CLA-2-84:S:N:N3:102 807803
Mr. Robert M. Barr
United Rebuilders, Inc.
450 East Sandford Blvd.
Mount Vernon, N.Y. 10550-4729
RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of remanufactured cast iron air conditioning/refrigeration compressors from Mexico
Dear Mr. Barr:
In your letter dated February 10, 1995 you requested a ruling on the status of remanufactured cast iron air conditioning/refrigeration compressors from Mexico under the NAFTA.
Your inquiry outlines your plans to send used or defective air conditioning/refrigeration cast iron air compressors to Mexico for rebuilding. These compressors are considered scrap, with no functional commercial value. The procedure involves tearing down the compressor to its core, testing and checking for wear and damage, reboring of the casing, cleaning, and rebuilding of the compressor to new condition with parts originating from U.S. sources. You also state that the direct and indirect labor, plant overhead and general administrative expenses incurred in Mexico will account for over 50% of the cost of the final product. In a supplemental phone conversation you stated that the imported compressors would be semi-hermetic, reciprocating type units, with a power rating exceeding 10 horsepower.
The applicable tariff provision for the refurbished air conditioning/refrigeration compressors will be 8414.30.8080, Harmonized Tariff Schedule of the United States (HTS), which provides for other compressors of a kind used in refrigeration equipment (including air conditioning), other, exceeding 10 horsepower. The general rate of duty will be 3.4 percent ad valorem.
General Note 12 (ix) of the HTSUSA states that "goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States means . . .waste and scrap derived from. . . used goods collected in the territory of one or more of the NAFTA parties, provided such goods are fit only for the recovery of raw materials" It is our belief that the recovered parts used in the production of the imported compressors meet this requirement
The air conditioning/refrigeration compressors, being made entirely in the territory of Mexico using materials which themselves were originating, will satisfy the requirements of HTSUSA General Note 12(b)(iii). The merchandise will therefore be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.
This ruling is being issued under the provisions of Section 177 of the Customs Regulations (19 C.F.R. 177).
A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is imported. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.
This ruling letter is binding only as to the party to whom it is issued and may be relied on only by that party.
Sincerely,
Jean F. Maguire
Area Director
New York Seaport