MAR-05: RR:TC:SM 560456 BLS
Ms. Elva Arzate
Rudolph Miles & Sons
4950 Gateway East
El Paso, Texas 79983
RE: Clarification of NY Ruling Letter B83438; surgical sets; NAFTA Preference; country of origin marking; Article 509
Dear Ms. Arzate:
This is in reference to your letter dated April 28, 1997, requesting clarification of NY Ruling Letters A89110 (November 25, 1996) and B83438 (April 15, 1997).
FACTS:
In your ruling request dated October 15, 1996, you asked that Customs rule on the tariff classification and country of origin marking of four surgical kits imported from Mexico, and whether such kits are eligible for preferential duty treatment under the North American Free Trade Implementation Act (NAFTA). Customs addressed these issues in NY A89110 with respect to the Dry Skin Scrub Tray Kit (Kit #1) and the Wet Skin Scrub Tray Kit (Kit #2), and in NY B83438 with respect to the Suction Catheter Kit (Kit #3) and the Urine Meter Tray Kit (Kit #4). You believe that the rulings may not be consistent and therefore seek a clarification of Customs position. This ruling will deal only with NY B83438. We are proposing to modify NY A89110, and are sending you notice of our action under separate cover. Our review of NY B83438 will address only those issues related to preferential treatment under the NAFTA and country of origin marking requirements.
Suction Catheter Kit (Kit #3)
The items in this kit consist of a suction catheter, two solution cups (one paper and one plastic), and a latex glove. The solution cups are of U.S.-origin and the latex gloves are of Malaysian origin. The suction catheter is assembled in Mexico and, while we are not provided with sufficient information to determine the origin of the catheter when imported into the U.S., we will assume for purposes of this ruling that as stated
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in your request, pursuant to the NAFTA Marking Rules the suction catheter is a product of Mexico.
Urine Meter Tray Kit (Kit #4)
The items in this kit are as follows:
1) Plastic urinary drainage tray
2) Beers plastic tray
3) Paper drape
4) Absorbent paper towel
5) Blotting paper towel
6) Blue paper towel
7) Latex glove
8) Povidine iodine
9) Rayon balls
10) Specimen paper label
11) Lube, jelly packer
12) Prefill syringe (saline)
13) Plastic forcep
14) Plastic centrifuge tube
15) Urine meter drain bag/silicone Foley catheter
The urine meter drainage bag/silicone Foley catheter (“Foley catheter”) is assembled in Mexico from U.S.-origin components. While information necessary to determine the origin of this article has not been submitted, we will assume for purposes of this ruling that as stated in the request, under the NAFTA Marking Rules the country of origin of the assembled article upon importation is Mexico. The latex glove is a product of Malaysia. The other articles are of U.S.-origin. The items in each kit are packaged in Mexico with U.S.-origin packing materials, and then imported into the U.S.
In NY B83438, Customs found that Kit #3 and Kit #4 were “goods put up in sets for retail sale”, and were governed by GRI 3(b), Harmonized Tariff Schedule of the United States (HTSUS), since in Kit #3 the essential character of the set was imparted by the suction catheter, and in Kit #4 by the Foley catheter. Kit #3 was classified under subheading 9018.39.0020, HTSUS, which provides for: Syringes, needles, catheters... other. Kit #4 was classified under subheading 9018.90.80, HTSUS, which provides for: Instruments and appliances used in medical, surgical, dental or veterinary sciences... other. Customs also held that Kit #3 and Kit #4 were eligible for preferential duty treatment under the NAFTA, and that the country of origin of both kits was Mexico.
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ISSUES:
1) Whether the imported surgical kits are eligible for preferential duty treatment under the NAFTA.
2) What are the country of origin marking requirements for the surgical kits?
LAW AND ANALYSIS
Suction Catheter Kit (Kit #3)
A. NAFTA Preference
General Note 12 of the HTSUS, incorporates Article 401 of the NAFTA into the
HTSUS. General Note 12(b) provides in pertinent part the following:
For 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 subdivision (r), (s) and (t) where no
change in tariff classification is required, and the
goods satisfy all other requirements of this note; or
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(iii) they are goods produced entirely in the territory of
Canada, Mexico and/or the United States exclusively
from originating materials.
Since this set is comprised in part of materials (latex gloves) which comes from countries other than Mexico, Canada and/or the United States, neither General Note 12(b)(i) or 12(b)(iii) is applicable. Therefore, we must ascertain whether the non-originating material, in this case the latex gloves from Malaysia, is transformed in Mexico pursuant to General Note 12(b)(ii)(A). To qualify under this provision, the non-originating latex gloves must undergo the requisite change in tariff classification required in General Note 12(t), HTSUS. This item is classifiable in subheading 4015.11.00, HTSUS, as “Articles of apparel and clothing accessories (including gloves) for all purposes, of vulcanized rubber, surgical and medical.” As noted, above, the kit is classified under subheading 9018.39.0020, HTSUS, which provides for “Instruments and appliances used in medical, surgical, dental or veterinary sciences.... Syringes, needles, catheters, cannulae and the like; parts and accessories thereof...Other...Syringes, needles, catheters... other.“
General Note 12(t)/90.33-12(t)90.47, HTSUS, requires a change to
subheadings 9018.20 through 9018.50 from any other heading. Since the
latex gloves are classifiable under subheading 4015.11, there is a tariff shift and Kit # 3 will be considered originating goods eligible for NAFTA Preference upon importation into the U.S.
General Note 12(a) provides in pertinent part that:
* * * * *
(ii) Goods that originate in the territory of a NAFTA party
under subdivision (b) of this note and that qualify to be
marked as goods of Mexico under the terms of the marking
rules....and are entered under a subheading for which a rate
of duty appears in the “Special” subcolumn followed by the
symbol “MX” in parentheses, are eligible for such duty rate....
Since Kit #3 is classified under a subheading for which the “Special” rate of duty of “MX” is applicable, and is an “originating” good under General Note 12(b), HTSUS, it will be eligible for the MX duty rate provided the kit is determined to be a good of Mexico. Accordingly, we must review the country of origin marking requirements to determine whether, under these rules, the country of origin of Kit #3 is Mexico.
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B. Country of Origin Marking
The marking statute, section 304 of the 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 United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article 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. Part 134, Customs Regulations (19 C.F.R. Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. §1304.
The country of origin marking requirements for a “good of a NAFTA country” are also determined in accordance with Annex 311 of the NAFTA, as implemented by section 207 of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057) (December 8, 1993) and the regulations set forth in 19 CFR Parts 102, 134.
Section 134.1(b) (19 C.F.R. §134.1(b)) of the regulations defines “country of origin” as:
The country of manufacture, production, or growth
of any article of foreign origin entering the U.S.
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”; however, for a good of a NAFTA country, the
NAFTA Marking Rules will determine the country of origin
Section 134.1(j) provides that the “NAFTA Marking Rules” are the rules
promulgated for purposes of determining whether a good is a good of a NAFTA country. Section 134.1(g) defines a “good of a NAFTA country” as an article for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules.
Part 102 of the regulations (19 C.F.R. Part 102), sets forth the “NAFTA Marking Rules” for purposes of determining whether a good is a good of a NAFTA country. Section 102.11 of the regulations (19 C.F.R. §102.11) sets forth the required hierarchy for determining country of origin for marking purposes. Section 102.11(a) provides that
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“[t]he 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 section
102.20 and satisfies any other applicable requirements of that
section, and all other requirements of these rules are satisfied.
“Foreign Material” is defined in section 102.1(e) of the regulations 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.”
Since Kit #3 is neither wholly obtained or produced, or produced exclusively from domestic (Mexican) materials, section 102.11(a)(3) is the applicable rule which must first be applied. In order to determine whether Mexico is the country of origin under this rule, we must look at those materials whose country of origin is other than Mexico, to determine if such materials have undergone the required tariff shift pursuant to this rule. In this case, the suction catheter is of Mexican origin, the cups are of U.S.-origin (“Foreign Material” under 19 C.F.R. §102.11(e)), and the latex gloves are of Malaysian origin.
As this kit is classified under subheading 9018.39.0020, HTSUS, the change in tariff classification must be made in accordance with section 102.20(q), Section XVIII: Chapters 90 through 92, which provides as follows:
A change to subheading 9018.39 from any other subheading, except
from surgical tubing of subheading 4009.10 when resulting from
a simple assembly.
As noted above, the latex gloves are classifiable under subheading 4015.11.00. The paper solution cup is classifiable in subheading 4823.60, as “Other paper, paperboard ... Trays, dishes, plates, cups and the like...”
However, although the latex gloves and paper cup appear to meet the requisite tariff shift since they are classifiable in a subheading other than subheading 9018.39, and not under subheading 4009.10, HTSUS, section 102.17 of the regulations (19 CFR
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102.17) provides that "[a] foreign material shall not be considered to have undergone the applicable change in tariff classification set out in 102.20, or satisfy the other applicable requirements of that section by reason of ...
(c) Simple packing, repacking or retail packaging
without more than minor processing....
Therefore, we must consider the next applicable rule in the hierarchal scheme. Section 102.11(b) of the regulations (19 C.F.R. §102.11(b)) cannot be used
under the facts presented since it is not applicable if the good is specifically described in the Harmonized System as a set, or is classified as a set pursuant to GRI 3.
Since each set is deemed to be originating, and a single NAFTA country of origin for each of the sets cannot be determined pursuant to 19 C.F.R. §102.11(a) or 19 C.F.R. §102.11(b), the NAFTA Preference Override (19 C.F.R. §102.19) is triggered. This regulation provides in pertinent part as follows:
(a) Except in the case of goods covered by paragraph (b)
of this section, if a good which is originating ..... is not
determined under section 102.11(a) or (b) or 102.21 to
be a good of a single NAFTA country, the country of
origin of such good is the last NAFTA country in which
the good underwent production other than minor processing
provided that a Certificate of Origin (see section 181.11 of
this chapter) has been completed and signed for the good.
The suction catheter was assembled in Mexico, which operations constitute more than minor processing. (See 19 C.F.R. §102.1(m)). Therefore, the country of origin of Kit #3 is Mexico, the last NAFTA country in which the good underwent production other than minor processing.
C. MX Rate of Duty
Since Kit #3 is an “originating” good under General Note 12(b), HTSUS, is classified under a subheading for which the “Special” rate of duty of “MX” is applicable, and is a product of Mexico, it will be eligible for such “Special” rate of duty upon importation into the U.S.
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Urine Meter Tray Kit (Kit #4)
A. NAFTA Preference
Since this set is comprised in part of materials (latex gloves) which come from countries other than Mexico, Canada and/or the United States, neither General Note 12(b)(i) or 12(b)(iii) is applicable. Therefore, we must ascertain whether the non-originating material, the latex gloves from Malaysia, are transformed in Mexico pursuant to General Note 12(b)(ii)(A). To qualify under this provision, the non-originating latex gloves must undergo the requisite change in tariff classification required in General Note 12(t), HTSUS.
As this set is classified under subheading 9018.90.80, HTSUS, the
change in tariff classification must be made in accordance with General Note 12(t)90.33--12(t)90.47, HTSUS. The applicable rule requires a change to subheading 9018.90 from any other heading. Since the latex gloves are classifiable under subheading 4015.11, HTSUS, there is a tariff shift and Kit # 4 will be considered originating goods eligible for NAFTA Preference upon importation into the U.S.
As Kit #4 is classified under a subheading for which the “Special” rate of duty of “MX” is applicable, and is an “originating” good under General Note 12(b), HTSUS, it will be eligible for the MX duty rate provided it is determined to be a good of Mexico. Accordingly, we must apply the NAFTA Marking Rules to determine whether, under these rules, Kit # 4 is a product of Mexico.
B) Country of Origin Marking
Since Kit #4 is neither wholly obtained or produced, or produced exclusively from domestic (Mexican) materials, section 102.11(a)(3) is the applicable rule which must first be applied. In order to determine whether Mexico is the country of origin under this rule, we must look at those materials whose country of origin is other than Mexico, to determine if such materials have undergone the required tariff shift pursuant to this rule. In this case, the Foley catheter is of Mexican origin, the latex gloves are of
Malaysian origin, and the remainder of the items are of U.S.-origin (“foreign material” under 19 C.F.R. §102.11(e)).
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As this kit is classified under subheading 9018.90.80, HTSUS, the change in tariff classification must be made in accordance with section 102.20(q), Section XVIII: Chapters 90 through 92, which provides as follows:
A change to subheading 9018.90 from any other subheading, except
from subheading 9001.90 or synthetic rubber classified in heading 4002 when resulting from a simple assembly; or
A change to defibrillators from printed circuit assemblies, except when resulting from a simple assembly.
As the plastic centrifuge tube and plastic forcep are also classified under subheading 9018.90, HTSUS, and therefore do not undergo a tariff shift, the country of origin cannot be determined under 19 C.F.R. §102.11(a)(3). Further, the latex gloves of Malaysian origin are merely packaged with the set, and therefore, as noted, will not be considered to have undergone the change in tariff classification set out in 19 C.F.R. §102.20.
Therefore, we must consider the next applicable rule in the hierarchal scheme. Section 102.11(b) of the regulations (19 C.F.R. §102.11(b)) cannot be used under the facts presented since it is not applicable when the good, as in this case, is specifically described in the Harmonized System as a set, or is classified as a set pursuant to
GRI 3.
Since Kit #4 is deemed to be originating, and a single NAFTA country of origin for the set cannot be determined pursuant to 19 C.F.R. §102.11(a) or 19 C.F.R. §102.11(b), the NAFTA Preference Override (19 C.F.R. §102.19), supra, is triggered.
In this scenario, the last NAFTA country in which the good underwent production other than minor processing is Mexico, the country where the Foley catheter was assembled. Therefore, the country of origin of Kit # 4 is Mexico.
C. MX Rate of Duty
Since Kit # 4 is an “originating” good under General Note 12(b), HTSUS, is classified under a subheading for which the “Special” rate of duty of “MX” is applicable, and is a product of Mexico, it is eligible for the “MX” rate of duty.
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D. Subheading 9801.00.10
Subheading 9801.00.10, HTSUS, generally provides for the free entry of products of the U.S. that have been exported and returned without having been advanced in value or improved in condition by any process or manufacture or other means while abroad. Accordingly, the U.S.-origin components which are merely packaged with the set without further processing and the U.S.-origin packaging materials will be entitled to duty-free treatment under subheading 9801.00.10, HTSUS, provided the documentary requirements of section 10.1, Customs Regulations (19 C.F.R. §10.1) are met.
HOLDING:
A. Suction Catheter Kit (Kit # 3) - The non-originating materials which are packaged as part of the Suction Catheter Kit undergo a tariff shift in Mexico pursuant to General Note 12(b)(ii)(A). Therefore, Kit #3 is considered a good “originating in the territory of a NAFTA party.” Under the NAFTA Marking Rules, the non-originating materials will not undergo a change in classification pursuant to 19 C.F.R. §102.11(a)(3) since simple packaging operations are involved. See 19 C.F.R. §102.17. Section 102.11(b) is not applicable since the kit is classified as a set pursuant to GRI 3, HTSUS. Under 19 C.F.R. §102.19(a), the country of origin of the Suction Catheter Kit will be Mexico, the last NAFTA country in which the good underwent production other than minor processing.
Since Kit #3 is an originating good, is classifiable under a subheading for which a “Special” MX rate of duty is applicable, and is considered to be a product of Mexico, it will be eligible for such duty rate upon importation into the U.S.
B. Urine Meter Drainage Tray Kit ( Kit # 4) - The non-originating materials which are packaged as part of the Urine Meter Drainage Tray Kit undergo a tariff shift in Mexico pursuant to General Note 12(b)(ii)(A). Therefore, Kit #4 is considered a good
“originating in the territory of a NAFTA party.”
Under the NAFTA Marking Rules, neither 19 C.F.R. §102.11(a) or 19 C.F.R. §102.11(b) is applicable and therefore, as the kit is deemed to be an originating good, 19 C.F.R. §102.19 is triggered. Under this rule, the country of origin of Kit #4 will be Mexico, the last NAFTA country in which the good undergoes production other than minor processing (packaging). As a result, since Kit #4 is originating, is classifiable under a subheading for which a “Special” MX rate of duty is applicable, and is considered to be a product of Mexico, it will be eligible for such duty rate upon importation into the U.S.
C. The U.S.-origin components of Kit #3 and Kit #4 which are merely packaged
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without further processing and the U.S.-origin packaging materials will be entitled to duty-free treatment under subheading 9801.00.10, HTSUS, provided the documentary requirements of section 10.1, Customs Regulations (19 C.F.R. §10.1) are met.
NY B83438 correctly determined that both kits were eligible for NAFTA preference, that Mexico was the country of origin, and that the “Special” duty rate of “MX” was applicable. However, the ruling is erroneous to the extent of the methodology used to ascertain the country of origin. This ruling clarifies NY B83438 and sets forth the correct methodology used to determine the country of origin based on the submitted information.
Sincerely,
John Durant, Director
Tariff Classification Appeals Division