MAR-2-05 RR:CR:SM 561488 RSD
Mr. John L. Reeher
Reade Manufacturing Company
100 Ridgeway Boulevard
Lakehurst, New Jersey 08733
RE: Magnesium; substantial transformation; granules; Articles 509; NAFTA
Dear Mr. Reeher:
This is in response to your letter dated August 13, 1999, on behalf of Reade Manufacturing Company requesting a ruling concerning the country of origin marking requirements for magnesium granules.
FACTS:
Reade Manufacturing Co. and its affiliated companies, Hart Metals, Inc., and Niagara Metallurgical Products are involved in the steel desulfurization industry. These companies produce specific U.S. sieve sized and shaped granules from magnesium ingots which are blended to the exact proprietary customer requirements. These desulfurization reagent blends are then pneumatically injected into the steel making process.
The raw magnesium ingots used to produce the granules are in 16 kg grinding slabs. They are purchased from countries such as France, China, Russia and Israel and shipped to Reade’s plant in Canada. The ingots are processed into desulfurization grade granules by: (A) chipping the magnesium ingots down to a fine free flowing chip on a customized high speed machine; (B) hammer milling the chips to a 18 mesh size; (C) screening the milled granules with vibratory screens to remove any oversized particles which are returned to the mills for further processing; (D) packaging the granules in Department of Transportation approved containers for shipment to Reade’s manufacturing plants in Pennsylvania or New Jersey.
You indicate that the magnesium ingots are classified in subheading 8104.11.00 of the Harmonized Tariff Schedule of the United States (HTSUS) and the magnesium granules are classified in subheading 8104.30.00, HTSUS. You further point out that for the purpose of desulfurization, magnesium ingots are not usable and in order to be used they must be ground into specific granular sizes and shapes.
In the future, you may perform the blending of the granules in Canada into the final desulfurization grade reagent. In such a case, the reagents will be shipped directly to designated U.S. steel mills. To make the desulfurization grade reagents, pulverized quicklimes which are produced and purchased in Canada, would be blended with the made magnesium granules made in Canada as described above. Typically, three formula blends are used: 1) 90% mg-10% lime; 2) 30% mg- 70% lime; and 3) 25% mg-75% lime.
ISSUES:
What is the country of origin of the imported magnesium granules, which are processed as described above in Canada from ingots produced in a non-NAFTA country?
What is the country of origin of the imported blended desulfurization reagents using the aforementioned magnesium granules and lime produced and purchased in Canada?
LAW AND ANALYSIS:
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 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 exceptions of 19 U.S.C. §1304. 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. See 19 CFR §134.35.
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 United States. 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 this part;
however for a good of a NAFTA country, the NAFTA Marking
Rules will determine the country of origin.).
The country of origin marking requirements for a "good of a NAFTA country" are 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). 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 United States as determined under the NAFTA Marking Rules. The NAFTA Marking Rules are defined in 19 CFR §134.1(j) as the rules promulgated for purposes of determining whether a good is a good of a NAFTA country.
The NAFTA Marking Rules are set forth at 19 CFR Part 102. Section 102.11, Customs Regulations (19 CFR §102.11), sets forth the required hierarchy for determining the country of origin under the Marking Rules. Paragraph (a) of this section states 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.
“Foreign material” is defined in 19 CFR §102.1(e) 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.” Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because the magnesium ingots are not of Canadian origin. Since an analysis of sections 102.11(a)(1) and 102.11(a)(2) will not yield a country of origin determination, we look to section 102.11(a)(3).
Section 102.11(a)(3) provides that the country of origin is the country in which “each foreign material incorporated in that good undergoes an applicable change in tariff classification as set forth in 19 CFR §102.20 and satisfies any other applicable requirements of that section....”
According to information you have provided, the magnesium granules are classified at subheading 8104.30.00, HTSUS. The magnesium ingots are classified at subheading 8104.11.00, HTSUS. The applicable tariff shift rule found in section 102.20(n) provides as follows:
HTSUS Tariff Shift and/or other requirements
8103.10 8113.00 .....A change to subheading 8103.10 through 8113.00 from any other subheading, including
another subheading within that group; or
A change to any of the following goods classified in subheading 8103.10 through 8113.00, including
from materials also classified in subheading 8103.10 through 8113.00: Matte; wrought; powder except from flakes; flakes except from powder; bars except from rods or profiles; rods except from bars or profiles; profiles except from rods or bars; wire except from rod; plates except from sheets or strip; sheets except from plate or strip; strip except from sheets or plate; foil except from sheet or strip; tubes except from pipes; pipes except from tubes; tube or pipe fittings except from tubes or pipes; cables/ stranded wire/ plaited bands.
In HRL (Headquarters Ruling Letter) 561103, dated January 20, 1999, in accordance with the NAFTA Marking Rules as set forth in 19 CFR Part 102.11(a)(3), we ruled in regard to an almost identical fact pattern that the country of origin of imported magnesium granules for NAFTA marking purposes was Canada or Mexico (the country in which the magnesium ingot was granulated). Similarly in this case, because the magnesium granules undergo the requisite tariff shift, pursuant to 19 CFR §102.11(a)(3), the country of origin of the imported magnesium granules would be Canada--where the magnesium is granulated.
With respect to the country of origin of the blended desulfurization reagents, you indicate that only one additional ingredient, Canadian origin quicklime, is blended with the magnesium granules of Candian origin to produce the blended desulfurization reagents. Therefore, the country of origin of the blended desulfurization reagents will be Canada pursuant to 19 CFR 102.11(a)(2).
HOLDING:
Pursuant to 19 CFR 102.11(a)(3), the country of origin of the imported magnesium granules produced from non-NAFTA ingots is Canada--the country where magnesium is granulated. The country of origin of the blended desulfurization reagents made in Canada with Canadian-origin quicklime and magnesium granules is also Canada.
A copy of this ruling letter should be attached to the entry documents filed at the time the goods are 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