Florey Del Rio
Rexel Canada Electrical Inc.
5600 Keaton Crescent
Mississauga, Ontario L5R 3G3
RE: The tariff classification, marking, and status under the North American Free Trade Agreement (NAFTA) of electrical junction boxes from Canada
Dear Ms. Del Rio:
In your letter dated March 22, 2019 you requested a tariff classification ruling.
There are five items under consideration which are identified as Electrical Junction Boxes, PN RTB-003-02, PN RTB-009-01, PN RTB-009-02, PN RTB-009-03, and PN RTB-009-04. The junction boxes consist of electrical components mounted within a NEMA compact enclosure which are used in electrical distribution applications.
Junction Box RTB-003-02 is described as a populated enclosure containing 56 terminal blocks, a bus bar, two cross connectors, and various mounting hardware. You state the enclosure, bus bar, and cross connectors are from Germany, the terminal blocks are from Romania, and the various remaining parts and mounting hardware are of numerous foreign origins.
Junction Boxes RTB-009-001, PN RTB-009-02, PN RTB-009-03, and RTB-009-004 have identical bills of material and are described as populated enclosures containing 48 terminal blocks, a bus bar, two cross connectors, and various mounting hardware. You state the enclosure, bus bar, and cross connectors are from Germany, the terminal blocks are from Romania, and various parts and mounting hardware are of numerous foreign origins.
The applicable subheading for the Electrical Junction Boxes, PN RTB-003-02, PN RTB-009-01, PN RTB-009-02, PN RTB-009-03, and PN RTB-009-04, will be 8537.10.9170, Harmonized Tariff Schedule of the United States, (HTSUS), which provides for "Electrical apparatus for switching...: Other switches: Other: Other: Push-button: Rated at over 5 A". The general rate of duty will be 0.6%.
With regard to the country of origin marking of the junction boxes, Section 304 of the 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 container) will permit in such a manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article. The regulations implementing the requirements and exception to 19 U.S.C. 1304 are set forth in Part 134, Customs and Border Protection Regulations (19 C.F.R. Part 134).
19 C.F.R. 134.1(b) provides as follows:
Country of origin means 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 country, the NAFTA Marking Rules will determine the country of origin.
Since Canada is a NAFTA country, the NAFTA Marking Rules must be applied in determining the country of origin for purposes of marking.
Part 102, Customs and Border Protection Regulations (19 C.F.R. Part 102), sets forth the NAFTA Marking Rules. Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes. 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 Section 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 this case because the assembled junction boxes are neither wholly obtained nor 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). "Foreign material" is defined in 19 C.F.R. 102.1(e) as "a material whose country of origin as determined under these rules is not the same country as the country in which the good is produced." The applicable rule for subheading 8537.10.9170, HTSUS, in section 102.20 requires:
A change to heading 8537 from any other heading.
All of the components used in the assembly of the junction boxes are imported into Canada and are therefore designated as foreign material. After a thorough review of the bills of materials for each of the junction boxes, we are of the opinion that prior to assembly, all of the components are classifiable outside of heading 8537, HTSUS. Thus, for purposes of marking, the foreign components satisfy the requisite change in heading and the country of origin of the Electrical Junction Boxes, PN RTB-003-02, PN RTB-009-01, PN RTB-009-02, PN RTB-009-03, and PN RTB-009-04 is Canada.
Turning to your request for NAFTA status, 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:
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 nonoriginating 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.
With respect to General Note 12(b)(ii)(A), the applicable tariff shift rule under General Note 12(t) Chapter 85 states:
A) A change to heading 8537 from any other heading, except from tariff items 8538.90.10, 8538.90.30 or 8538.90.60;
In noting each of the junction boxes contain foreign end brackets and plates which are classified under subheading 8538.90.60, HTSUS, we are of the opinion that these non-qualifying components would meet the de minimis rule for the NAFTA tariff preference, which states as follows:
(f) De Minimis.
(i) Except as provided in subdivisions (f)(iii) through (vi), inclusive, a good shall be considered to be an originating good if the value of all non-originating materials used in the production of the good that do not undergo an applicable change in tariff classification set out in subdivision (t) of this note is not more than 7 percent of the transaction value of the good, adjusted to a F.O.B. basis, or, if the transaction value is unacceptable under section 402(b) of the Tariff Act of 1930, as amended, the value of all such non-originating materials is not more than 7 percent of the total cost of the good, provided that (B) the good satisfies all other applicable requirements of this note.
Based on the facts provided, the Electrical Junction Boxes, PN RTB-003-02, PN RTB-009-01, PN RTB-009-02, PN RTB-009-03, and PN RTB-009-04 described above qualify for NAFTA preferential duty 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.
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 the World Wide Web at https://hts.usitc.gov/current.
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 Karl Moosbrugger at firstname.lastname@example.org.
Steven A. Mack
National Commodity Specialist Division