CLA-2-95:RR:NC:SP:225 E80179
Mr. Steven B. Zisser
Suite 34
2155 Paseo De Las Americas
San Diego, CA 92173
RE: The tariff classification, status under the North American Free Trade Agreement (NAFTA)and country of origin marking of a battery pack and charger set for use with radio controlled toy vehicles from Mexico; Article 509
Dear Mr. Zisser:
In your letter dated March 29, 1999, received in this office on March 31, 1999, you requested a classification ruling and marking determination on a battery pack and charger set from Mexico under the NAFTA.
A sample of the “Nitro Power” battery charger pack was submitted with your inquiry. The product consists of a 7.2 volt nickel-cadmium battery pack and a charger unit. The battery pack is specially designed for use with any radio controlled toy vehicle. You have stated that, in most instances, the battery packs will be manufactured in Mexico and the plug-in charger units will be made in either China or Thailand. The charger will be packaged for retail in Mexico with the battery pack. The retail package consists of a clam shell packing with marketing insert.
CLASSIFICATION:
The classification of merchandise under the HTS is governed by the General Rules of Interpretation (GRI'S), taken in order. GRI 1 of the HTS, 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 . . . ”
The battery pack and charger package is considered a set for classification purposes. GRI 3(b) states in part that "goods made up of different components which cannot be classified by
reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character.”
Explanatory Note VIII to GRI 3(b) of the Harmonized Commodity Description and Coding System, page 4, states that:
(VIII) The factor which determines essential character will vary as between different kinds of goods. It may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods.
This office finds the essential character of the subject article to be imparted by the rechargeable r/c battery pack. The primary reason for purchasing the set is to obtain a battery that is compatible with a radio controlled toy vehicle which requires a 7.2V battery pack. The charger itself is intended to recharge the battery with which it is sold. Although the charger may potentially be used for other purposes, such use is considered to play a secondary role in the hands of the ultimate purchaser.
Chapter 95 note 3 states that "Subject to note 1, parts and accessories which are suitable for use solely or principally with articles of this chapter are to be classified with those articles.” Since the battery pack is designed solely or principally for use with radio controlled toy vehicles they will be classified as parts of toys.
The applicable tariff provision for the “Nitro Power” battery pack set will be 9503.80.0050, Harmonized Tariff Schedule of the United States (HTS), which provides for other toys and models, incorporating a motor and parts and accessories thereof: parts and accessories. The general rate of duty will be free.
NAFTA ELIGIBILITY:
Those items eligible for tariff preferences under the NAFTA, must be "originating goods" within the rules of origin in General Note 12(b), HTSUS. In this case, we refer to General Note 12(b)(ii), HTSUS, is applicable. General Note 12(b)(ii), HTSUS, which states that merchandise may qualify as "goods originating in the territory of a NAFTA party" only if:
(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 (assembling) 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 battery pack set is "transformed in the territory of Canada, Mexico and/or the United States" pursuant to General Note 12(b)(ii)(A), HTSUS. When the charger is entered into Mexico it is classifiable under heading 8504 as electric generators. Upon entry, the charger will be assembled with a battery pack which was produced in Mexico from both foreign and Mexican components. General Note 12(t)/9503, HTS, states that:
A change to headings 9503 through 9505 from any other chapter.
The requirement of a tariff shift pursuant to General Note 12(t), HTSUS, has been met for the charger component. Based on the information provided, the battery pack is (in most cases) manufactured in Mexico. Therefore, the completed set is considered to be "originating goods" pursuant to General Note 12(b)(ii)(A), HTSUS.
MARKING:
Your inquiry also requests a ruling on the country of origin marking requirements for an article imported from a NAFTA country. A sample marked “Battery Made in Mexico. Charger Made in Taiwan or Thailand as marked thereon” was submitted with your letter for review.
The marking statute, section 304, 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
U.S. 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 U.S. 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 North American Free Trade Agreement ("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 appropriate Customs Regulations. The Marking Rules used for determining whether a good is a good of a NAFTA country are contained in Part 102, Customs Regulations. The marking requirements of these goods are set forth in Part 134, Customs Regulations.
Section 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 within this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin.” (Emphasis added).
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.
You have suggested that Section 102.11 is not applicable because the battery pack kit is considered a GRI 3 set. We find this argument invalid since Section 102.11(c) provides for goods classified as sets pursuant to GRI 3. It is also your contention that the NAFTA Preference Override as described within Section 102.19 be employed. This section provides that when 102.11(a) or (b) or 102.21 are not applicable than the country of origin is determined by the last NAFTA country in which the good underwent production other than minor processing. This office finds the override does not apply since the finished good acquired its classification by minor processing as defined by Section 102.1(m)(6).
We find that Section 102.11(a)(1) and Section 102.11(a)(2) do not apply to the facts presented because the battery pack set is neither wholly obtained or produced in Mexico nor is either component produced exclusively from domestic materials. We, therefore, look to Section 102.11(a)(3) which provides that the country of origin is the country in which "[e]ach foreign material incorporated in that good undergoes an applicable change in tariff classification in 102.20 . . . " This rule, however, does not apply because the battery pack set does not undergo the necessary change in tariff classification as set out in section 102.20. Furthermore, the processing performed on the merchan-dise, specifically the packaging of the two components, is a non-qualifying operation, as described in section 102.17(c).
Section 102.11(b) is also found to be inappropriate because the battery pack set qualifies as a GRI 3 set.
In applying the NAFTA Marking Rules set forth in Part 102 of the interim regulations to the facts of this case, we find that Section 102.11(c) is applicable. Section 102.11(c) provides that “where the country of origin cannot be determined under paragraph (a) or (b) of this section and the good is specifically described in the Harmonized System as a set or mixture, or classified as a set, mixture or composite good pursuant to General Rule of Interpretation 3, the country of origin of the good is the country or countries of origin of all materials that merit equal consideration for determining the essential character of the good.” Accordingly, we find that the imported battery pack set should be marked to indicate the appropriate country of origin for each component.
The submitted sample marked “Battery Made in Mexico. Charger Made in Taiwan or Thailand as marked thereon” appears to satisfy the requirements of Section 102.11(c). We will assume that the country of China will be substituted for Taiwan where applicable.
This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 C.F.R. 181).
This ruling letter is binding only as to the party to whom it is issued and may be relied on only by that party.
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regard-ing the ruling, contact National Import Specialist Alice J. Wong at 212-637-7028.
Sincerely,
Robert B. Swierupski
Director,
National Commodity
Specialist Division