Mr. Jason M. Waite
Alston & Bird LLP
The Atlantic Building
950 F Street, NW
Washington, DC 20004-1404
RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of control units from Mexico; Article 509
Dear Mr. Waite:
In your letter dated March 14, 2008, on behalf of your client E.G.O. North America, Inc. (EGO), you requested a ruling on the status of two control boards from Mexico under the NAFTA.
The merchandise under consideration consists of two printed circuit board assemblies (PCBAs), which are control boards for laundry machines identified as the MDC Dryer Control, Part Number 7702163000 and the Cyclone Motor Control, Part Number 7702175000. Samples of both controls completely assembled, along with pre-assembled individual components were submitted with your ruling request.
The fully assembled MDC Dryer Control consists of two printed circuit boards (PCBs) populated with active and passive components (i.e., integrated circuits (ICs), semiconductor devices, resistors, transistors, capacitors, etc.), 3 relays, 7 multi-pin PCB connectors and 2 spade terminals. The two PCBs are connected together physically and electrically, and fitted to a metal frame or support exposing two LITEON Displays and several light emitting diodes (LEDs) behind a clear plastic film. From the information that you provided, this PCBA serves as the user interface control, which controls the functions of a laundry machine.
The fully assembled Cyclone Motor Control consists of a PCB mounted onto a metal support and populated with active and passive components (i.e. integrated circuits (ICs), semiconductor devices, resistors, transistors, capacitors, etc.), 3 relays and 9 multi-pin PCB connectors. From the information that you provided, this PCBA controls a laundry or washing machine motor.
The applicable tariff provision for the MDC Dryer Control, Part Number 7702163000 and the Cyclone Motor Control, Part Number 7702175000, will be 8537.10.3000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Boards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of heading 8535 or 8536, for electric control or the distribution of electricity…: For a voltage not exceeding 1,000 V: Assembled with outer housing or supports, for the goods of headings…8450 or 8516.” The general rate of duty will be 2.7 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 http://www.usitc.gov/tata/hts/.
In your ruling request you state that the PCBAs are made from non-originating components (i.e., bare PCBs, ICs, semiconductor devices, diodes, resistors, transistors, capacitors, relays, connectors, etc.), which are imported into Mexico from various countries. The complete assembly process in conducted in Mexico.
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.
Each of the non-originating components used in the assembly of the control boards satisfy the change in tariff classification requirements under the HTSUS General Note 12(t)/85.121. Based on the facts provided, the goods described above qualify for NAFTA preferential treatment, because they will meet the requirements of HTSUS General Note 12(b)(ii)(A). The goods will therefore be entitled to a Free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.
This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 C.F.R. 181).
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 Thomas Campanelli at 646-733-3016.
Robert B. Swierupski