OT:RR:NC:N1:103
Andrew Park
Andrew J Park CHB
19515 S. Vermont Ave., Suite 100 Torrance, CA 90502
RE: The country of origin and United States-Mexico-Canada Agreement (USMCA) eligibility of a cylindrical battery can
Dear Mr. Park:
In your letter dated November 17, 2024, on behalf of your client, LT Precision Co., Ltd., you requested a country of origin ruling for marking purposes and a determination on the eligibility of duty free treatment for a cylindrical battery can under the USMCA.
The merchandise under consideration is referred to as a 4680 Cylindrical Can Assembly. U.S. Customs and Border Protection reviewed the merchandise in New York ruling N342365, dated September 16, 2024, and classified the assembly under subheading 8507.90.8000, Harmonized Tariff Schedule of the United States (HTSUS). The subject Cylindrical Can Assembly will be produced in Mexico using steel sourced from Korea, and incorporates a rivet and gasket that are also sourced from Korea.
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that unless excepted, every article of foreign origin 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. Congressional intent in enacting 19 U.S.C. 1304 was “that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will.” See United States v. Friedlander & Co., 27 C.C.P.A. 297, 302 (1940).
Section 134.1(b), CBP Regulations (19 CFR 134.1(b)), 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 the marking laws and regulations.
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 sections 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 and apparel goods which are subject to the provisions of 19 CFR 102.21. See 19 CFR 102.11.
Applied in sequential order, 19 CFR 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 Cylindrical Can Assembly is neither “wholly obtained or produced” nor “produced exclusively from domestic materials.” Therefore, paragraphs (a)(1) and (a)(2) cannot be used to determine its country of origin, and we need to apply paragraph (a)(3).
Under 19 C.F.R. § 102.11(a)(3), any foreign materials of the Cylindrical Can Assembly must satisfy the tariff shift requirements of 19 C.F.R. § 102.20. "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.”
As previously noted, the Cylindrical Can Assembly is classified under subheading 8507.90, HTSUS. The tariff shift requirement in Section 102.20 for a good of subheading 8507.90, HTSUS, requires “a change to subheading 8507.90 from any other heading.”
The foreign materials used during production, namely the nickel-plate steel, polybutylene terephthalate gasket, and aluminum rivet, are classified outside of heading 8507, HTSUS. Since all the foreign components satisfy the tariff shift rules set forth in 19 C.F.R. § 102.20, the country of origin of the 4680 Cylindrical Can Assembly, for marking purposes, is Mexico.
You also inquire whether the Cylindrical Can Assembly is eligible for preferential treatment under the USMCA. 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—
(i) the good is the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries;
(ii) the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials;
(iii) 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));
Since the Cylindrical Can Assembly contains non-originating materials, they are not considered goods “wholly obtained” nor “produced entirely in a USMCA country” under GN 11(b)(i) and GN 11(b)(ii). We must next determine whether the Cylindrical Can Assembly qualifies under GN 11(b)(iii). Since the finished Cylindrical Can Assembly is classified under subheading 8507.90, HTSUS, the applicable rule of origin is in GN 11(o)/85.19(A), HTSUS, which provides for “a change to subheading 8507.90 from any other heading, except from tariff items 8548.10.05 or 8548.10.15.” Based on the facts presented, the non-originating materials are classified outside of heading 8507, HTSUS. As such, all foreign materials meet the tariff shift requirement. Accordingly, the 4680 Cylindrical Can Assembly is eligible for preferential tariff treatment under the USMCA.
You also requested a country of origin ruling for the purposes of applying current trade remedies under Section 232. Since the subject Cylindrical Can Assembly is classified in heading 8507, Section 232 duties are not applicable.
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. Additionally, we note that the material facts described in the foregoing ruling may be subject to periodic verification by CBP.
This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection 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, please contact National Import Specialist Paul Huang at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division