CLA-2-39:OT:RR:NC:N:5:137
David Olave
Sandler, Travis & Rosenberg P.A.
1300 Pennsylvania Ave. NW, Suite 400 Washington, DC 20004
RE: The tariff classification, country of origin and status under the United States-Panama Trade Promotion Agreement of vinyl flooring planks from Panama
Dear Mr. Olave:
In your letter dated November 27, 2023, you requested a tariff classification, country of origin and status under the US-PTA determination ruling on behalf of your client CPF Floors LLC.
The products under review are vinyl flooring tiles with click lock installation edging. The tiles consist of the following layers: a UV coating layer, polyvinyl chloride (PVC) wear layer and a PVC decorative layer, a stone plastic composite (SPC) core comprised of a mixture of PVC and calcium carbonate, and an ethylene-vinyl acetate (EVA) acoustic padding layer. Imported in boxes, the subject planks are typically manufactured in lengths of 1220 mm (4 feet) and widths of 183 mm (approximately 7 inches).
The applicable subheading for the vinyl flooring tiles will be 3918.10.1020, Harmonized Tariff Schedule of the United States (HTSUS), which provides for floor coverings or plastics, whether or not self-adhesive, in rolls or in the form of tiles: of polymers of vinyl chloride: floor coverings: vinyl tile: vinyl tile consisting of a rigid solid polymer core. The general rate of duty will be 5.3 percent ad valorem.
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.”
When considering a product that may be subject to antidumping, countervailing, or other safeguard measures, the substantial transformation analysis is applied to determine the country of origin. See 19 C.F.R. § 102.0; HQ 563205, dated June 28, 2006; see also HQ 563205, dated September 16, 1996 (finding that "the term 'product of' at the least includes manufactured articles of such country or area" and that substantial transformation "is essentially the test used... in determining whether an article is a manufacture of a given country").
The courts have held that a substantial transformation occurs when an article emerges from a process with a new name, character or use different from that possessed by the article prior to processing. United States v. Gibson-Thomsen Co., Inc., 27 CCPA 267, C.A.D. 98 (1940); National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff'd, 989 F. 2d 1201 (Fed. Cir. 1993); Anheuser Busch Brewing Association v. The United States, 207 U.S. 556 (1908) and Uniroyal Inc. v. United States, 542 F. Supp. 1026 (1982).
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. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983). Substantial transformation determinations are based on the totality of the evidence. See Headquarters Ruling (HQ) W968434, date January 17, 2007, citing Ferrostaal Metals Corp. v. United States, 11 CIT 470, 478, 664 F. Supp. 535, 541 (1987).
Large SPC sheets are manufactured in either China or Vietnam. Polyvinyl chloride, calcium carbonate powder and plasticizers are mixed together and compounded. The mixture is then extruded into a continuous SPC layer. This layer will form the core. Next the core SPC sheet is laminated with the PVC color layer and PVC wear layers through a hot press roller that embosses textures onto the surface. This is followed by a UV coating that is sprayed on top of the bonding. The SPC sheet is cooled until rigid and is then cut into rectangles of 980 mm x 1245 mm.
The large SPC sheets are shipped to Panama for further production. The first step in the process is the “cutting” process. The large sheets go through an automated cutting machine that divides it into tiles per desired width size, generally five 196 mm planks. The next step is “slotting” sometimes referred to as “profiling.” In this step the tiles go through two slotting machines to create high precision patented “angle-angle click” slots on each of their four edges. The resulting tiles will measure 183 mm x 1220 mm at the end of the slotting process. The final transformation step is the “padding.” In this step a padding made from cellular ethylene-vinyl acetate (EVA), sourced from India or China will be bonded through a series of hot gluing rollers to the bottom of the SPC layer. This step provides the resulting SPC click flooring with required acoustic insulation properties. The tiles are then packed in groups of nine to twelve tiles per box and the boxes are palletized for shipment to the United States.
We find that the processing performed in Panama with respect to cutting the tiles, creating the angle-angle click slots, and adding padding does constitute a substantial transformation of the imported components into "products of" Panama. The manufacturing process in Panama transforms the non-originating components and parts to produce the finished SPC flooring tiles. It creates a new and different article of commerce with a distinct character and use that is not inherent in the components imported into Vietnam. Therefore, the "product of" requirement has been satisfied. It is of the opinion of this office that the country of origin for the SPC flooring will be Panama.
You also requested a ruling on the status of vinyl flooring tiles from Panama under the United States-Panama Trade Promotion Agreement.
General Note 35, HTSUS, sets forth the criteria for determining whether a good is originating under the US-PATPA. General Note 35(b), HTSUS, states, in pertinent part, that
For the purposes of this note, subject to the provisions of subdivisions (c), (d), (n) and (o) thereof, a good imported into the customs territory of the United States is eligible for treatment as an originating good under the terms of this note if-
(i) the good is a good wholly obtained or produced entirely in the territory of Panama, the United States, or both;
(ii) the good was produced entirely in the territory of Panama, the United States, or both, and-
(A) each of the non-originating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (o) of this note; or
(B) the good otherwise satisfies any applicable regional value content or other requirements specified in such subdivision (o); and satisfies all other applicable requirements of this note and of applicable regulations; or
(iii) the good was produced entirely in the territory of Panama or of the United States, or both, exclusively from materials described in subdivision (i) or (ii), above
For goods classified in 3918, General Note 35(o) 39.2 requires:
A change to subheadings 3916.10 through 3918.90 from any other subheading.
The non-originating SPC sheets are classified in subheading 3920.43, HTSUS and the non-originating EVA padding is classified in subheading 3921.19, HTSUS. Therefore, the vinyl flooring tiles with SPC core qualify for preferential tariff treatment under the United States-Panama Trade Promotion Agreement.
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 at https://hts.usitc.gov/current.
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. Additionally, we note 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 and Border Protection 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, please contact National Import Specialist Christina Allen at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division