CLA-2-44:OT:RR:NC:N1:130
Mr. Steve Clyde
Axxess International Inc.
3041 Commerce Drive
Fort Gratiot, MI 48059
RE: The tariff classification, country of origin, and marking of multilayer wood flooring
Dear Mr. Clyde:
In your letter, dated September 8, 2023, you requested a binding ruling on behalf of your client, Les Planchers Mercier Inc. The ruling was requested for the classification, country of origin, and marking of multilayer wood flooring. Product information and photos were submitted for our review.
The product under consideration is multilayer wood flooring. The panel consists of six wood layers: a 3mm-thick, white oak (a non-coniferous wood) face ply, or veneer, bonded onto a substrate of five eucalyptus (a non-coniferous wood) layers, or veneers. No ply exceeds 6mm in thickness. The finished panel measures 190mm wide by 1900mm long by 12.7mm thick. The grain of each layer is oriented at a 90-degree angle to those of the adjacent layers. The panel is tongued and grooved on its edges and ends and is coated with a clear, acrylate polymer-based finish containing polyurethane and aluminum oxide. The panels are also sometimes stained. The grain of the wood is not obscured by the coatings.
The instant panels meet the definition of “plywood” as set forth in the Explanatory Notes to the Harmonized System (ENs) for heading 4412: panels “consisting of three or more sheets of wood glued and pressed one on the other and generally disposed so that the grains of successive layers are at an angle.” Plywood is specifically provided for in heading 4412 of the Harmonized Tariff Schedule of the United States (HTSUS).
The applicable subheading for the multilayer wood panels will be 4412.33.3225, HTSUS, which provides for Plywood, veneered panels and similar laminated wood: (con.) Other plywood consisting solely of sheets of wood (other than bamboo), each ply not exceeding 6 mm in thickness: Other, with at least one outer ply of nonconiferous wood of the species alder (Alnus spp.), ash (Fraxinus spp.), beech (Fagus spp.), birch (Betula spp.), cherry (Prunus spp.), chestnut (Castanea spp.), elm (Ulmus spp.), eucalyptus (Eucalyptus spp.), hickory (Carya spp.), horse chestnut (Aesculus spp.), lime (Tilia spp.), maple (Acer spp.), oak (Quercus spp.), plane tree (Platanus spp.), poplar and aspen (Populus spp.), robinia (Robinia spp.), tulipwood (Liriodendron spp.) or walnut (Juglans spp.): Not surface covered, or surface covered with a clear or transparent material which does not obscure the grain, texture or markings of the face ply: Other: Wood flooring. The rate of duty will be 8 percent ad valorem.
In your letter, you describe a scenario wherein multilayer wood flooring is fully manufactured in Vietnam and then shipped to Canada for sanding, coating, and packaging. Because some manufacturing of the panels takes place in Canada, the United States-Mexico-Canada Agreement (USMCA) must be considered.
The USMCA was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018. The USMCA was approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act, Pub. L. 116-113, 134 Stat. 11, 14 (19 U.S.C. § 4511(a)). 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));
Subdivision (o) states that, in order to be subject to USMCA, the manufacturing in a USMCA country must result in “A change to headings 4401 through 4421 from any other heading, including another heading within that group.” Since the complete flooring panel exported from Vietnam is classifiable in heading 4412 and the finished flooring panel is also classifiable in heading 4412, the rule is not met. Therefore, the goods are not subject to USMCA preference.
Section 134.1(b) of the Customs and Border Protection Regulations (19 CFR 134.1(b)) provides that the "[c]ountry 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 Part 134, Customs and Border Protection Regulations (19 CFR Part 134). Substantial transformation requires that "[t]here must be a transformation; a new and different article must emerge, ‘having distinctive name, character, or use.’" Anheuser-Busch Brewing Association v. United States, 207 U.S. 556, 28 S. Ct 204 (1908). We must therefore determine where a substantial transformation of materials occurs in order to determine country of origin.
You state that the wood flooring panels are fully constructed in Vietnam. Transforming veneers into a multilayer plywood panel constitutes a substantial transformation. Therefore, if the panels are constructed in Vietnam, then Vietnam is the country of origin for duty purposes.
For marking purposes, the "country of origin" is defined in Title 19, Code of Federal Regulations (CFR), Section 134.1(b) 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 or USMCA country, the marking rules set forth in part 102 of this chapter (hereinafter referred to as the part 102 Rules) will determine the country of origin.
Pursuant to section 102.0, interim regulations, related to the marking rules, tariff-rate quotas, and other USMCA provisions, published in the Federal Register on July 6, 2021 (86 FR 35566), the rules set forth in §§ 102.1 through 102.18 and 102.20 determine the country of origin for marking purposes with respect to goods imported from Canada and Mexico.
Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes, with the exception of textile goods which are subject to the provisions of 19 C.F.R. § 102.21. See 19 C.F.R. § 102.11. 19 CFR Part 102.11(a) provides that the country of origin of a good is the country in which:
(1) The good is wholly obtained or produced; (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 Part 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
The multilayer wood flooring is neither “wholly obtained or produced” nor “produced exclusively from domestic materials.” Therefore, paragraphs (a)(1) and (a)(2) cannot be used to determine the country of origin of the panel and paragraph (a)(3) must be applied next to determine the origin of the finished article. Section 102.20 (19 CFR 102.20) sets forth the applicable tariff change rules that address the current scenario. Goods classified in heading 4412 must undergo a change as follows: “A change to surface-covered plywood of heading 4412 from any other plywood that is not surface covered or is surface-covered only with a clear or transparent material which does not obscure the grain, texture, or markings of the face ply.” The multilayer wood floor panels are plywood. The panels imported into Canada from Vietnam are unfinished, i.e., not surface covered. The manufacturing in Canada consists of sanding and surface-covering the plywood. Therefore, the rule is met. The country of origin for marking purposes only is Canada.
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 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 U.S. the English name of the country of origin of the article. Section 134.1(d), Customs Regulations [19 CFR 134.1(d)], defines "ultimate purchaser" as "generally the last person in the United States who will receive the article in the form in which it was imported.”
Some wood flooring is included on the J-list of goods excepted from marking requirements (19 CFR 134.33). If the flooring is imported in a container, 19 CFR 134.33 requires that “the outermost container in which the article ordinarily reaches the ultimate purchaser is required to be marked to indicate the origin of its contents…” Therefore, the boxes in which the flooring panels are imported must be marked with the country of origin. Your suggested markings of “Product of Canada” or “Made in Canada” are both sufficient.
The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in Title 19, Code of Federal Regulations (CFR), Section 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, whether directly, by reference, or by implication, is accurate and complete in every material respect. In the event that the facts are modified in any way, or if the goods do not conform to these facts at time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and submit a request for a new ruling in accordance with 19 CFR 177.2. You should also be aware that the material facts described in the foregoing ruling may be subject to periodic verification by CBP.
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 Laurel Duvall at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division