CLA-2-85: OT: RR: NC: N2:208
Mr. Michael Dahm
Cole International USA Inc.
1775 Baseline Rd.
Grand Island, NY 14072
RE: The tariff classification and status under the United States-Mexico-Canada Trade Agreement (USMCA) of a radio navigational aid apparatus
Dear Mr. Dahm:
In your letter dated May 13, 2021, on behalf of Novatel Inc., you requested a ruling on the classification of a radio navigational aid apparatus, as well as a determination on the eligibility of duty-free treatment under the USMCA.
The merchandise under consideration is radio navigational aid apparatus, models Powerpak7D-E2 (PwrPak7) and SPANCPT (CPT7).
The PwrPak7 is a Global Navigation Satellite System (GNSS) Inertial Navigation Systems that contains GNSS and Inertial Navigation System (INS) technologies. Moreover, the PwrPak7 contains an Inertial Measurement Unit (IMU) and can track all present and upcoming GNSS constellations and satellite signals.
The CPT7 is a single enclosure GNSS and INS receiver. The CPT7 also contains an IMU to deliver position, altitude, and navigation technology in an integrated solution.
In your request, you suggest that these radio navigational aid systems are classifiable under subheading 8526.91.0040, Harmonized Tariff Schedule of the United States (HTSUS). We agree.
The applicable subheading for the Powerpak7D-E2 and SPANCPT receivers will be 8526.91.0040, HTSUS, which provides for “Radio apparatus, radio navigational aid apparatus and radio remote control apparatus: Other: Other.” The rate of duty will be Free.
The following addresses the eligibility for preferential treatment on the products under the USMCA.
In the first scenario, you describe the manufacturing process for the CPT7. According to the information provided, the GNSS receiver card is manufactured in Canada through the Surface Mount Technology (SMT) process to create the PCBA. The individual components are soldered and pasted onto the PCB with pick and place equipment. The assembly of the GNSS receiver card goes through an SMT solder machine to reflow the solder paste. Next, the PCBA is optically inspected and electrically tested to confirm it operates to specifications. The IMU is designed and manufactured in the United States. The mounting rail is manufactured in Hong Kong. In the United States, the GNSS receiver card, the IMU, and all other components are assembled into an enclosure. Lastly, the authorization code is added in Canada.
In the second scenario, you describe the manufacturing processes for the PwrPak7. The GNSS receiver card is manufactured in Canada through the Surface Mount Technology (SMT) process to create the PCBA. The individual components are soldered and pasted onto the PCB with pick and place equipment. Then, the assembly goes through an SMT solder machine to reflow the solder paste. Subsequently, the PCBA is optically inspected and electrically tested to confirm it operates to specifications. The IMU for the PwrPak7 is manufactured in Japan. Based on the provided information, in Canada, the GNSS receiver card, the IMU, and all other components are assembled into an enclosure and the software with authorization codes is added.
Regarding the radio navigational aid systems eligibility for preferential treatment, the USMCA was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018 and approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act. General Note (GN) 11 of the HTSUS implements the USMCA. GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA. GN 11(b) states:
For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, is eligible for the preferential tariff treatment provided for in the applicable subheading and quantitative limitations set forth in the tariff schedule as a “good originating in the territory of a USMCA country” only if - the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries; the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials; the good is a good produced entirely in the territory of one or more USMCA countries using non-originating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o))
The subject radio navigational aid systems contain non-originating materials and are not considered a good wholly obtained or produced entirely in a USMCA country under GN 11(b)(i). Moreover, under GN 11(b)(ii), the subject navigational devices are not a good produced entirely in Canada and the United States exclusively from originating materials. Therefore, we must next determine whether the non-originating materials undergo the tariff shift and other requirements provided for in GN 11(b)(iii) and GN 11(o).
The applicable tariff shift rule for merchandise classifiable under heading 8526, HTSUS, is in (o), HTSUS, which provides, in relevant part:
Chapter 85 (62) “A change to subheadings 8526.10 through 8526.92 from any other subheading, including another subheading within that group.”
Based on the information, provided both items have foreign components classified outside of heading 8526, HTSUS, the requisite tariff shift rule is met, and both items would be considered an originating goods under the USMCA and eligible for preferential treatment.
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 Lisa Cariello at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division