, provided rules of origin for textiles and apparel entered, or withdrawn from warehouse for consumption, on and after July 1, 1996. Section 102.21, Customs Regulations (19 C.F.R. 102.21), published September 5, 1995 in the Federal Register, implements Section 334 (60 FR 46188). Section 334 of the URAA was amended by section 405 of the Trade and Development Act of 2000, enacted on May 18, 2000, and accordingly, section 102.21 was amended (68 Fed. Reg. 8711). Section 102.21 sets forth the NAFTA Marking Rules for textile and apparel products for purposes of 19 U.S.C. 1304 and Annex 311 of the NAFTA. The country of origin of a textile or apparel product shall be determined by the sequential application of the general rules set forth in paragraphs (c)(1) through (5) of Section 102.21.
Paragraph (c)(1) states, “The country of origin of a textile or apparel product is the single country, territory, or insular possession in which the good was wholly obtained or produced.” As the subject merchandise is not wholly obtained or produced in a single country, territory or insular possession, paragraph (c)(1) of Section 102.21 is inapplicable.
Paragraph (c)(2) states, “Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) of this section, the country of origin of the good is the single country, territory, or insular possession in which each of the foreign materials incorporated in that good underwent an applicable change in tariff classification, and/or met any other requirement, specified for the good in paragraph (e) of this section:” Paragraph (e) in pertinent part states,
The following rules shall apply for purposes of determining the country of origin of a textile or apparel product under paragraph (c)(2) of this section:
HTSUS Tariff shift and/or other requirements
6307.20 A change to subheading 6307.20 from any other heading, provided that the change is the result of the good being wholly assembled in a single country, territory, or insular possession.
As the Ratis™ LPU is not assembled in a single country, territory or insular possession, Section 102.21(c)(2) is inapplicable.
Section 102.21(c)(3) states,
Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) or (2) of this section:
(i) If the good was knit to shape, the country of origin of the good is the single country, territory, or insular possession in which the good was knit; or
(ii) Except for goods of heading 5609, 5807, 5811, 6213, 6214, 6301 through 6306, and 6308, and subheadings 6209.20.5040, 6307.10, 6307.90, and 9404.90, if the good was not knit to shape and the good was wholly assembled in a single country, territory, or insular possession, the country of origin of the good is the country, territory, or insular possession in which the good was wholly assembled.
As the subject merchandise is neither knit to shape, nor wholly assembled in a single country, Section 102.21 (c)(3) is inapplicable.
Section 102.21 (c)(4) states, “Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1), (2) or (3) of this section, the country of origin of the good is the single country, territory or insular possession in which the most important assembly or manufacturing process occurred.” In the opinion of this office, while it is the bladder that fills with CO2 to ultimately provide the flotation, the bladder is not functional without the CO2 and it is the outer cover that contains all of the sub-assemblies and allows the LPU to be attached to the MOLLE carrier. As no assembly or manufacturing imparts the most important assembly or manufacturing process, a single country of origin determination cannot be made based on Section 102.21(c)(4).
Paragraph (c)(5) states, “Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1), (2), (3) or (4) of this section, the country of origin of the good is the last country, territory or insular possession in which an important assembly or manufacturing process occurred.” Accordingly, in the case of the subject Ratis™ LPU, country of origin is conferred by the last country in which an important assembly or manufacturing process occurred, that is, Canada.
HOLDING:
The country of origin of the Ratis™ SOF LPU with manual inflator, MD 1502, is Canada. The LPU is entitled to a Free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.
The holding set forth above applies only to the specific factual situation and merchandise identified in the ruling request. This position is clearly set forth in section 19 CFR 177.9(b)(1). This section states that a ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177). Should it be subsequently determined that the information furnished is not complete and does not comply with 19 CFR 177.9(b)(1), the ruling will be subject to modification or revocation. In the event there is a change in the facts previously furnished, this may affect the determination of country of origin. Accordingly, if there is any change in the facts submitted to Customs, it is recommended that a new ruling request be submitted in accordance with 19 CFR 177.2.
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 Kim Wachtel at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division