CLA-2 CO:R:C:M 953079 KCC
Sandra Liss Friedman, Esq.
Barnes, Richardson & Colburn
475 Park Avenue South
New York, New York 10016
RE: Motor vehicle side panel steel blanks; GRI 2(a); unfinished
articles; EN to Rule 2(a); blanks; EN 87.08; parts and
accessories of motor vehicle bodies; General EN (III) PARTS AND
ACCESSORIES; Note 1(k), Chapter 72; CFTA; General Note
3(c)(vii)(B)(2); transformation; General Note 3(c)(vii)(R)(aa);
change in tariff classification
Dear Ms. Friedman:
This is in response to your letter dated December 9, 1992, on
behalf of Mitsubishi International Corporation, regarding the tariff
classification under the Harmonized Tariff Schedule of the United
States (HTSUS) and applicability of the United States-Canada Free
Trade Agreement (CFTA), to motor vehicle side panel steel blanks.
Specifications and photographs of the panel blanks were submitted on
May 21, 1993, for examination.
FACTS:
Flat-rolled galvanized steel in coil form measuring 0.033 inch
in thickness and 60 inches in width is produced in Japan and
imported into Canada where it undergoes certain processing
operations. In Canada, the steel is uncoiled, cleaned, flattened
and blanked, using a special die shape, into automobile outer side
panel blanks (panel blanks). The panel blanks will then be imported
into the U.S. where they will be further processed into finished
auto parts.
ISSUE:
I. What is the classification of the panel blanks under the HTSUS?
II. Are the panel blanks eligible for preferential tariff treatment
under the CFTA?
LAW AND ANALYSIS:
I. Tariff Classification
The classification of merchandise under the HTSUS is governed
by the General Rules of Interpretation (GRI's). GRI 1, HTSUS,
states, in part, that for legal purposes, classification shall be
determined according to the terms of the headings and any relative
section or chapter notes...." GRI 2(a), HTSUS, states:
Any reference in a heading to an article shall be taken to
include a reference to that article incomplete or unfinished,
provided that, as entered, the incomplete or unfinished article
has the essential character of the complete or finished
article.
The Harmonized Commodity Description and Coding System (HCDCS)
Explanatory Notes (ENs), although not dispositive, are to be looked
to for the proper interpretation of the HTSUS. 54 Fed. Reg. 35127,
35128 (Aug. 23, 1989). EN to Rule 2(a) states:
(II) The provisions of this Rule also apply to blanks unless these
are specified in a particular heading. The term "blank" means
an article, not ready for direct use, having the approximate
shape or outline of the finished article or part, and which can
only be used, other than in exceptional cases, for completion
into the finished article or part.
The panel blanks have the approximate shape or outline of the
finished article; motor vehicle side panels. When exported to the
U.S., the panel blanks can only be used for completion into a
finished side panel. Therefore, pursuant to GRI 2(a), HTSUS, the
panel blanks are unfinished articles and are classified under the
tariff provision for the finished article.
We are of the opinion that the panel blanks imported into the
U.S. are classified under subheading 8708.29.00, HTSUS, which
provides for "Parts and accessories of the motor vehicles of
headings 8701 to 8705...Other parts and accessories of bodies
(including cabs)...Other...." EN 87.08 (pg. 1432) states that:
This heading covers parts and accessories of the motor
vehicles of headings 87.01 or 87.05, provided the parts and
accessories fulfil both the following conditions:
(i) They must be identifiable as being suitable for use
solely or principally with the above-mentioned
vehicles;
and (ii) They must not be excluded by the provisions of the
Notes to Section XVII (see the corresponding General
Explanatory Note).
General EN (III) PARTS AND ACCESSORIES (pgs. 1410-1412) states
that:
It should, however, be noted that these headings apply
only to those parts or accessories which comply with all three
of the following conditions:
(i) They must not be excluded by the terms of Note 2 to
this Section....
and (ii) They must be suitable for use solely or principally
with the articles of Chapters 86 to 88....
and (iii)They must not be more specifically included
elsewhere in the Nomenclature....
The panel blanks are not excluded by Note 2, Section XVII,
HTSUS, because they are not among the listed products. Furthermore,
the panel blanks are not parts and accessories covered more
specifically by another heading in the Nomenclature. The panel
blanks are excluded from classification in Chapter 72, HTSUS, by
Note 1(k), Chapter 72, HTSUS. This note states, in part, that
"[f]lat-rolled products of a shape other than rectangular or square,
of any size, are to be classified as products of a width of 600 mm
or more, provided that they do not assume the character of articles
or products of other headings." As stated previously, the panel
blanks are nonrectangular flat-rolled products that have assumed the
character of an article in another heading.
The information submitted indicates that the panel blanks are
manufactured according to Chrysler Motors specifications for use
solely for the manufacture of a motor vehicle side panel. The panel
blanks meet both requirement of EN 87.08 and all three requirements
of General EN (III) PARTS AND ACCESSORIES to Section XVII, HTSUS.
Therefore, the panel blanks are classified as other parts and
accessories of bodies of motor vehicles under subheading 8708.29.00,
HTSUS. This tariff provision is eligible for preferential tariff
treatment under the CFTA.
II. The United States-Canada Free Trade Agreement
To be eligible for tariff preference under the CFTA, goods must
be "originating goods" within the rule of origin in General Note
3(c)(vii)(B), HTSUS. There are two primary means in General Note
3(c)(vii)(B), HTSUS, by which articles imported into the U.S. may be
"goods originating in the territory of Canada." The first method is
if the goods are "wholly obtained or produced in the territory of
Canada and/or the United States." General Note 3(c)(vii)(B)(1),
HTSUS. The panel blanks are manufactured from Japanese galvanized
steel, so they are not "wholly obtained or produced in the territory
of Canada."
The second method is if the goods are "transformed in the
territory of Canada and/or the United States." General Note
3(c)(vii)(B)(2), HTSUS. A transformation is evident when a change
in tariff classification occurs that is authorized by General Note
3(c)(vii)(R), HTSUS. General Note 3(c)(vii)(R)(17)(aa), HTSUS,
states that for chapters 86 through 89 "[a] change from one chapter
to another" is acceptable.
In this case, pursuant to General Note 3(c)(vii)(R)(aa), HTSUS,
a transformation does occur. As imported into Canada, the flat-
rolled galvanized steel measuring 0.033 inch in thickness and 60
inches in width is classified under subheading 7210.49.00, HTSUS,
which provides for "Flat-rolled products of iron or nonalloy steel,
of a width of 600 mm or more, clad, plated or coated...Otherwise
plated or coated with zinc...Other...." As previously stated, the
panel blanks imported into the U.S. are classified under subheading
8708.29.00, HTSUS, as other parts and accessories of bodies of motor
vehicles. A change in classification from Chapter 72, HTSUS, to
Chapter 87, HTSUS, is authorized by General Note 3(c)(vii)(R)(aa),
HTSUS. Therefore, the panel blanks are entitled to preferential
tariff treatment under the CFTA.
HOLDING:
The Japanese steel when imported into Canada is classified
under subheading 7210.49.00, HTSUS, which provides for flat-rolled
galvanized steel. The panel blanks manufactured from the Japanese
steel are classified under subheading 8708.29.00, HTSUS, as other
parts and accessories of bodies of motor vehicles. The change in
classification which occurs is a change authorized by General Note
3(c)(vii)(R)(17)(aa), HTSUS. Therefore, the panel blanks are
entitled to preferential tariff treatment under the CFTA. Under the
CFTA, the panel blanks are dutiable at the rate of 1.5 percent ad
valorem.
Sincerely,
John Durant, Director