MAR-05 RR:CR:SM 560936 BLS
Ms. Catherine L. Holmes
The A.W. Fenton Company Inc.
1157 Rarig Avenue
Columbus, Ohio 43236-0614
RE: Country of origin marking of wheelbarrow parts; NAFTA; Article 509
Dear Ms. Holmes:
This is in reference to your letter dated November 24, 1997, on behalf of Union Tools, Inc., requesting a ruling with respect to country of origin marking of wheelbarrow parts imported in separate shipments from various countries.
FACTS:
Union Tools Inc. (“Union”) imports wheelbarrow parts, including the tray, in separate shipments from various countries. Union will then repackage the unassembled parts in one box and the tray in a separate box for purposes of sale in this condition to contractors or to retail outlets. The retail outlets will either sell the wheelbarrows to their customers unassembled, or assemble the parts and sell the articles in an assembled condition. Occasionally, a wheelbarrow tray may be sold as a replacement part. In this case, you state that the tray will be marked to reflect its country of origin.
You state that the importer will know the country of origin of the various parts at the time of repackaging. The country of origin of the various parts are as follows:
Handle ------------------------------------------ Malaysia or Canada
Tray ------------------------------------------ Mexico
Metal Legs and Parts -------------------------- Mexico
Wooden Wedges and Stays ----------------- Malaysia or Canada
Tire and Tube ------------------------------------Taiwan or Vietnam
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You state that the wedges and stays comprise 4 percent of the total value of the imported parts.
ISSUE:
What are the country of origin marking requirements for the imported wheelbarrow parts?
LAW AND ANALYSIS:
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 CFR Part 134), implements the country of origin marking requirements and the exceptions of 19 U.S.C. 1304. Section 134.1(b), Customs Regulations (19 CFR 134.1(b)), 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 the meaning of the marking laws and regulations. However, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin.
Section 134.1(j), Customs Regulations (19 CFR 134.1(j)), provides that the “NAFTA Marking Rules” are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. A “good of a NAFTA country” is defined in 19 CFR
134.1(g) as an article for which the country of origin is Canada, Mexico, or the U.S. as determined under the NAFTA Marking Rules set out at 19 CFR Part 102.
A good of a NAFTA country which is to be processed in a manner that would result in the good becoming a good of the United States under the NAFTA Marking Rules is excepted from marking. In this circumstance, unless the good is processed by the importer or on its behalf, the outermost container of the good must be marked. See 19 CFR 134.35(b).
Accordingly, as the wheelbarrow parts imported into the U.S. are to be packaged or
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assembled for sale, the country of origin marking requirements of the
packaged/assembled articles will depend upon whether the processing in the United States would cause the wheelbarrows to be of United States origin pursuant to the NAFTA Marking Rules.
Section 102.11, Customs Regulations (19 CFR 102.11), sets forth the required hierarchy for determining whether a good is a good of a NAFTA country for marking
purposes. Paragraph (a) of this section provides that the 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 applicable requirements of these rules are satisfied.
As noted above, Union will repackage wheelbarrow parts from various countries for sale to contractors and retail outlets as unassembled wheelbarrows. The country of origin of the tray and metal legs and parts will be Mexico; the handle and wooden wedges and stays may be either of Canadian or Malaysian origin; the tire and tube will be a product of either Vietnam or Taiwan. The retailers will sell the products to their customers as packaged in an unassembled state and may also assemble the parts and sell the product in a completed condition. In this regard, the ultimate purchasers of the product are the contractors when sold to these customers, and the retail customers when sold to retail stores.
The packaged/assembled wheelbarrows are neither wholly obtained/produced nor produced exclusively from domestic (U.S.) materials. Therefore, paragraphs (a)(1) and (a)(2) of section 102.11 are not applicable. Accordingly, paragraph (a)(3) of section 102.11 is the applicable rule that next must be applied.
The wheelbarrow, whether assembled or unassembled, is classifiable under subheading 8716.80.50, Harmonized Tariff Schedule of the United States (HTSUS), “Trailers and semi trailers; other vehicles, not mechanically propelled; Other.” In this regard, we conclude that as packaged in the U.S. by Union, the wheelbarrow tray and other parts have the essential character of a complete or finished wheelbarrow and, pursuant to GRI 2(a), HTSUS, are so classified. We also find that the wheelbarrow tray alone has the essential character of a complete or finished wheelbarrow and is similarly classified under 8716.80.50 pursuant to GRI 2(a). The other wheelbarrow parts are
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classifiable under subheading 8716.90.50, HTSUS, “Trailers and semi-trailers; other vehicles, not mechanically propelled; Parts: Other.”
The applicable change in tariff classification for subheading 8716.80.50 is set out in section 102.20(p), Section XVII: Chapters 86 through 89, and provides as follows:
8716.10.-8716.80 ... A change to subheading 8716.10 through 8716.80 from any other heading, except from subheading 8716.90 when that change is pursuant to General Rule of Interpretation 2(a).
This rule was intended to allow a change from 8716.90 except when the change is made pursuant to General Rule of Interpretation 2(a). The rule allows a change only from a heading outside 8716, but then permits a change from subheading 8716.90 (the same heading) except when made pursuant to General Rule of Interpretation 2(a). Since the language of the rule could be written more clearly, Customs is in the process of amending this rule, which will be published in the Federal Register. As amended, the rule will be as follows:
8716.10-8716.80 ... A change to subheading 8716.10 through 8716.80 from any
other subheading outside that group, except from subheading 8716.90 when that change is made pursuant
to General Rule of Interpretation 2(a).
As the wheelbarrow tray is classifiable under subheading 8716.80.50, a change in classification does not occur in connection with this component, whether or not the wheelbarrow is assembled before reaching the ultimate purchaser. Further, the other parts do not meet the tariff shift rule when the wheelbarrow is sold to the ultimate purchaser unassembled, as these parts are classifiable under subheading 8716.90, and the change, if the wheelbarrow is unassembled, is pursuant to GRI 2(a). (See also 19 CFR 102.17, which provides that "[a] foreign material shall not be considered to have undergone the applicable change in tariff classification set out in 102.20 or 102.21 ..... or to have met the other applicable requirements of those sections by reason of ...(c) (Simple packing, repacking or retail packaging without more than minor processing....”)
Since section 102.11(a) is not applicable, the next step in the hierarchal rules is
section 102.11(b), Customs Regulations (19 CFR 102.11(b)). That section provides as
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follows:
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) of this section:
(1) The country of origin of the good is the country
or countries of origin of the single material that imparts
the essential character to the good....
When determining the essential character of a good under section 102.11, section
102.18(b) 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, and the role of a constituent material in relation to the use of the goods.
Based upon these factors, the tray and other parts (with the exception of the wooden wedges and stays) are considered because they are classified in a tariff provision from which a change is not allowed. (The wooden wedges and stays are disregarded in determining the country of origin as the value of these materials is less than 7 percent of the value of the good. See 19 CFR 102.13.)
Applying section 102.11(b)(1) to this case, we find that the single material that imparts the essential character to the wheelbarrow is the tray. As imported, this component has the basic shape of the completed item, which is a container used to move garden materials, tools and related items. This is the attribute that marks or serves to distinguish the essence of a wheelbarrow, and is indispensable to the structure or condition of the product.
Accordingly, as sold unassembled to contractors, and assembled or unassembled to customers of retail outlets, the country of origin of the wheelbarrow will be Mexico, the country of origin of the tray.
Repacking
As the wheelbarrow parts will be repacked upon importation, section 134.26 (19
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CFR 134.26) will apply. Section 134.26 provides in pertinent part that:
If an imported article subject to these requirements is intended to be
repacked in retail containers ... after its release from Customs custody, or if the port director having custody of the article, has reason to believe such article will be repacked after its release, the importer shall certify to the port director that: (1) If the importer does the repacking, he shall not obscure or conceal the country of origin marking appearing on the article, or else the new container shall be marked to indicate the country of origin of the article in accordance with the requirements of this part; or (2) if the
article is intended to be sold or transferred to a subsequent purchaser or repacker, the importer shall notify such purchaser or transferee, in writing, at the time of transfer or sale, that any repacking of the article must conform to these requirements.
The purpose of 19 CFR 134.26 is to ensure that the new container in which the
article is repacked does not obscure or conceal the country of origin marking on the article, or that the new container is properly marked with the country of origin. Further, where the importer is not the repacker, the importer must comply with the notification as well as the certification requirements of the regulation. In this case, when selling to retail stores Union Tools must comply with the notification requirements of 19 CFR 134.26 as these transferees may remove the wheelbarrow parts from the container for assembly and sale to the ultimate purchaser.
In summary, as Union Tools does the repacking, it is required to mark the new containers with Mexico as the country of origin. Further, Union Tools must notify the retail stores of their obligation to mark the wheelbarrows should they be removed from the cartons and assembled or if they are otherwise repacked and sold in this condition so that their customers, the ultimate purchasers of the product, may know the country of origin prior to purchase. Union Tools must also provide the appropriate certification to the port director as noted.
HOLDING:
When packaged in the U.S. in an unassembled condition, a wheelbarrow tray and other parts imported into the U.S. have the essential character of a complete or finished wheelbarrow and, pursuant to GRI 2(a), HTSUS, are so classified. Under 19 CFR 102.11(b), the single material that imparts the essential character to the good is the wheelbarrow tray. Therefore, the country of origin of the wheelbarrow is Mexico, the country of origin of the tray.
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As the articles are to be repacked after release from Customs custody, the importer is required to comply with the notification and certification requirements of 19 CFR 134.26.
A copy of this ruling should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.
Sincerely,
John Durant, Director
Commercial Rulings Division