CLA-2 CO:R:C:F 088812 SLR
Robert H. Schor, Esq.
Barnes, Richardson & Colburn
475 Park Avenue South
New York, NY 10016
RE: Blood Diagnostic Disposable Cartridge from Canada; GRI 3(b);
Composite Diagnostic or Laboratory Reagents of Heading 3822;
United States-Canada Free Trade Agreement;
Subheading 9802.00.80; Subheading 9801.00.10;
U.S. Goods Returned.
Dear Mr. Schor:
This is in response to your letter of August 9, 1990, on
behalf of your client, I-STAT Corporation, regarding the
classification of a blood diagnostic disposable cartridge under
the Harmonized Tariff Schedule of the United States Annotated
[hereinafter "HTSUSA"]. A sample was forwarded for our
examination.
FACTS:
The item at issue is composed of plastic and metal, contains
reagents, is approximately 1-3/4" long x 1-1/6" wide x 1/4" deep,
and is used to test blood components for diagnostic purposes
(in conjunction with a hand held analyzer made in the U.S.). The
cartridge is disposable, marketed in boxes containing 12 to 24
foil packages, and sold primarily to hospitals. You refer to the
instant product as the "test pack."
In your letter, you maintain that the test pack is
classifiable in heading 3822, HTSUSA, which provides for
composite diagnostic or laboratory reagents. In addition,
you posit that the merchandise in question qualifies for a
reduction in duty under the United States-Canada Free Trade
Agreement [hereinafter "CFTA"]. You indicate that most of the
components and packaging of the cartridge are manufactured in the
U.S. and exported to Canada for simple snap together assembly,
and return. The remaining components are manufactured in Canada.
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ISSUES:
I. Whether the test pack is classifiable in heading 3822,
HTSUSA, the provision for composite diagnostic or laboratory
reagents.
II. Whether the product qualifies for a reduction in duty
under the CFTA.
III. Whether the product's U.S.-made components qualify for
the partial duty exemption under subheading 9802.00.80, HTSUSA,
when returned to the U.S.
IV. Whether the product's packing materials qualify for the
duty exemption under subheading 9801.00.10, HTSUSA.
LAW AND ANALYSIS:
ISSUE I
Classification of merchandise under the HTSUSA is in
accordance with the General Rules of Interpretation (GRI's),
taken in order. GRI 1 provides that classification is determined
according to the terms of the headings and any relative section
or chapter notes.
No heading within the Nomenclature provides for plastic
cartridges containing chemical reagents. Consequently, GRI 1
is of no assistance in classifying the product in question. The
remaining GRI's, therefore, must be consulted.
The present product consists of a plastic cartridge and
chemical reagents, the former classifiable in heading 3926,
HTSUSA, which provides for other articles of plastics; the latter
classifiable in heading 3822, HTSUSA, which provides for
composite diagnostic or laboratory reagents. As the product is
made up of two components classifiable under different headings,
GRI 3 must be consulted.
GRI 3(a) provides that articles classifiable under two or
more headings are to be classified under the heading which
provides the most specific description of the goods in question.
All headings are regarded as equally specific, however, when each
refers to part only of the goods.
Each of the headings in question -- heading 3926 and
heading 3822 -- refers to part only of the merchandise in
question. As the headings are regarded as equally specific,
classification of the subject product cannot be determined by
application of GRI 3(a). Consequently, we must turn our
attention to GRI 3(b).
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GRI 3(b) provides that goods made up of two or more
components shall be classified as if they consisted of the
component which gives them their essential character.
"Essential character" may be determined by the nature of the
material, its bulk, quantity, weight or value, or by the role of
the constituent material in relation to the use of the goods.
Here, the chemical reagent is the active principle within
the cartridge; the cartridge simply acts as a carrier for the
blood sample. The chemical reagent component, therefore,
represents the essential character of the product in question,
and the product as a whole is classifiable under heading 3822.
The applicable subheading for the product is 3822.00.5090
HTSUSA. The corresponding rate of duty under the "General"
column is 5 percent ad valorem. The "Special" column, however,
indicates that goods originating from Canada enjoy a reduced duty
rate of 1 percent ad valorem. Does the merchandise at hand
qualify for a reduction in duty under the CFTA?
ISSUE II
Under specific circumstances, goods originating in the
territory of Canada which enter the territory of the U.S. are
entitled to a reduction in duty under the CFTA. Articles which
are considered "goods originating in the territory of Canada"
under General Note 3(c)(vii)(B), HTSUSA, are those which are
"obtained or produced" or "transformed" in "Canada and/or the
United States" (bold added). Thus, goods made of originating
components from both the United States and Canada are considered
to be "goods originating in the territory of Canada" for purposes
of General Note 3(c)(vii)(B).
Here, the cartridges and their accompanying packaging are
stated to be of Canadian and U.S. origin. The test packs,
therefore, are entitled to a reduction in duty under the CFTA.
Please be reminded that all necessary documentation relating to
CFTA status must be presented upon entry.
ISSUE III
Chapter 98, Subchapter II, HTSUSA, incorporates provisions
that apply to articles which are exported and then returned to
the United States. Subheading 9802.00.80, HTSUSA, provides a
partial duty exemption for:
Articles assembled abroad in whole or in part
of fabricated components, the product of the
United States, which (a) were exported in condition
ready for assembly without further fabrication,
(b) have not lost their physical identity in such
articles by change in form, shape, or otherwise, and
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(c) have not been advanced in value or improved in
condition abroad except by being assembled and except
by operations incidental to the assembly process, such
as cleaning, lubricating, and painting.
All three of the above-mentioned requirements must be satisfied
before a component may receive a duty allowance. An article
entered under subheading 9802.00.80 is subject to duty upon
the full cost or value of the imported assembled article, less
the cost or value of the U.S. components assembled therein, upon
compliance with the documentary requirements of section 10.24
Customs Regulations (19 CFR 10.24).
From the information provided, it appears that requirements
(a) and (b) have been met. Moreover, as section 10.16(a) Customs
Regulations (19 CFR 10.16(a)) considers any method used to join
or fit together solid components a proper assembly operation,
requirement (c) has been satisfied. The merchandise at issue,
therefore, qualifies for the partial duty exemption under
subheading 9802.00.80.
ISSUE IV
With respect to containers, GRI 5(b) provides that,
"[p]acking materials and packing containers presented with the
goods therein shall be classified with the goods if they are of a
kind normally used for the packing of such goods. However, this
provision does not apply when such packing materials or packing
containers are clearly suitable for repetitive use." Therefore,
the value of a non-reusable container normally used for packing
is dutiable at the rate of its contents. However, upon
submission of satisfactory proof that a container is of U.S.
origin and that it is returned without having been advanced in
value or improved in condition abroad, it is entitled to
duty-free treatment under subheading 9801.00.10, HTSUSA, provided
the documentary requirements of section 10.1, Customs Regulations
(19 CFR 10.1), are met.
Here, the operations performed in Canada (the filling of the
U.S.-made foil packs followed by the simple manipulation of the
U.S.-made fold-up boxes to accommodate these goods) do not
constitute an advancement in value or improvement in condition of
the U.S. packing components. Consequently, the U.S.-made foil
packs and paperboard boxes are eligible for duty free treatment
under subheading 9801.00.10, HTSUSA.
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HOLDING:
The merchandise at issue is classifiable in subheading
3822.00.5090, HTSUSA, which provides for composite diagnostic
or laboratory reagents, other than those of heading 3002
or 3006: other (than containing antigens or antisera): other.
The "General" rate of duty is 5 percent ad valorem.
The merchandise at issue is entitled to a reduced duty
rate of 1 percent ad valorem under the CFTA. All necessary
documentation relevant to CFTA status must be presented upon
entry, however.
The merchandise at issue is entitled to the partial duty
exemption under subheading 9802.00.80, HTSUSA. Therefore,
the 2 percent duty rate would be applied against the fully
appraised value of the article less the cost or value of the
U.S. fabricated components. All necessary documentation under
19 CFR 10.24 must be presented upon entry.
The U.S.-made foil packs and paperboard boxes are entitled
to duty free entry under subheading 9801.00.10, HTSUSA. All
necessary documentation under 19 CFR 10.1 must be presented upon
entry.
Sincerely,
John Durant, Director
Commercial Rulings Division