CLA-2 R:C:T 957701 ch
Mark Sandstrom
Thompson, Hine and Flory
1920 N Street, N.W.
Washington, D.C. 20036-1601
Re: Modification of New York Ruling Letter 806293; North
American Free Trade Agreement eligibility for the "Mead
Five Star First Gear Student Day Planner."
Dear Mr. Sandstrom:
This is in response to your letter of March 9, 1995,
requesting reconsideration of New York Ruling Letter (NYRL)
806293, dated February 7, 1995, in which you were advised in part
that the "Mead Five Star First Gear Student Day Planner" was not
an originating good for the purposes of the North American Free
Trade Agreement (NAFTA).
Pursuant to section 625, Tariff Act of 1930 (19 U.S.C.
1625), as amended by section 623 of Title VI (Customs
Modernization) of the North American Free Trade Agreement
Implementation Act, Pub. L. 103-182, 107 Stat. 2057, 2186 (1993)
(hereinafter section 625), notice of the proposed modification of
NYRL 806293 was published May 31, 1995, in the Customs Bulletin,
Volume 29, Number 22.
FACTS:
The article is a six-ring looseleaf book, designed to hold
printed pages measuring 7 1/2 inches by 5 7/8 inches. The paper
inserts comprise a day planner with sections for a calendar,
assignments, notes and telephone/addresses. A six-inch
transparent plastic ruler and a pad of graph paper are also
incorporated into the book.
The sewn nylon cover, metal six-ring binder, and a heavy
durable sheet of paperboard are exported from China to Mexico.
In Mexico, the ring binder is riveted to the paperboard sheet.
The binder mechanism is then inserted into a slot inside the
cover. The ruler is exported from Taiwan to Mexico. Paper of
U.S. origin is imported into Mexico for use as paper inserts or
as label bands. In Mexico, the paper is cut to specific size,
collated, organized and hole-punched.
In NYRL 806293, the merchandise was classified in subheading
4820.10.2010, Harmonized Tariff Schedule of the United States
(HTSUS), which provides for bound diaries and address books, of
paper or paperboard. In addition, Customs concluded that the
binder was not an originating good for purposes of the NAFTA.
ISSUE:
Does the merchandise qualify for NAFTA preferential
treatment?
LAW AND ANALYSIS:
General Note 12(b), HTSUS, provides in pertinent part that:
For the 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 subdivisions (r), (s) and (t)
where no change in tariff classification is
required, and the goods satisfy all other
requirements of this note; or
(iii) they are goods produced entirely in the territory
of Canada, Mexico and/or the United States
exclusively from originating materials.
Thus, General Note 12(b)(ii)(A) specifies in part that
merchandise will qualify as originating goods if each of the non-originating materials undergo a change in tariff classification
described in subdivision (t). General Note 12(t), Chapter 48,
Rule 6, states that "a change to headings 4817 through 4823 from
any heading outside that group" will undergo a qualifying change
in tariff classification. The rule is applicable to the subject
merchandise, as the finished planner is classified within heading
4820, HTSUS. Therefore, the rule indicates that if the
components exported from China and Taiwan are not classifiable
within headings 4817 through 4823, HTSUS, the finished binder
will qualify for NAFTA preferential treatment.
The materials exported from China and Taiwan are not
classifiable within headings 4817 through 4823. However, in NYRL
806292 it was stated:
The merchandise does not qualify for preferential treatment
under the NAFTA because one or more of the non-originating
materials used in the production of the goods will not
undergo the change in tariff classification required by
General Note 12(t)/Chapter 48, HTSUSA.
In this connection, please note Section 102.17(c), Customs
Regulations, (19 C.F.R. 102.17(c)), which reads, in
pertinent part: "A foreign material shall not be considered
to have undergone the applicable change in tariff
classification set out in Section 102.20, or satisfy the
other applicable requirements of that Section by reason of
simple packing, repacking or retail packaging without more
than minor processing."
In our view, the placing of U.S. origin paper articles onto
Chinese looseleaf rings is not "more than minor processing"
of those rings. The slipping of the Chinese looseleaf
mechanism into a slot in the Chinese nylon cover is not
"more than minor processing" of either the mechanism or the
cover. Finally, the slipping of the Taiwan ruler onto the
Chinese looseleaf mechanism is not "more than minor
processing" of the ruler or the mechanism.
Thus, we reasoned that the processing undertaken in Mexico were
non-qualifying operations as set forth in Customs Regulation
102.17(c).
However, NAFTA preference eligibility is governed by General
Note 12 of the HTSUS. Part 102 of the Customs Regulations is
limited to those purposes set forth in Section 102.0. Hence,
reference to Section 102.17(c) in NYRL 806293 was in error.
Moreover, in this instance General Note 12(m), concerning non-qualifying operations, is not applicable. Consequently, pursuant
to General Note 12(t), Chapter 48, Rule 6, the "Mead Five Star
First Gear Student Day Planner" is eligible for NAFTA
preferential treatment.
HOLDING:
NYRL 806293 is hereby modified.
The subject merchandise is classifiable under subheading
4820.10.2010, HTSUS, which provides in part for bound diaries,
notebooks and address books of paper or paperboard.
The merchandise is eligible for preferential treatment under
the NAFTA. The applicable rate of duty for such goods from
Mexico is Free.
In accordance with 19 U.S.C. 1625, this ruling will become
effective 60 days after its publication in the Customs Bulletin.
Publication of rulings or decision pursuant to section 625 does
not constitute a change of practice of position in accordance
with section 177.10(c)(1), Customs Regulations (19 CFR
177.10(c)(1)).
Sincerely,
John Durant, Director
Commercial Rulings Division