CLA-2-85:OT:RR:NC:N1:108
Mr. Steven B. Zisser
Zisser Customs Law Group
9355 Airway Road, Ste.1
San Diego, CA 92154
RE: The tariff classification, status and country of origin marking under the North American Free Trade Agreement (NAFTA), of an LED-backlit LCD color television from Mexico; Article 509
Dear Mr. Zisser:
In your letter dated October 13, 2014, on behalf of your client, Trend Smart America Inc., you requested a ruling on the tariff classification, status, and country of origin marking of an LED-backlit LCD color television from Mexico under the NAFTA.
The subject merchandise, based on the submitted information, is the Vizio D500i-B1 (a 50-inch model), which is stated to represent similarly constructed Vizio televisions of various diagonal-screen sizes ranging from 39 inches to 65 inches. This high-definition color Smart TV, which incorporates a USB port, contains the internal circuitry and firmware that provide the television with the capability to reproduce still photos, music and videos stored on a USB storage device (not included). You are requesting NAFTA eligibility regarding two different scenarios.
In the first scenario, specifically related to the above model number, the merchandise essentially consists of the LED-backlit LCD subassembly, the main board, the power board, the remote control, and the speakers, all of which are non-originating Chinese components that are shipped separately from China into the United States and then imported inbond to Mexico in different shipments and at different times. Although these parts, as well as various subsidiary components of Chinese origin, are shipped, as noted above, independently to Mexico as production needs occur, the above-stated components are always shipped separately from each other.
In the second scenario, not having a confirmed model number, the merchandise essentially consists of the LED-backlit LCD subassembly, the main board with the power board, the remote control, and the speakers, all of which are non-originating Chinese components that are shipped separately from China into the United States and then imported inbond to Mexico in different shipments and at different times. Although these parts, as well as various subsidiary components of Chinese origin, are shipped, as noted above, independently to Mexico as production needs occur, the above-stated components are always shipped separately from each other.
The difference between the two scenarios is that in the first scenario the main board only has the traditional functions of a main board; and in the second scenario, the main board also includes the power distribution/control functions that are typically found on a separate power board.
For both scenarios, when imported into Mexico, the pre-assembled LCD subassembly with LED backlight consists of the following: the LED-backlit LCD panel; the timing controller board (controls video signal to TFT panel); the display board (controls such features as channel and volume and the menu); the infrared board; the front bezel; the back cover; and the stand, all of which come pre-assembled excepting the stand. The LCD subassembly does not contain a tuner or a main board and cannot receive or process a broadcast television signal or any other type of signal.
For scenario one, the main board, when imported into Mexico, is stated to contain all the television control elements, including a television tuner and all audio and video components. Furthermore, the main board, which does not have a power supply or a display screen, contains all of the components, except the deflection circuitry, enumerated in Additional U.S. Note 9 to Chapter 85 of the Harmonized Tariff Schedule of the United States (HTSUS). For the second scenario, the main board, when imported into Mexico, is stated to contain all the television control elements, including a television tuner and all audio and video components, plus a power supply. Furthermore, the main board, which does not have a display screen, contains all of the components, except the deflection circuitry, enumerated in Additional U.S. Note 9 to Chapter 85 of the HTSUS.
In Mexico, for both scenarios, the LCD subassembly with LED backlight is disassembled in such a manner to allow the main board (with or without the power board), the power board (with or without the main board), and the speakers, as well as several minor components, to be incorporated into the LCD subassembly, with all the required operations being performed in assembling this merchandise. In this manner, the components are further manufactured to produce a functioning LED-backlit LCD television.
The applicable tariff provision for this television will be 8528.72.6400, HTSUS, which provides for Monitors and projectors, not incorporating television reception apparatus; . . . : Reception apparatus for television, whether or not incorporating radio-broadcast receivers or sound or video recording or reproducing apparatus: Other, color: With a flat panel screen: Incorporating video recording or reproducing apparatus: Other. The general rate of duty will be 3.9 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/.
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—
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
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.
Based on the facts provided, this LED-backlit LCD color television qualifies for NAFTA preferential treatment, because in both scenarios it will meet the requirements of HTSUS General Note 12(b)(ii)(A). Moreover, the non-originating components will undergo the appropriate change in tariff classification as required by HTSUS General Note 12 (t)/85.91(H), which reads: “A change to other reception apparatus for television of subheading 8528.72 from incomplete or unfinished reception apparatus for television (including assemblies for reception apparatus consisting of all the parts specified in chapter rule 3 to chapter 85 plus a power supply), not incorporating a cathode-ray tube, flat panel screen or similar display, of subheading 8528.72 or any other heading.” This LCD color television, with an LED backlight, will therefore be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.
You have stated that the finished television can be properly marked “Made in Mexico,” “Product of Mexico,” or “Assembled in Mexico.” In this regard, through reviewing various rules of origin governing the NAFTA Marking Rules, you determined that the country of origin for this merchandise would be Mexico. Moreover, you claim, citing HQ ruling decision 563266, dated July 27, 2005, that the subject television being also produced through an assembly operation as the merchandise in the above-stated HQ ruling decision supports your position.
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 United States 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 United States the English name of the country of origin of the article. Part 134, Customs Regulations (19 C.F.R. 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 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. (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 imported television is processed in Mexico prior to being imported into the United States. Since Mexico is defined under 19 C.F.R. 134.1(g), as a NAFTA country, we must first apply the NAFTA Marking Rules in order to determine whether the imported television is a “good of a NAFTA country,” and thus subject to the NAFTA marking requirements.
Part 102 of the regulations (19 C.F.R. 102) 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. 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 in that good undergoes an applicable change in tariff classification set out in section 102.20 of the regulations.
“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.
Since the subject television is neither wholly obtained or produced, nor produced exclusively from domestic materials, the requirements of sections 102.11(a)(1) and 102.11(a)(2) will not apply. Consequently, Section 102.11(a)(3) must be addressed; this section 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 C.F.R. 102.20. In this regard, the applicable tariff rule under Section 102.20 (o) states: “A change to subheading 8528.69 through 8528.73 from any other subheading, including another subheading within that group, except from subheading 8540.11 through 8540.12.” In both scenarios, the requisite tariff shift rule is met, and therefore, the country of origin of the completed television is found to be Mexico, which is the country of assembly.
Being that this television is a product of Mexico under 19 C.F.R. Part 102, with regard to the proposed marking, section 134.43(e), Customs Regulations (19 C.F.R. 134.43(e)), provides that:
Where an article is produced as a result of an assembly operation and the country of origin of such article is determined under this chapter to be the country in which the article was finally assembled, such article may be marked, as appropriate, in a manner such as the following:
(1) Assembled in (country of final assembly);
(2) Assembled in (country of final assembly) from components of (name of country or countries of origin of all components); or
(3) Made in, or product of, (country of final assembly).
Based on this section of the Customs Regulations, this office has determined that the subject television, assembled as described above, would be considered properly marked “Made in Mexico,” “Product of Mexico, “ or “Assembled in Mexico” when in compliance with the above-stated marking requirements. This determination has been confirmed in the above-cited HQ ruling decision 563266.
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 Lisa Cariello at [email protected].
Sincerely,
Gwenn Klein Kirschner
Director
National Commodity Specialist Division