CLA-2-76:OT:RR:NC:N5:116
Mrs. Ilse Genoveva Montemayor Sacramento
Custom Home Goods, LLC
70 Draper Dr.
Brownsville, Texas 78521
RE: The tariff classification, country of origin for marking purposes, country of origin for purposes of Applicability of Section 232, and status under the United States-Mexico-Canada Trade Agreement (USMCA) of aluminum fence retail kits
Dear Mrs. Montemayor Sacramento:
In your letter dated August 15, 2023, you requested a tariff classification and a country of origin ruling for marking purposes for aluminum fence retail kits. Also, you inquire whether the fence kits are eligible for duty free treatment under the United States-Mexico-Canada (USMCA) Trade Agreement and the country of origin to determine if Section 232 additional duties are applicable.
The products under consideration are described as ornamental aluminum fence kits. These kits are comprised of the following components: 1) 20 pc. - 3-Rail Flat Top, 6´W x 5´H Fence Sections; 2) 20 pc. - 2” x 2” Line Posts; 3) 2 pc. - 2” x 2” Gate Posts; 4) 22 pc. Std Post Caps; 5) 1 pc. Welded 4’W x 5’H Pedestrian Gate, Residential Grade; 6) 1 set Gate Nylon Hinges (2 pc/set) and 7) 1pc - Gate Std Latch.
According to your submission, aluminum profiles, aluminum post caps, an aluminum gate, and connecting hardware (i.e., screws, hinges, etc.) of Chinese origin are sent to Mexico where they will be made into fence kits. The profiles, which are made from type 6063 aluminum alloy and have been extruded, will be shipped to Mexico in 18.86 foot-lengths and will be cut, punched, routed, assembled, welded, and painted as needed and will ultimately become the rail top flats, line posts, and gate posts used in the fence sections. After assembly, the fence kits are packaged and then shipped to the United States (U.S.). You indicate that at the time of importation into the U.S. that the kits contain the exact number of pieces and necessary components to make a complete fence and just require on-site installation.
The applicable subheading for the aluminum fence kits will be 7610.90.0080, Harmonized Tariff Schedule of the United States (HTSUS), which provides for aluminum structures (excluding prefabricated buildings of heading 9406) and parts of structures (for example, bridges and bridge-sections, towers, lattice masts, roofs, roofing frameworks, doors and windows and their frames and thresholds for doors, balustrades, pillars and columns); aluminum plates, rods, profiles, tubes and the like, prepared for use in structures: other: other: other. The rate of duty will be 5.7 percent ad valorem.
USMCA
You inquire whether the fence kits are eligible for preferential treatment under the USMCA. The 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, 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, in relevant part:
For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country … 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—
(i) the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries;
(ii) the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials;
(iii) 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)); ….
The fence kits are comprised of non-originating material from China. Therefore, the fence kits are not considered goods wholly obtained or produced entirely in a USMCA country under GN 11(b)(i) and (ii). We must next determine whether the fence kits qualify under GN 11(b)(iii). The imported fence kits are classified in heading 7610, HTSUS. The applicable rule of origin for merchandise classified in heading 7610, HTSUS, is in GN 11(o), HTSUS, which provides, in relevant part:
Chapter 76 (9) “A change to headings 7610 through 7613 from any other heading, including another heading within that group.” Aluminum profiles and other aluminum components (i.e., post caps and gate) are sent to Mexico where they are manufactured into aluminum fence kits. The profiles are made into the rail top flats, line posts, and gate posts that are used to form a fence section. In order to satisfy the rule of origin in GN 11(o), all the non-originating material/components must meet the tariff shift requirements. We find that the profiles which are made into the rail top flats, line posts and gate posts, and the aluminum post caps meet the tariff shift requirement in the rule of origin cited above. The aluminum rail top flats are classified in heading 7604, HTSUS, the line posts and gate posts are classified in heading 7608, HTSUS, and the post caps are classified in heading 7616, HTSUS. However, this office finds that the aluminum gate is classified in heading 7610, HTSUS, and as such, the gate does not meet the required tariff shift. Since all the non-originating components do not meet the requisite tariff shift, the fence kits cannot be considered originating goods and therefore, are not eligible for preferential treatment under the USMCA.
Country of Origin
In addition to USMCA eligibility, you are requesting a country of origin determination for the subject fence kits for marking purposes. The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides 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 its 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 "country of origin" is defined in 19 CFR 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. 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 § 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 the cases described above because the imported fence panels are neither wholly obtained or produced or produced exclusively from “domestic” 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). Pursuant to 19 C.F.R. §102.11(a)(3), the country of origin of a good is the country in which each foreign material incorporated in that good undergoes an applicable change in tariff classification as set forth in 19 C.F.R. §102.20 and satisfies any other applicable requirements of that section.
Based on the facts presented, because the aluminum fence kits imported into the U.S. from Mexico are classified in heading 7610, HTSUS, the change in tariff classification must be made in accordance with section 102.20(n), Section XV: Chapters 72 through 83, heading 7606 - 7615, HTSUS, which requires “A change to heading 7606 through 7615 from any other heading, including another heading within that group.” In order to satisfy the rule of origin in section 102.20(n), all the non-originating material/components must meet the tariff shift requirements.
The aluminum profiles, aluminum post caps, and the aluminum gate are of Chinese origin and are sent to Mexico where they will be made into fence sections. We find that the profiles which are made into the rail top flats, line posts and gate posts, and the aluminum post caps meet the tariff shift requirement in the rule of origin cited above. The aluminum rail top flats are classified in heading 7604, HTSUS, the line posts and gate posts are classified in heading 7608, HTSUS, and the post caps are classified in heading 7616, HTSUS. However, the aluminum gate is classified in heading 7610, HTSUS, and therefore, the tariff shift requirement has not been met. Since all the non-originating components do not meet the requisite tariff shift and an analysis of section 102.11(a) has not produced a country of origin determination, we turn to section 102.11(b) of the regulations. Section 102.11(b)(1) provides as follows:
b) 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 3, where the country of origin cannot be determined under paragraph (a) of this section:
(1) 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.
Section 102.18(b)(iii) states, in pertinent part:
For purposes of identifying the material that imparts the essential character to a good under 19 C.F.R. § 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 19 C.F.R.§ 102.20 specific rule or other requirements applicable to the good.
If there is only one material that is classified in a tariff provision from which a change in tariff classification is not allowed under the 19 C.F.R. § 102.20 specific rule or other requirements applicable to the good, then that material will represent the single material that imparts the essential character to the good under 19 C.F.R. § 102.11.
In this particular case, the material that does not undergo the applicable tariff shift is the aluminum gate. Therefore, the aluminum gate is the material that imparts the essential character. As such, the country of origin for marking purposes is China.
Applicability of Section 232 Duties
Please be advised when determining the country of origin for purposes of applying trade remedies under Section 301, Section 232 and Section 201, the substantial transformation analysis is applicable. The test for determining whether a substantial transformation will occur is whether an article emerges from a process with a new name, character, or use, different from that possessed by the article prior to processing. This determination is based on the totality of the evidence. See Texas Instruments, Inc. v. United States, 681 F.2d 778 (CCPA 1982).
Assembly operations that are minimal or simple, as opposed to complex or meaningful, will generally not result in a substantial transformation. Factors which may be relevant in this evaluation may include the nature of the operation (including the number of components assembled), the number of different operations involved, and whether a significant period of time, skill, detail, and quality control are necessary for the assembly operation. See C.S.D. 80-111, C.S.D. 85-25, C.S.D. 89-110, C.S.D. 89-118, C.S.D. 90-51, and C.S.D. 90-97. If the manufacturing or combining process is a minor one which leaves the identity of the article intact, a substantial transformation has not occurred. See Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983).
Based on the information provided, aluminum profiles and other aluminum components (i.e., post caps and gate) from China are sent to Mexico. In Mexico, the profiles will be made into the rail top flats, line posts, and gate posts. They will be cut, punched, routed, welded and assembled with the other components to make a new product, namely a completed fence kit. This office finds that the manufacturing and assembling operations performed in Mexico result in a substantial transformation. As such, the country of origin of the subject fence kits for purposes of trade remedy applicability will be Mexico. Products of Mexican origin are excluded from Section 232 trade remedy duties.
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.
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 Angelia Amerson at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division