OT:RR:CTF:VS H256732 CMR
Mr. Kenneth M. Carmon
Bay Brokerage, Inc.
44951 County Route 191
P.O. Box 293
Wellesley Island, NY 13640
RE: Modification of New York Ruling Letter (NY) N254072, dated July 7, 2014; Eligibility for preferential tariff treatment under the North American Free Trade Agreement (NAFTA); Article 509; 19 U.S.C. § 1625; publication exception
Dear Mr. Carmon:
On July 7, 2014, Customs and Border Protection (CBP) issued New York Ruling Letter (NY) N254072 to you addressing the classification of certain footwear identified as Wilkuro Safety Toes. The ruling also addressed the eligibility of the footwear under the North American Free Trade Agreement (NAFTA). You submitted the ruling request on behalf of your client, Chausseres Regence, Inc.
It has come to our attention that an error was made with regard to the analysis provided in NY N254072 for the NAFTA eligibility determination on the Wilkuro Safety Toes. This ruling serves to modify NY N254072 as to the reason the Wilkuro Safety Toes qualify for NAFTA. As this modification decision is being issued within 60 days of the issuance of NY N254072, per 19 U.S.C. § 1625, CBP is not required to publish notice of the modification in the Customs Bulletin.
FACTS:
The Wilkuro Safety Toes were described in NY N254072 as follows:
. . . . The product, Wilkuro brand Safety Toes, are below-the-ankle, galoshes-type, PVC overshoes with steel toe caps. Available in color coded sizes to fit over most shoes, they are said to protect the wearer’s toes from compression as well as providing slip-resistance. They are not considered “protective,” as described in T.D. 93-88, for tariff purposes. They measure 1-1/2 inches tall at the lowest point and do not cover the top of the foot, excepting the toes. In Canada, the steel toe caps from China are incorporated into the PVC components, sourced from Mexico, using adhesives.
The footwear is classified in subheading 6401.10.1000, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for “[w]aterproof footwear with outer soles and uppers of rubber or plastics, the uppers of which are neither fixed to the sole not assembled by stitching, riveting, nailing, screwing, plugging or similar processes: [f]ootwear incorporating a protective metal toe-cap.”
You indicated in your May 29, 2014 submission that the footwear is manufactured within the NAFTA parties with originating components with the exception of the Chinese origin steel toe-caps. You state that the PVC overshoe is an originating good of Mexico; the steel toe-cap is a good of China; and, the adhesive used to attach the steel toe-cap to the PVC overshoe is an originating good of the United States. The steel toe-caps are classifiable in subheading 6406.10.90, HTSUS, as parts of footwear. A sticker, instruction sheet, and boxes imported with the overshoes are of Canadian origin.
The steel toe-caps are imported into Canada from China for incorporation into the finished overshoe. The finished Wilkuro Safety Toes are produced by assembling, gluing, or otherwise completing the imported products, at the Chaussures Regence, Inc. facility in Canada.
In your request for a ruling, you indicate that the steel toe-cap is “less than seven (7) percent of the transaction value of the finished footwear adjusted to an FOB basis,” and you inquire as to whether the de minimis rule would apply allowing the footwear to qualify for NAFTA. You provided the selling price for four style numbers and the calculated de minimis value of the steel toe-cap for each model. You verified that the selling price provided to CBP was the transaction value adjusted to a FOB basis.
ISSUE:
Whether the Wilkuro Safety Toes qualify for preferential tariff treatment under the NAFTA.
LAW AND ANALYSIS:
The NAFTA is implemented in GN 12 of the HTSUS. GN 12(a)(ii) states that goods are eligible for the NAFTA rate of duty if they originate in the territory of a NAFTA party and qualify to be marked as goods of Canada. GN 12(b) sets forth the various methods for determining whether a good originates in the territory of a NAFTA party. Specifically, these provisions provide, in relevant part, as follows:
Goods originating in the territory of a party to the North American Free Trade Agreement (NAFTA) are subject to duty as provided herein. For the purposes of this note—
(i) Goods that originate in the territory of a NAFTA party under the terms of subdivision (b) of this note and that qualify to be marked as goods of Canada under the terms of the marking rules set forth in regulations issued by the Secretary of the Treasury (without regard to whether the goods are marked), and goods enumerated in subdivision (u) of this note, when such goods are imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appears in the "Special" subcolumn followed by the symbol "CA" in parentheses, are eligible for such duty rate, in accordance with section 201 of the North American Free Trade Agreement Implementation Act.
* * *
(b) 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
* * *
As the footwear at issue incorporates a non-originating component, i.e., the steel toe-cap from China, we look to GN 12(b)(ii)(A). As the footwear is classifiable in heading 6401, the applicable tariff shift rule set forth in GN 12(t) is:
A change to headings 6401 through 6405 from any heading outside that group, except from subheading 6406.10, provided there is a regional value content of not less than 55 percent under the net cost method.
Since the steel toe-cap is classifiable in subheading 6406.10, the good does not meet the tariff shift rule.
The de minimis rule set forth in GN 12(d)(i) provides:
Except as provided in subdivisions (f)(iii) through (vi), inclusive, a good shall be considered to be an originating good if the value of all non-originating materials used in the production of the good that do not undergo an applicable change in tariff classification set out in subdivision (t) of this note is not more than 7 percent of the transaction value of the good, adjusted to a F.O.B. basis, or, if the transaction value is unacceptable under section 402(b) of the Tariff Act of 1930, as amended, the value of all such non-originating materials is not more than 7
percent of the total cost of the good, provided that—
(A) if the good is subject to a regional value-content requirement, the value of such non-originating materials shall be taken into account in calculating the regional value content of the good; and
(B) the good satisfies all other applicable requirements of this note.
In NY N254072, it is stated:
Based on the facts provided, the goods described above qualify for NAFTA preferential treatment, because the non-originating material used to make the footwear has satisfied the changes in tariff classification required and will meet the requirements of HTSUS General Note 12(b)(ii)(A) and General Note 12(t)/64.1
The above statement is incorrect. The Wilkuro Safety Toes, described herein, qualify for NAFTA preferential treatment because the non-originating material used to produce the footwear, that is, the steel toe-cap, meets the requirements of the de minimis rule set forth above. Therefore, the footwear, style numbers WIL 001-11, WIL 001-21, WIL 001-23, and WIL 001-11, for which price information was provided to CBP to show that the non-originating steel toe-caps used in the production of the footwear falls within the terms of the de minimis rule set forth in GN 12(d)(i), qualify for preferential tariff treatment under the NAFTA.
HOLDING:
The Wilkuro Safety Toes, style numbers WIL 001-11, WIL 001-21, WIL 001-23, and WIL 001-11, qualify for preferential tariff treatment under the NAFTA. As such, the footwear which is classified in subheading 6401.10.1000, HTSUS, which provides for “[w]aterproof footwear with outer soles and uppers of rubber or plastics, the uppers of which are neither fixed to the sole not assembled by stitching, riveting, nailing, screwing, plugging or similar processes: [f]ootwear incorporating a protective metal toe-cap.” Goods classified therein and eligible for NAFTA preferential tariff treatment are subject to a FREE rate of duty.
This ruling is issued pursuant to the provisions of Part 181, CBP Regulations (19 CFR Part 181). If the specific factual situation as described above should change, this ruling may not be valid. A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered.
Sincerely,
Monika R. Brenner, Chief
Valuation and Special Programs Branch