CLA-2-67:OT:RR:NC:N3:348
Sylvia Casas
Casas International Brokerage, Inc.
9355 Airway Road
Suite 4
San Diego, CA 92154
RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of an outdoor artificial privacy screen kits from Mexico ; Article 509
Dear Ms. Casas:
In your letter dated April 24, 2013, you requested a ruling on the status of an artificial Privacy Screen Hedge from Mexico under the NAFTA.
The Privacy Screen Hedge is a composite good that contains a plastic artificial foliage grid, measuring 10” x 10” or 12” or 12”, affixed with artificial leaves; an iron cage and a pvc or fiberglass planter. The artificial leaves, for the plastic grid, are attached by a snap-on construction, in which the foliage is assembled by fitting onto plastic peg, without the use of an adhesive.
The Privacy Screen Hedge is considered to be a composite good within the meaning of General Rule of Interpretation (GRI) 3. The artificial plastic leaves provide ornamental and decorative appeal. It is the opinion of this office that plastic artificial foliage grid provides the essential character within the meaning of (GRI) 3(b).
The applicable tariff provision for the Privacy Screen Hedge will be 6702.10.4000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for artificial flowers, foliage and fruit and parts thereof; articles made of artificial flowers, foliage or fruit: of plastics: Other, including parts. The general rate of duty will be 3.4 percent ad valorem.
The manufacturing process for the merchandise is as follows:
The iron cage is manufactured in Mexico. In Mexico, the iron pieces are cut according to the size of the cage. The pieces are welded and formed into the appropriate shape. The cage is than cleaned and painted.
The PVC or fiberglass planter is manufactured in Mexico.
The plastic artificial foliage grid is manufactured in China.
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/.
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.
The NAFTA Rule of Origin for heading 6702, found under General Note 12(t) of the HTSUS, calls for “a change from any other heading, including another heading within that group.”
The non-originating material that must meet the terms of the tariff shift is the plastic artificial foliage grid. The plastic artificial foliage is classified under 6702 as ‘parts of artificial flowers, foliage and fruit’, they will not meet the tariff-shift rule for 6702.
Alternatively, General Note 12(b)(iv)(B), states that a good qualifies as NAFTA if the good is ‘produced entirely in …Mexico’ but one or more of the non-originating materials falling under the provisions under ‘parts’ and used in the production of the good does not undergo a change in tariff classification because…….
(B)……..the subheading for such goods provide for and specifically describe both the good themselves and their parts, …
and provided further that the regional value content is not less than 50% where the net cost method is used."
The non-originating parts (e.g., artificial foliage squares 10”x10” or 12”x12”) are parts that are used to make the good (i.e., Privacy Screen Hedge). These parts are classified in heading 6702 and within that heading they are classified in subheading 6702.10, HTSUS.
In your letter, you submitted documentation which provides the Regional Value Content (RVC) for the finished good. The RVC, for the Privacy Screen Hedge, is 77% when using the net cost method.
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)(iv)(B). The goods will therefore be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.
COUNTRY OF ORIGIN - LAW AND ANALYSIS:
Regulations (19 CFR 102.11), sets forth the required hierarchy for determining whether a good is a good of a NAFTA country for the purposes of country of origin marking and determining the rate of duty and staging category applicable to an originating good as set out in Annex 302.2. Paragraph (a) of this section provides that the country of origin of a good is the country in which (1) the good is wholly obtained or produced, or (2) the good is produced exclusively from domestic materials, or (3) each foreign material incorporated into that good undergoes an applicable change in tariff classification set out in section 102.20 of the regulations.
"Foreign material" is defined in 19 CFR 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. Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because the Privacy Screen Hedge is manufactured from materials originating in Mexico and China and therefore is neither wholly obtained or produced, nor produced exclusively from domestic materials. Since an analysis of sections 102.11(a) (1) and 102.11(a) (2) will not yield a country of origin determination, we look to section 102.11(a) (3).
Section 102.11(a)(3) provides that the country of origin is the country in which each foreign material incorporated in that good undergoes an applicable change in tariff classification as set forth in 19 CFR 102.20. Since we have determined that Privacy Screen Hedge is classified in subheading 6702.10.4000, HTSUS, the applicable tariff shift rule found in section 102.20(k) requires:
A change to heading 6702 thru 6704 from any other heading, including another heading within that group
Applying the NAFTA Marking Rules set forth in Part 102 of the regulations to the facts of this case, we find that the non-originating materials do not undergo the applicable shift in tariff classification.
Section 102.19(a) of the regulations contains a “NAFTA preference override”:
Except in the case of goods covered by paragraph (b) of this section, if a good which is originating within the meaning of § 181.1(q) of this chapter is not determined under § 102.11(a) or (b) or § 102.21 to be a good of a single NAFTA country, the country of origin of such good is the last NAFTA country in which that good underwent production other than minor processing, provided that a Certificate of Origin . . . has been completed and signed for the good
As the Privacy Screen Hedge qualifies as a NAFTA originating good, applying the terms of Section 102.19(a), the country of origin of this product is Mexico. The Privacy Screen Hedge will be entitled to the special "MX" duty rate, provided that all other requirements of the NAFTA are met.
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 Rosemarie Hayward at (646) 733-3064.
Should you wish to request an administrative review of this ruling, submit a copy of this ruling and all relevant facts and arguments within 30 days of the date of this letter, to the Director, Commercial Rulings Division, Headquarters, U.S. Customs and Border Protection, Regulations & Rulings, 799 9th Street N.W. - 7th floor, Washington, DC 20229-1177.
Sincerely,
Thomas J. Russo
Director
National Commodity Specialist Division