MAR-2 RR:CR:SM 561580 KSG
Vicki W. Talley
Komatsu America International Co.
101 N. Industrial Rd.
Ripley, TN 38063
RE: Country of origin marking of pin kits; NAFTA marking rules; 19 CFR 102.11(c)
Dear Ms. Talley:
This is in response to your letter dated November 16, 1999, requesting a binding ruling on behalf of Komatsu America International Co., regarding the country of origin marking of pin kits containing imported hose clamps and screws.
FACTS:
Komatsu America International Co. imports metal hose clamps of Mexican origin and screws of Canadian-origin that are packaged in the U.S with various U.S.-origin items to create a pin kit. The complete kit consists of the following items: a step pin; a nut lock; foam rubber ring, spacer; neoprene rubber cover; three metal hose clamps; a metal spacer; a hex head and eight steel nuts; a spherical plain bearing; and 16 capscrews. One of the two hose clamps is of Mexican origin, all 16 capscrews are of Canadian origin, while the remaining items in the kit are of U.S. origin. The value of the foreign clamps and screws is less than 1% of the value of the kit. The step pin and bearing are the components that comprise most of the value of the kit.
The kit contains all the parts necessary for attaching the final drive assembly to the frame of mining trucks. You state that the most important part of the kit is the step pin because it is the principal component used to attach the final drive to the frame and, due to extensive wear, must be replaced frequently. The pin is usually replaced in the field with a cutting torch and, to expedite the repair, an inexact cut is used. Any parts damaged by the torch would be contained in the kit so a quick repair could be done on site.
You state that the foreign clamps are classified in subheading 7326.90.8530 of the Harmonized Tariff Schedule of the United States (“HTSUS”) and the capscrews in subheading 7318.15.2060, HTSUS.
You ask if it is acceptable to mark the kit package as a product of the U.S.
ISSUE:
What are the country of origin marking requirements pursuant to 19 U.S.C. 1304 for pin kits containing a clamp of Mexican-origin and capscrews of Canadian-origin packaged in the U.S. with U.S. components?
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930 (19 U.S.C. 1304), as amended, provides that unless excepted, every article of foreign origin 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 of 19 U.S.C. 1304.
The language of 19 U.S.C. 1304 only requires marking for goods of foreign origin; therefore, Customs would not require marking the country of origin of U.S. goods. Pursuant to 19 CFR 134.35(b), a good of a NAFTA country which is to be processed in the U.S. in a manner that would result in the good becoming a good of the U.S. under the NAFTA Marking Rules is excepted from marking. Unless the good is processed by the importer or on its behalf, the outermost container of the good shall be marked in accord with this part.
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.
Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because the ingredients are of U.S., Canadian, and Mexican 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....”
Each foreign material must be separately analyzed under 19 CFR 102.11(a)(3). With respect to the classification of the pin kits, it appears that the kits qualify as “goods put up in sets for retail sale” under General Rule of Interpretation 3(b), HTSUS, and that the step pin imparts the essential character of the set. Therefore, it appears that the pin kit is classified in heading 7318, HTSUS, which provides for: “Screws, bolts, nuts, coach screws, screw hooks, rivets, cotters, cotter pins, washers (including spring washers) and similar articles, of iron or steel.” The applicable tariff shift rule found in section 102.20(n) provides as follows:
HTSUS Tariff Shift and/or other requirements
7317-7318 .....A change to heading 7317 through 7318 from any other heading, including another heading within that
group.
The capscrews, a foreign material, are classified in heading 7318, HTSUS. Since this is classified in the same heading as the pin kit, the tariff shift rule is not satisfied.
Where the country of origin cannot be determined under 19 CFR 102.11(a) or (b), and the article is specifically described in the Harmonized System as a set or mixture, or classified as a set, mixture, or composite good pursuant to GRI (b), 19 CFR 102.11(c) is the rule which must then be applied.
Under 19 CFR 102.11(c), the country of origin is the country or countries of origin of all materials that merit equal consideration for determining the essential character of the good. All of the materials of the set or mixture, foreign and domestic, which merit equal consideration, must be considered. In Treasury Decision (“T.D.”) 94-4, dated December 17, 1993, Customs gave an example of a determination of origin pursuant to section 102.11(c).
For example, the countries of origin of a cutlery and dinnerware packaged set from Mexico, which includes 12 knives from Mexico, 12 forks from Korea, 12 spoons from Taiwan, and a plastic case from Japan would be as follows: Mexico, Taiwan and Korea. The plastic case from Japan did not merit equal consideration in determining the essential character of the set.
With regard to the pin kit, the clamp and capscrews do not merit equal consideration for determining the essential character of the good. Therefore, as the the remaining items in the set are of U.S. origin, the country of origin of the set is the U.S. Since U.S. origin articles (including U.S.-origin sets) are excepted from marking pursuant to 19 CFR134.35(b), the foreign clamps and capscrews packaged into the kit
need not be marked. Unless the packaging operation is performed by Komatsu (the importer) or on its behalf, the outermost containers in which the foreign clamps and capscrews are imported are required to be marked to indicate their origin.
The Federal Trade Commission (“FTC”) has jurisdiction concerning the use of the phrase “Made in the U.S.A.,” or similar words denoting U.S. origin. Consequently, any inquiries regarding the use of such phrases reflecting U.S. origin should be directed to Steven Ecklund, Investigator, Division of Enforcement, Federal Trade Commission, 6th & Pennsylvania Avenue, N.W., Washington, D.C. 20508 or by telephone at (202) 326-2841.
HOLDING:
Pursuant to 19 CFR 102.11(c), the imported clamps and capscrews do not merit equal consideration for determining the essential character of the good. Therefore, as the remaining items in the set are of U.S. origin, the pin kits are considered to be products of the U.S. Pursuant to 19 CFR 134.35(b), the foreign clamps and capscrews packaged into the kit sets are excepted from marking requirements. Unless the packaging operation is performed by Komatsu (the importer) or on its behalf, the outermost containers in which the clamps and capscrews are imported are required to be marked with their country of origin.
A copy of this ruling letter 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