Karl F. Krueger
DHL Global Forwarding
2660 20th Street
Port Huron, MI 48060-6444
RE: The tariff classification, North American Free Trade Agreement (NAFTA) status and marking requirements for disassembled alternator and starter cores from Canada
Dear Mr. Krueger:
In your letter dated December 29, 2009, you requested a ruling on behalf of your client Rapidparts, Inc. of Grand Rapids, Michigan.
Rapidparts operates a business in remanufactured alternators and starters for automobiles and lift trucks. You state that the vehicles from which the used alternator and starter cores are removed are NAFTA non-originating and classifiable in Chapter 84, if lift trucks, and Chapter 87, if automobiles, of the Harmonized Tariff Schedule of the United States (HTSUS). While in Canada, the alternator and starter cores are removed by disassembly. The removed cores are exported to the United States in the same condition as removed from the vehicles for re-building.
The applicable classification subheading for the Alternator Cores will be 8511.50.0000, HTSUS, which provides for “ … generators ( … alternators) … used in conjunction with [spark-ignition or compression-ignition internal combustion engines]: Other generators”. The rate of duty will be 2.5 %.
The applicable classification subheading for the Starter Cores will be 8511.40.0000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “ … starting equipment of a kind used for spark-ignition or compression-ignition internal combustion engines ( … starter motors …): Starter motors … .” The rate of duty will be 2.5 %.
In your Ruling Request, you propose that the disassembled Alternator and Starter Cores receive NAFTA preferential tariff treatment on the bases that “disassembly” qualifies as “production”, for NAFTA purposes and that they undergo a change in their tariff classification when they are removed from lift trucks or automobiles.
Section 181.32(a) [NORTH AMERICAN FREE TRADE AGREEMENT: Subpart L-Rules of Origin: Disassembly] of Title 19 of the Code of Federal Regulations [Customs Duties] states “ … disassembly is considered to be production … .”
In addition, General Note 12(b), HTSUS, which sets forth the criteria for determining whether a good is originating under the NAFTA, 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
Based on the facts provided, the Alternator and Starter Cores described above qualify for NAFTA preferential treatment because they will meet the requirements of HTSUS General Note 12(b) as having a country of origin of Canada. The goods will therefore be entitled to a Free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.
You have also requested a ruling on the country of origin to be marked on the un-built cores at the time of importation into the United States.
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 134.45(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. 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.
Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.41(b), Customs Regulations (19 CFR 134.41(b)), mandates that the ultimate purchaser in the U.S. must be able to find the marking easily and read it without strain. Section 134.1(d) of the regulations, provides that the ultimate purchaser of a good of a NAFTA country is the last person in the United States who purchases the good in the form in which it was imported. If an imported article is to be sold at retail in its imported form, the purchaser at retail is the ultimate purchaser.
Since both the Alternator and Starter Cores are disassembled from vehicles in Canada and disassembly qualifies as production for NAFTA purposes, the Cores should be marked “Made in Canada” or “Product of Canada”.
There is no indication in your request as to the specifics of your imported shipments of the Alternator and Starter Cores, therefore the following paragraphs entertain multiple scenarios:
With regard to the permanency of a marking, section 134.41(a), Customs Regulations (19 CFR 134.41(a)), provides that as a general rule marking requirements are best met by marking worked into the article at the time of manufacture. For example, it is suggested that the country of origin on metal articles be die sunk, molded in, or etched. However, section 134.44, Customs Regulations (19 CFR 134.44), generally provides that any marking that is sufficiently permanent so that it will remain on the article until it reaches the ultimate purchaser unless deliberately removed is acceptable. These regulations would apply if the Alternator and Starter Cores are imported individually or without packaging or containers enclosing them.
An article is excepted from marking under 19 U.S.C. 1304 (a)(3)(D) and section 134.32(d), Customs Regulations (19 CFR 134.32(d)), if the marking of a container of such article will reasonably indicate the origin of such article. Accordingly, if Customs is satisfied that the article will remain in its container until it reaches the ultimate purchaser and if the ultimate purchaser can tell the country of origin of the cores by viewing the container in which it is packaged, the individual Alternator and Starter Cores would be exempted from marking under this provision.
This ruling is being issued under the provisions of Parts 177 and 181 of the Customs Regulations (19 C.F.R. 177, 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 contact National Import Specialist Richard Laman at 646-733-3017.
Robert B. Swierupski
National Commodity Specialist Division