CLA-2-39:OT:RR:NC:N2:421
John Hubers
Agility Logistics Corp. 3505 Naturally Fresh Blvd, Suite 340 Atlanta, GA 30349
RE: The tariff classification, country of origin marking, and status under the North American Free Trade Agreement (NAFTA), of the ProVa Shower System imported from Canada; Article 509
Dear Mr. Hubers:
In your letter dated February 24, 2016, on behalf of Loxcreen Canada, Ltd., you requested a ruling on the classification, country of origin, and NAFTA status of the ProVa Shower System kit imported from Canada.
The merchandise at issue is identified as the ProVa Shower System, a do-it-yourself kit designed to allow a user to build a fully bonded watertight assembly for a tiled shower. The main component of the kit is identified as the ProVa Mat, a 54 square foot roll of waterproofing membrane constructed of nonwoven man-made fiber fabric combined with a layer of polypropylene plastic foil. Additional components of the kit include a polystyrene plastic shower curb and shower base (the ProVa Shower Curb and Shower Pan respectively), joint strips and corner seals (made from the same material as the ProVa Mat), a drain assembly, and instructional materials. All of the components are packaged in a corrugated cardboard box ready for retail sale. The basic kit is available in several variations to account for different shower sizes and drain placements.
Tariff classification under the Harmonized Tariff Schedule of the United States (HTSUS) is governed by the principles set forth in the General Rules of Interpretation (GRI) taken in order. The Explanatory Notes to the Harmonized Tariff System provide guidance in the interpretation of the Harmonized Commodity Description and Coding System at the international level. Explanatory Note X to GRI 3(b) provides that the term "goods put up in sets for retail sale" means goods that: (a) consist of at least two different articles which are, prima facie, classifiable in different headings; (b) consist of articles put up together to meet a particular need or carry out a specific activity; and (c) are put up in a manner suitable for sale directly to users without repacking. Goods classifiable under GRI 3(b) are classified as if they consisted of the material or component which gives them their essential character, which may be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the article. Based on the information provided, the ProVa Mat waterproof membrane is the principal component of the shower kit in terms of value and function. It is the ProVa Mat that enables a user to install the majority of the waterproofing system in a shower, with the other components of the kit serving a supplemental role in the endeavor. The ProVa Shower System would be considered a set for tariff classification purposes, with the essential character imparted by the ProVa Mat.
You suggest classification of the ProVa Mat in heading 5603 of the HTSUS, which provides for Nonwovens, whether or not impregnated, coated, covered or laminated. As mentioned above, the ProVa Mat is composed of nonwoven polypropylene fiber textile material combined with polypropylene plastic foil. Per the specifications provided with your submission, the material consists of 76.7% polypropylene plastic foil and 23.3% nonwoven fabric, and weighs 240 grams per square meter. Harmonized System Explanatory Note III to heading 5603 indicates that nonwovens covered on one or both surfaces with textile fabric or with sheets of any other material are classified in this heading only if they derive their essential character from the nonwoven. The ProVa Mat’s primary purpose is to serve as a waterproof membrane, a function in which the nonwoven material does not serve a major role. It is the polypropylene plastic layer that provides impermeability to the ProVa Mat, and as a result, the essential character of the mat is imparted by the plastic.
The applicable tariff provision for the ProVa Shower System kit will be 3921.90.1100, HTSUS, which provides for Other plates, sheets, film, foil and strip, of plastics: Other: Combined with textile materials and weighing not more than 1.492 kg/m2: Products with textile components in which man-made fibers predominate by weight over any other single textile fiber: Over 70 percent by weight of plastics. The general rate of duty will be 4.2% 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/.
In your submission you inquire as to the ProVa Shower System kit’s eligibility to qualify for preferential duty treatment under NAFTA. The kit consists of components that hail from Canada, Germany, India, and Taiwan. The components are packaged together for retail sale at Loxcreen Canada’s facility in Ontario and subsequently shipped to the United States.
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.
While the ProVa Shower System kits are packaged in Canada, they contain non-originating components (i.e. those that were produced in countries other than Canada, the United States, or Mexico). As a result, to qualify for NAFTA treatment under the terms of General Note 12(b)(ii)(a), each non-originating material must undergo the change in tariff classification set forth in General Note 12(t). The relevant change in tariff classification rule for subheading 3921.90, where the ProVa Shower System kit is classified, states the following:
A change to subheading 3921.90 from any other heading, except from subheadings 3920.20 or 3920.71. In addition, the regional value content must not be less than:
(A) 60 percent where the transaction value method is used, or
(B) 50 percent where the net cost method is used.
Per the information you provided, the aforementioned ProVa Mat (which imparts the essential character to the kit) is a product of Germany, and is thus a non-originating component. As the mat and the kit are both classified in subheading 3921.90, it does not meet the requisite tariff shift outlined above. Consequently, the ProVa Shower System kit is not eligible for preferential treatment under NAFTA.
You have also inquired about the country of origin of the ProVa Shower System kits. 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 as legibly and 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 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.
As stipulated in 19 CFR 134.1(b), "country of origin" is defined 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 determine the country of origin.” The NAFTA Marking Rules are defined, per 19 CFR 134.1(j), as the rules promulgated for purposes of determining whether a good is a good of a NAFTA country, and said rules are set forth in 19 CFR 102.
Section 102.11 of the regulations (19 CFR 102.11) sets forth the hierarchy for determining the country of origin under the NAFTA marking rules. As has been established above, the ProVa Shower System kit is not wholly obtained or produced in a single country, nor is it produced exclusively of domestic (i.e. Canadian) materials. Additionally, not every foreign material included in the kit undergoes an applicable change in tariff classification set out in 19 CFR 102.20. Section 102.11(c) indicates that when the country of origin of a product cannot be determined under the preceding methods in the hierarchy, and the good is specifically described as a set pursuant to GRI 3, the country of origin of the good is the country or countries of origin of all materials that merit equal consideration for determining the essential character of the good.
The components of the ProVa Shower System kit that equally merit consideration include products of Germany, Canada, and India (the Taiwanese material consists solely of a handful of screws and a small plastic bag, and thus does not merit equal consideration). As a result, the countries of origin of the ProVa Shower System are Canada, Germany, and India.
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/.
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 Evan Conceicao at [email protected].
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, 90 K Street, N.E. – 10th floor, Washington, DC 20229-1177.
Sincerely,
Deborah C. Marinucci
Acting Director
National Commodity Specialist Division