HQ 957697
CLA-2 R:C:M 957697 KCC June 21, 1995
Mr. Samuel P. Drake
Rudolph Miles & Sons
4950 Gateway East
P.O. Box 144
El Paso, Texas 79942
RE: "XL2PK Value Pak" residential burglar/fire alarm system; Article 509; NAFTA; General
Note 12(b)(ii)(A); originating good; non-originating material; tariff shift; General Note
12(t)/85.104; 19 CFR 134.1(b); country of origin; Marking Rules; 134.1(j), (g);
134.45(a)(2); 102.11(a)(3),and (b)(1); 102.18(b); 102.20(p); 102.1(e), and (o); foreign
material; simple assembly; 134.46
Dear Mr. Drake:
This is in response to your letter of February 22, 1995, on behalf of Alarm Device
Manufacturing Company, concerning the country of origin and applicability of the North
American Free Trade Agreement (NAFTA), to a residential burglar/fire alarm system. A sample
was submitted for our examination.
FACTS:
The article at issue is the "XL2PK Value Pak" which is an unassembled residential
burglar/fire alarm system consisting of the following components:
1. XL2 PCA control panel, which is assembled in Mexico, is an EEPROM based
control/communicator. The control panel allows the alarm system to have six fully
programmed zones and a wired panic zone. Programming of the control panel can be
performed through the keypad (up to four keypads per system) or the system can be up or
downloaded remotely using the EZ-Mate PC Downloader. The alarm system contains up
to six user codes with capability for ambush code and arm only code. You maintain that
the control panel imparts the essential character to the entire alarm system and, therefore,
you state that it is classified pursuant to GRI 2(a), HTSUS, as an unassembled burglar or
fire alarms and similar apparatus under subheading 8531.10.0045, HTSUS. You state that
the control panel is an originating good pursuant to General Note 12(b)(ii)(A), HTSUS,
and the tariff shift requirement of General Note 12(t)/85.104, HTSUS.
2. XL 4600 Digital Keypad, which is assembled in Mexico, contains six zone indicator lights
(LEDs) for the arm, stay, ready, instant, and low battery conditions, sixteen push buttons
for entry of commands and allows for a four wire interconnection with the control panel.
The keypad circuitry accepts inputs from a remote programmer. You state that pursuant
to New York (NY) 864521 dated July 2, 1991, the keypad is classified under subheading
8537.10.9060, HTSUS, as programmable controllers . You state that the keypad is an
originating good pursuant to General Note 12(b)(ii)(A), HTSUS, and the tariff shift
requirement of General Note 12(t)/85.121(A), HTSUS. You note that the translucent
door is a non-originating good classified under subheading 8538.90.60, HTSUS, as other
molded parts suitable for use solely or principally with the apparatus of heading 8535.
However, you state that the translucent door falls within the de minimis exception of
General Note 12(f), HTSUS.
3. ZR-815 C Dual Tone Siren is a 95dB output at 12vt DC, 2 tone-steady and warble, with
mounting hardware. You state that it is a product of Taiwan and is classified under
subheading 8531.80.8040, HTSUS, as other sound signaling apparatus.
4. 3P+ Beacon is a 9-16vt DC dual element passive infrared motion detector . You state that
it is made in Israel and Headquarters Ruling Letter (HRL) 953154 dated March 29, 1993,
classified this type of product under subheading 8531.90.8000, HTSUS, as other parts for
electric sound or visual signaling apparatus.
5. 12vt Sealed Lead Acid Rechargeable Battery provides power to the alarm system in case
of power outage or intentional power interruption. You state that the battery is a product
of Korea and is classified under subheading 8507.20.8040, HTSUS, as other lead-acid
storage batteries.
6. 12vt AC/DC Transformer supplies power to the alarm system in normal operation and
recharges the battery. You state that it of U.S. origin.
7. Steel Cabinet of U.S. origin is used to mount several components of the system.
8. Installation Kit which includes:
a. 6 resistors from Japan which are classified under subheading 8533.10, HTSUS, as
fixed carbon resistors, composition or film types,
b. 3 spacers from Korea which are classified under subheading 8547.20, HTSUS, as
insulating fittings of plastics,
c. 6 screws from Taiwan which are classified under subheading 7318.14, HTSUS, as
self-tapping screws,
d. ground lug of U.S. origin, and
e. washer of U.S. origin.
In Mexico, the above components are packaged together for importation and sale in the
U.S. You state that in their condition as imported they are considered a functional unit pursuant
to Note 4, Section XVI, HTSUS, and the alarm system is, therefore, classified under subheading
8531.10.0045, HTSUS, as burglar or fire alarms and similar apparatus. It is assumed only for
purposes of this issues in this ruling that the cited HTSUS classifications for the above
components are correct.
ISSUE:
I. Is the alarm system composed of originating and non-originating components packaged
together in Mexico eligible for NAFTA tariff preference, provided all other applicable
NAFTA requirements are met?
II. What is the country of origin and the proper marking requirements applicable to the alarm
device?
LAW AND ANALYSIS:
I. NAFTA Eligibility
To be eligible for tariff preferences under the NAFTA, goods must be "originating goods"
within the rules of origin in General Note 12(b), HTSUS. In this case, the method by
which the alarm system imported into the United States may be "goods originating in the territory
of a NAFTA party" is General Note 12(b)(ii), HTSUS. General Note 12(b)(ii), HTSUS, states
that to be "goods originating in the territory of a NAFTA party":
(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 subdivision (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....
We must examine whether the alarm system is "transformed in the territory of Canada,
Mexico and/or the United States" pursuant to General Note 12(b)(ii)(A), HTSUS. As the alarm
system is classified pursuant to Note 4, Section XVI, HTSUS, as a functional unit under
subheading 8531.10.00, HTSUS, based on the information provided, a transformation is
authorized by General Note 12(t)/85.104, HTSUS, which states:
A change to subheading 8531.10 from any other subheading , except from tariff item
8531.90.40.
Therefore, the non-originating components of the alarm system can come from any subheading,
other than subheading 8531.10 or 8531.90.40, HTSUS
Based on the information provided, the alarm system is classified pursuant to Note 4,
Section XVI, HTSUS, as a functional unit under subheading 8531.10.00, HTSUS. You state that
the XL2 PCA control panel, XL4600 digital keypad, AC/DC transformer, steel cabinet, grounding
lug and washer are originating goods because they are of Mexican and U.S. origin. The AC/DC
transformer, steel cabinet, grounding lug and washer are manufactured in the U.S. You state that
the other two components, the XL2 PCA control panel and XL4600 digital keypad, have met
their respective tariff shift requirements pursuant to General Note 12(t)/85, HTSUS. Based on
the information submitted, the non-originating components, i.e., ZR-815 C dual tone siren, 3P+
beacon, rechargeable battery, resistors. spacers and screws, meet the tariff shift requirement,
because they are classified under HTSUS tariff provisions other than subheadings 8531.10 or
8531.90.40, HTSUS. We note that we are asked to assume that the XL2 PCA control panel and
XL4600 digital keypad are "originating" pursuant to General Note 12(b)(ii)(A), HTSUS. Based
on the information you supplied for this analysis and provided that the XL2 PCA control panel
and XL4600 digital keypad, in fact, are "originating" materials under General Note 12(b)(ii)(A),
HTSUS, the alarm system composed of originating and non-originating components meets the
tariff shift requirements of General Note 12(t)/85.104, HTSUS, and, therefore, is considered to be
"originating goods" pursuant to General Note 12(b)(ii)(A), HTSUS.
II. Country of Origin and 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 (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. Part 134,
Customs Regulations (19 CFR 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 interim regulations set forth in 19 CFR Parts 102, 134.
Section 134.1(b) of the interim 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 (emphasis added).
Section 134.1(j) of the interim regulations, 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) of the interim regulations, 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. Section 134.45(a)(2) of the interim regulations, provides that
"a good of a NAFTA country may be marked with the name of the country of origin in English,
French, or Spanish."
Part 102 of the interim regulations, sets forth the "NAFTA Marking Rules" for purposes
of determining whether a good is a good of a NAFTA country for marking purposes. Section
102.11 of the interim regulations, sets forth the required hierarchy for determining country of
origin for marking purposes. Section 102.11(a) of the interim regulations states that "[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."
In this case, the applicable rule is section 102.11(a)(3) of the interim regulations. "Foreign
Material" is defined in section 102.1(e) of the interim 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." In order to determine whether Mexico is the country of origin, we must look at those
materials whose country of origin is other than Mexico. Therefore, all the materials, except the
XL2 PCA control panel and XL4600 digital keypad are considered to be foreign material. You
have asked us to assume that the country of origin of the XL2 PCA control panel and XL4600
digital keypad is Mexico.
As the alarm system is classified pursuant to Note 4, Section XVI, HTSUS, as a functional
unit under subheading 8531.10.00, HTSUS, the change in tariff classification must be made in
accordance with section 102.20(p), Section XVI: Chapters 84 through 85, 8531.10-8531.80 of
the interim regulations, which states that:
A change to subheading 8531.10 through 8531.80 from any other subheading, including
another subheading within that group, except when resulting from a simple assembly.
Section 102.1(o) of the interim regulations states that "'[s]imple assembly" means the
fitting together of five or fewer parts all of which are foreign (excluding fasteners such as screws,
bolts, etc.) by bolting, gluing, soldering, sewing or by other means without more than minor
processing." In this case, there is no simple assembly operation. The foreign components are not
assembled together in Mexico, but are packaged together for importation and subsequent sale in
the U.S. Therefore, all the foreign components, i.e., ZR-815 C dual tone siren, 3P+ beacon,
rechargeable battery, AC/DC transformer, steel cabinet, resistors, spacers, screws, ground lug and
washer, appear to meet the tariff shift requirement of section 102.20(p), Section XVI: Chapters
84 through 85, 8531.10-8531.80 of the interim regulations.
However, section 102.17 of the interim regulations states 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...."
Since the foreign materials are simply packaged together for importation and subsequent sale in
the U.S., they are not considered to meet the applicable change in tariff classification as set forth
in section 102.20(p), Section XVI: Chapters 84 through 85, 8531.10-8531.80 of the interim
regulations.
Section 102.11(b) of the interim regulations states that:
Except for a good that is specifically described in the Harmonized System as a set, or is
classified as a set pursuant to General Rule of Interpretation 3, where the country of origin
cannot be determined under paragraph (a), the country of origin of the good:
(1) Is the country or countries of origin of the single material that imparts the essential
character of the good...(emphasis added).
When determining the essential character of a good under section 102.11 of the interim
regulations, section 102.18(b) of the interim regulations provides that only domestic and foreign
materials that are classified in a tariff provision from which a change is not allowed shall be taken
into consideration and that in deciding among these materials consideration is given to various
factors, including the nature of the material or component, bulk, quantity, weight, value, role of a
constituent material in relation to the use of the goods. In this case, the XL2 PCA control panel,
ZR-815 C dual tone siren, 3P+ beacon, rechargeable battery, AC/DC transformer, steel cabinet,
resistors, spacers, screws, ground lug and washer, do not meet the tariff shift change. The XL2
PCA control panel did not change subheadings and the remaining materials are simply packaged
together. We are of the opinion that the single material which imparts the essential character of
the good is the XL2 PCA control panel. Provided that the country of origin of the XL2 PCA
control panel is Mexico, the country of origin of the alarm system will be Mexico, pursuant to
section 102.11(b) of the interim regulations.
However, even though Mexico is the country of origin, you propose to individually mark
the components and the container of the alarm system as follows:
CONTENTS: XL-2PK VALUE PAK
1 XL-2 CONTROL PANEL ASSEMBLED IN MEXICO
1XL-4600SM SURFACE MOUNT LED KEY PAD
KEY PAD ASSEMBLED IN MEXICO
SPARE DOOR FROM KOREA
1 12V 4AH BATTERY TAIWAN 1 TRANSFORMER USA
1 INDOOR SPEAKER/SIREN TAIWAN 1 WASHER USA
1 BEACON PLUS PIR ISRAEL 6 RESISTORS JAPAN
1 GROUNDING LUG USA 1 STEEL CABINET USA
2 SPACERS SO. KOREA
You contend that since the alarm system is a functional unit, it would appear that marking the
individual components as well as the container which reaches the ultimate consumer, with the
foreign origin would be appropriate. The proposed marking is unacceptable marking for the
alarm system. As stated above, the country of origin of the alarm system is Mexico. Therefore,
the container and/or the components must be labeled "Product of Mexico" or "Made in Mexico",
or other similar wording. We note that markings such as "Made in Taiwan" on the individual
components is unacceptable and must be corrected. See, section 134.46, Customs Regulations
(19 CFR 134.46).
HOLDING:
Based on the presented facts set forth above and provided that the XL2 PCA control panel
and XL4600 digital keypad are "originating" materials pursuant to General Note 12(b)(ii)(A),
HTSUS, the "XL2PK Value Pak" residential burglar/fire alarm system is found to be "originating
goods" pursuant to General Note 12(b)(ii)(a), HTSUS, provided all other applicable requirements
are met.
Pursuant to section 102.11(b) of the interim regulations and provided that the country of
origin of the XL2 PCA control panel is Mexico, the "XL2PK Value Pak" residential burglar/fire
alarm system is considered to be a product of Mexico for purposes of country of origin marking.
Therefore, the "XL2PK Value Pak" residential burglar/fire alarm system must be marked "Made
in Mexico" or "Product of Mexico."
Sincerely,
John Durant, Director
Commercial Rulings Division.