CLA-2-70:OT:RR:NC:N1:126
Steve Pepi
Near North Customs Brokers US, Inc.
400 Essjay Road
Suite 320
Williamsville, NY 14221
RE: The Classification of a Fiberglass Filter Bag assembled in Canada; Country of Origin; Marking; Section 301 trade remedy; 9903.88.03, HTSUS
Dear Mr. Pepi:
In your letter dated February 19, 2021, on behalf of your client, AES, you requested a tariff classification and country of origin marking determination regarding a Fiberglass Filter Bag assembled in Canada.
A sample was submitted with your ruling request. The sample was sent to our U.S. Customs and Border Protection Laboratory for analysis. Our laboratory has now completed its analysis.
The subject merchandise a two-part laminated roll consisting of a polytetrafluoroethylene (PTFE) membrane that is laminated to a woven fiberglass material. You indicated that the woven fiberglass material will be used to make bags for industrial machinery. A metal ring is sewn into the top of the Fiberglass Filter Bag.
The Fiberglass Filter Bag is utilized to reduce or stop pollutants produced in industrial processes from going into the air. The filter bag is installed in dust collectors (or baghouses), with a cage in each filter bag to hold its shape. You further stated, the filter bag aids in collecting harmful/unwanted particulates from the air to help producers meet standards enforced by the Environmental Protection Agency.
According to your submission, AES, purchases from various suppliers to complete the manufacturing process of the Fiberglass Filter Bags including rolls of woven glass fiber material (with PTFE membrane) manufactured in China (Scenario #1), or woven glass fiber material manufactured in the United States (U.S.) (Scenario #2). The woven fiberglass fabric is imported in rolls into Canada and undergoes a manufacturing process which is described as follows:
Rolls are loaded onto roll lift.
Roll lift introduces rolls to fabric spreader.
Fabric spreader lays fabric out on cutting table.
Cutting pattern is laid out.
Edge trim is cut from fabric.
Cutting of filter bags begins.
Cut parts are divided and marked for seaming of filter bags.
Parts are taken off cutting table and folded for seaming.
Folding of cut parts.
Staging of parts before seaming.
Marking and folding of more cut parts.
Seaming cut parts into the filter bag tubes.
Metal hardware to be sewn into filter bags.
Assembling hardware for filter bags.
Producing parts for filter bags.
Parts assembly.
Sewing hardware into filter bags.
Sewing parts onto filter bags.
Beginning filter bag inspection.
Finished filter bag Quality Control inspection.
Folding filter bags for packaging.
While the other components of the product all support the filtering function of the product, the filtering function itself is performed by the glass fiber material component of the article.
Our U.S. Customs and Border Protection laboratory has determined that the fiberglass material is a fabric consisting of woven glass fibers and a PTFE coating. The glass fibers constitute the greater part of the weight of this material.
The Fiberglass Filter Bag is a composite good comprised of different materials that are classifiable in different headings (glass fiber material, metal, and sewing thread). 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 3(b) of the HTSUS provides, in relevant part, that composite goods which cannot be classified by reference to GRI 3(a) shall be classified as if they consisted of the material or component which gives them their essential character. The glass fiber component provides the essential character of this item.
Classification
The applicable subheading for the “Fiberglass Filter Bags” will be 7019.90.5040, HTSUS, which provides for glass fibers (including glass wool) and articles thereof…Other: Other. The rate of duty will be 4.3 percent ad valorem.
Country of Origin The marking statute, Section 304(a), Tariff Act of 1930, as amended (19 U.S.C. § 1304(a)), provides that unless excepted, every article of foreign origin imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit in such manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article. Congressional intent in enacting 19 U.S.C. § 1304 was “that the ultimate purchaser should be able to know by an inspection of the marking on imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will.” United States v. Friedlaender & Co., 27 C.C.P.A. 297, 302 (1940).
Pursuant to section 102.0, interim regulations, related to the marking rules, tariff-rate quotas, and other USMCA provisions, published in the Federal Register on July 6, 2021 (86 FR 35566), the rules set forth in §§ 102.1 through 102.18 and 102.20 determine the country of origin for marking purposes with respect to goods imported from Canada and Mexico. Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes, with the exception of textile goods which are subject to the provisions of 19 C.F.R. § 102.21. Applied in sequential order, the required hierarchy under 19 C.F.R. Section 102.11, establishes that: (a) The country of origin of a good is the country in which: (1) The good is wholly obtained or produced;
(2) The good is produced exclusively from domestic materials; or (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 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 Fiberglass Filter Bag is neither wholly obtained nor produced exclusively from “domestic” (Canada, in this case) materials. Accordingly, we look to section 102.11(a)(3). The applicable tariff shift requirement in section 102.20(o) for the Fiberglass Filter Bags of subheading 7019.90, HTSUS, consist of the following:
A change to heading 7019 from any other heading, except from headings 7007 through 7018 or 7020.
This tariff shift rule requires a shift to heading 7019, HTSUS, from any other heading. There are two Fiberglass Filter Bag components (the metal and the thread) classified in headings other than 7019, HTSUS, and these undergo the required tariff shift. The remaining component (the glass fiber material) is classified in 7019.90, HTSUS at the time they are imported into Canada and therefore does not undergo the change in tariff classification set out in 19 C.F.R. § 102.20(o).
Since no country of origin determination can be made applying Section 102.11(a) for the components that were classified in heading 7019, HTSUS when imported into Canada, the analysis continues with Section 102.11(b), which instructs us to examine the Fiberglass Filter Bags “essential character” to determine its country of origin.
Section 102.11(b) states, in relevant part:
Except for a good that is specifically described in the Harmonized System as a set, or is classified as a set pursuant to General Rule of Interpretation [(“GRI”)] 3, where the country of origin cannot be determined under paragraph (a) of this section:
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 ….
In determining the “essential character” of the finished good, Section 102.18(b)(1) provides, in relevant part:
(b) (1) For purposes of identifying the material that imparts the essential character to a good under § 102.11, the only materials that shall be taken into consideration are those domestic or foreign materials that are classified in a tariff provision from which a change in tariff classification is not allowed under the § 102.20 specific rule or other requirements applicable to the good … (ii) Materials that may be considered include materials produced by the producer of the good and incorporated in the good. For example, if a producer of a good purchases raw materials and converts those raw materials into a component that is incorporated in the good, that component is a material that may be considered for purposes of identifying the materials that impart the essential character to the good, provided that the component is classified in a tariff provision from which a change in tariff classification is not allowed under the specific rule or other requirements applicable to the good; …
(2) For purposes of determining which one of two or more materials described in paragraph (b)(1) of this section imparts the essential character to a good under § 102.11, various factors may be examined depending upon the type of good involved. These factors include, but are not limited to, the following:
The nature of each material, such as its bulk, quantity, weight or value; and
The role of each material in relation to the use of the good.
Here, the metal ring, classified under subheading 7326.20, HTSUS and the sewing thread, classified under subheading 5508.10, HTSUS undergo the applicable tariff shift in 19 C.F.R. § 102.20(o), however, the remaining components (the glass fiber material), classified under subheading 7019.90, HTSUS, does not. Consistent with Sections 102.11(b) and 102.18(b)(1) and (2), it is only these components that do not undergo the tariff shift that must be taken into consideration when determining which material provides the essential character of the Fiberglass Filter Bag.
Of the foreign components that do not undergo the tariff shift: the glass fiber material that originates in China (Scenario #1), or the glass fiber material that originates in the U.S. (Scenario #2). The other two components originate in Austria (sewing thread) and Canada (metal ring). All of these materials are classified in 7019.90 at the time of import into Canada. The glass fiber material is functionally important to the Fiberglass Filter Bag. It is individually the component that is greater by weight, value, and is functionally more important than the other components as it filters the air. Therefore, we find that the glass fiber material component, that does not undergo the applicable tariff shift requirement, imparts the Fiberglass Filter Bag with its essential character.
Consequently, for Scenario #1, in accordance with 19 C.F.R. § 102.11(b), the country of origin for marking purposes of the Fiberglass Filter Bag is China.
Consequently, for Scenario #2, in accordance with 19 C.F.R. § 102.11(b), the country of origin for marking purposes of the Fiberglass Filter Bag is the United States.
Section 301 Duties
The United States Trade Representative (“USTR”) has determined that an additional ad valorem duty of 25% will be imposed on certain Chinese imports pursuant to USTR’s authority under Section 301(b) of the Trade Act of 1974 (“Section 301 measures”). See Section XXII, Chapter 99, Subchapter III, U.S. Note 20(e), HTSUS. The Section 301 measures apply to products of China enumerated in Section XXII, Chapter 99, Subchapter III, U.S. Note 20(f), HTSUS. Among the subheadings listed in U.S. Note 20(f) of Subchapter III, Chapter 99, HTSUS, is 7019.90.50.
With regard to your request for the appropriate country of origin of the Glass Filter Bags, 19 C.F.R. § 134.1(b) provides in pertinent part as follows:
Country of origin means the country of manufacture, production, or growth of any article of foreign origin entering the United States. 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 the meaning of this part;
As stated in HQ 735009 dated July 30, 1993, “The country of origin is the country where the article last underwent a “substantial transformation”, that is, processing which results in a change in the article's name, character, or use”. In addition, the court has held that “A substantial transformation occurs when an article emerges from a manufacturing process with a name, character, and use that differs from the original material subjected to the processing.” However, if the manufacturing or combining process is merely a minor one that leaves the identity of the article intact, a substantial transformation has not occurred.
In order to determine whether a substantial transformation occurs when components of various origins are assembled into completed products, all factors such as the components used to create the product and manufacturing processes that these components undergo are considered in order to determine whether a product with a new name, character and use has been produced. No one factor is decisive. Assembly operations that are minimal will generally not result in a substantial transformation.
Consequently, in Scenario #1, it is this office’s opinion that the glass fiber material produced in China provides the essence of the Fiberglass Filter Bag. The item is not substantially changed by either the addition of the Austrian and Canadian components or the minor assembly operations performed in Canada. The glass fiber material contains the “filtering function” that provides the essential function of the Fiberglass Filter Bag. In view of these facts, the country of origin is China. In addition, the Fiberglass Filter Bag is subject to the Section 301 trade remedies as provided for under 9903.88.03, HTSUS.
Consequently, in Scenario #2, it is this office’s opinion that the U.S. produced glass fiber material provides the essence of the Fiberglass Filter Bag. The item is not substantially changed by either the addition of the Austrian and Canadian components or the minor assembly operations performed in Canada. The glass fiber material contains the “filtering function” that provides the essential function of the Fiberglass Filter Bag. In view of these facts, the country of origin is the United States. In addition, the Fiberglass Filter Bag is not subject to the Section 301 trade remedies as provided for under 9903.88.03, HTSUS.
Since the marking statute regarding Scenario #2, in accordance with Section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), only requires that goods of foreign origin be marked with country or origin, there is no Customs requirement to mark a product when the country of origin is deemed to be the United States.
If you wish to mark this product with specific information about the U.S. origin of the product or its components, this issue must be addressed by the Federal Trade Commission (FTC).
U.S. Customs and Border Protection does not have the authority to rule on the propriety of specific marking referring to the United States.
You may contact the FTC, Division of Enforcement, 6th & Pennsylvania Avenue, N.W., Washington, DC 20508, telephone number 202-326-2222, on the propriety of any marking referring to the U.S. origin of this product.
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.
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 Elena Pietron at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division