MAR-2-48:OT:RR:NC:N5:130
Mr. David M. Murphy
Grunfeld, Desiderio, Lebowitz, Silverman, & Klestadt LLP
599 Lexington Ave, 36th Fl.
New York, NY 10022
RE: The country of origin of thermal paper rolls
Dear Mr. Murphy:
In your letter, dated July 7, 2023, you requested a binding ruling on behalf of your clients, Papeles Y Conversiones De Mexico SA DE CV (PCM) and A2 Labels & Rolls, Inc., concerning the country of origin of thermal coated paper in rolls.
The goods under consideration are rolls of direct thermal coated paper measuring 3 1/8 inches in width (7.94cm) by 230 feet in length. Such rolls are classifiable under subheading 4811.90.9030, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Paper, paperboard, cellulose wadding and webs of cellulose fibers, coated, impregnated, covered, surface-colored, surface-decorated or printed, in rolls or rectangular (including square) sheets, of any size, other than goods of the kind described in heading 4803, 4809 or 4810: Other paper, paperboard, cellulose wadding and webs of cellulose fibers: Other: Direct thermal coated paper. The paper rolls are used for point-of-sale cash register receipts.
In your letter, you outline a scenario wherein jumbo rolls of thermal coated paper are manufactured in Brazil and then shipped to Mexico, where they will be cut down into the small rolls described above. The jumbo rolls measure approximately 53.23 inches wide (135.2cm) and 15,500 meters in length. The paper weighs 48 grams per square meter (GSM). Such jumbo rolls would be classifiable under subheading 4811.90.8030, HTSUS, which provides for Paper, paperboard, cellulose wadding and webs of cellulose fibers, coated, impregnated, covered, surface-colored, surface-decorated or printed, in rolls or rectangular (including square) sheets, of any size, other than goods of the kind described in heading 4803, 4809 or 4810: Other paper, paperboard, cellulose wadding and webs of cellulose fibers: In strips or rolls of a width exceeding 15 cm or in rectangular (including square) sheets with one side exceeding 36 cm and the other side exceeding 15 cm in the unfolded state: Other: Other: Other: Weighing over 30 g/m²: Direct thermal coated paper.
The United States-Mexico-Canada Agreement (USMCA) was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018. The USMCA was approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act, Pub. L. 116-113, 134 Stat. 11, 14 (19 U.S.C. § 4511(a)). General Note (“GN”) 11 of the HTSUS implements the USMCA. GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA. GN 11(b) states:
For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, is eligible for the preferential tariff treatment provided for in the applicable subheading and quantitative limitations set forth in the tariff schedule as a “good originating in the territory of a USMCA country” only if— the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries; the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials; the good is a good produced entirely in the territory of one or more USMCA countries using non-originating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o));
Subdivision (o) states that, in order to be subject to USMCA, the manufacturing in a USMCA country must result in “(A) A change to paper or paperboard in strips or rolls of a width not exceeding 15 cm of heading 4811 from strips or rolls of a width exceeding 15 cm of heading 4811, floor coverings on a base of paper or paperboard of heading 4811, or from any other heading, except from headings 4817 through 4823.” Since the jumbo rolls of a width exceeding 15cm are cut down to rolls not exceeding 15cm in width, this rule is met. Therefore, the country of origin for Column 1 HTSUS duty purposes is Mexico.
The "country of origin" is defined in Title 19, Code of Federal Regulations (CFR), Section 134.1(b) as:
…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; however, for a good of a NAFTA or USMCA country, the marking rules set forth in part 102 of this chapter (hereinafter referred to as the part 102 Rules) will determine the country of origin.
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. See 19 C.F.R. § 102.11. 19 CFR Part 102.11(a) provides that 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 Part 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
The small paper rolls are neither “wholly obtained or produced” nor “produced exclusively from domestic materials.” Therefore, paragraphs (a)(1) and (a)(2) cannot be used to determine the country of origin of the paper rolls and paragraph (a)(3) must be applied next to determine the origin of the finished article. Section 102.20 (19 CFR 102.20) sets forth the applicable tariff change rules that address the current scenario. Goods classified in heading 4811 must undergo a change as follows: “A change to paper or paperboard in strips or rolls of a width not exceeding 15 cm of heading 4811 from strips or rolls of a width exceeding 15 cm of heading 4811 or any other heading, except from heading 4817 through 4823.” The jumbo rolls of paper exported from Brazil exceed 15cm in width and the manufacturing in Mexico renders paper rolls that are less that 15cm in width. Therefore, the tariff shift rule has been met. The country of origin for marking purposes is Mexico.
We note that, in similar scenarios where the jumbo rolls originate in other countries, the resulting goods may be subject to anti-dumping and countervailing duties. We emphasize that the holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in Title 19, Code of Federal Regulations (CFR), Section 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, whether directly, by reference, or by implication, is accurate and complete in every material respect. In the event that the facts are modified in any way, or if the goods do not conform to these facts at time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and submit a request for a new ruling in accordance with 19 CFR 177.2. You should also be aware that the material facts described in the foregoing ruling may be subject to periodic verification by CBP.
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 Laurel Duvall at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division