Mr. Alex Romero
AF Romero Co., Inc.
U.S. Customs Brokers
1749 Stergios Rd.
RE: THE COUNTRY OF ORIGIN UNDER THE NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA) OF LAMP BALLASTS; ARTICLE 509 AND NAFTA ELIGIBILITY
Dear Mr. Romero:
This is in response to your letter dated December 5, 2008 on behalf of Panasonic Electric Works Corp., requesting a ruling on whether the country of origin of the lamp ballasts, which your client imports, is Mexico. You also asked if the lamp ballasts are eligible for NAFTA duty preference. A marked sample was not submitted with your letter for review.
Your letter states that Panasonic Electric Works Corp. operates a Maquiladora in Mexicali, Mexico. They import 114 various components of diverse origin into Mexico for use in a considerable assembly process to product lamp ballasts in their Maquiladora. As a result of the assembly process each component undergoes a substantial transformation in which a finished good, lamp ballasts, are created.
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. Part 134, Customs Regulations (19 CFR Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.
The country of origin marking requirements for a “good of a NAFTA country” are also determined in accordance with Annex 311 of the North American Free Trade Agreement (“NAFTA”), as implemented by section 207 of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat 2057) (December 8, 1993) and the appropriate Customs Regulations. The Marking Rules used for determining whether a good is a good of a NAFTA country are contained in Part 102, Customs Regulations. The marking requirements of these goods are set forth in Part 134, Customs Regulations.
Section 134.1(b) of the regulations, defines "country of origin" as the country of manufacture, production, or growth of any article of foreign origin entering the U.S. 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 this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin. (Emphasis added).
Section 134.1(j) of the regulations, provides that the "NAFTA Marking Rules" are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. Section 134.1(g) of the regulations, defines a "good of a NAFTA country" as an article for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules. Section 134.45(a)(2) of the regulations, provides that a "good of a NAFTA country" may be marked with the name of the country of origin in English, French or Spanish.
The lamp ballasts are assembled in Mexico and advanced in value and/or improved in condition prior to being imported into the U.S. Since Mexico is defined under 19 CFR 134.1(g), as a NAFTA country, we must first apply the NAFTA Marking Rules in order to determine whether the imported articles are a "good of a NAFTA country", and thus subject to the NAFTA marking requirements.
Part 102 of the regulations, sets forth the "NAFTA Marking Rules" for purposes of determining whether a good is a good of a NAFTA country for marking purposes. Section 102.11 of the regulations, sets forth the required hierarchy for determining country of origin for marking purposes.
Applying the NAFTA Marking Rules set forth in Part 102 of the regulations to the facts of this case, we note that the applicable tariff provision for the lamp ballasts will be 8504.10.0000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “ballasts for discharge lamps or tubes.” We find that the imported lamp ballasts are goods of Mexico for marking purposes because they meet the tariff shift requirement set out in Part 102 of the regulations. As such, the imported lamp ballasts can be marked to indicate Mexico as the country of origin.
You also inquired as the NAFTA eligibility of the imported lamp ballasts. In accordance with General Note (GN) 12 to Chapter 85, Chapter Rule 7, 4(A) states in part:
“A change to subheadings 8504.10 through 8504.31 from any other heading.”
Based on the Bill of Materials (BOM) that you furnished, labeled Exhibit B, there are seven components, which originate in China and Japan, whose classifications fall within heading 8504, specifically subheadings 8504.31.2000 and 8504.50.8000. As such, since the classifications of those seven components are not from a heading other than 8504, they are not eligible for duty free preferential treatment under NAFTA. Further in your letter, you claim that those non-tariff shifting components are well below the 7 percent De Minimis Rule allowed by GN 12(f) of the Harmonized Tariff Schedule of the United States (HTSUS). However, your submission reveals that the cost of the finished good is $21.59 and the cost of the seven non-tariff shifting components is $2.16. As such, the seven components represent 10 percent of the value of the finished good. Therefore, the De Minimis Rule is not applicable since the cost of the seven components exceeds the 7.0 percent allowance under this rule.
This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 CFR Part 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 Linda Hackett at (646) 733-3015.
Robert B. Swierupski
National Commodity Specialist Division