CLA-02 RR:CR:SM 563064 NL
Mr. Rodney Ralston
UPS Supply Chain Consultants
One Trans-Border Drive
Champlain, NY 12919
RE: Tariff Classification and NAFTA Eligibility for “House Fly Trap”
Dear Mr. Ralston:
This is in reply to your letter dated June 22, 2004, in which you request a binding ruling on behalf of your client, Flystar International (Flystar), concerning their product called “The Original House Fly Trap” which is to be imported from Canada. A sample was submitted.
An earlier submission on Flystar’s behalf indicated that this importer was seeking a ruling on the eligibility of the House Fly Trap for preferential tariff treatment under the North American Free Trade Agreement (NAFTA). At that time Customs and Border Protection (CBP) had not been provided with sufficient information to rule on NAFTA eligibility. The instant submission now includes the information necessary to determine the tariff classification of the good as imported from Canada. The tariff classification, in turn, permits an analysis of whether the production of the good in Canada satisfies the applicable NAFTA rule of origin under General Note 12, Harmonized Tariff Schedule of the United States (HTSUS). Our ruling follows.
FACTS:
The device is a disposable household-type article designed for insect control. Packaged for retail sale, the article essentially consists of a small fold-up house motif of light cardboard construction, measuring 5 inches x 3 1/4 inches x 3 inches, and a glue board, also of light cardboard, measuring approximately 4 1/2 inches x 3 inches. It is coated on one side with a "glue" adhesive material consisting of styrene copolymer, hydrocarbon resin, paraffin oil and less than 1 percent antioxidants. When the folded cardboard house is assembled by the consumer, the glue board is placed inside to become the floor of the house and "traps" the insects. The available information indicates the article is non-toxic but is silent on whether the glue material contains an aromatic or other attractant. The cardboard house is of Canadian origin and the glue board, presumed to be both the cardboard backing and the coating material, is of Swedish origin.
ISSUE:
Whether the Original House Fly Trap qualifies for preferential tariff treatment under NAFTA.
LAW AND ANALYSIS:
Under General Rule of Interpretation (GRI) 1, Harmonized Tariff Schedule of the United States (HTSUS), goods are to be classified according to the terms of the headings and any relative section or chapter notes, and provided the headings or notes do not require otherwise, according to GRIs 2 through 6.
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System at the international level. Though not dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS. Customs believes the ENs should always be consulted. See T.D. 89-80. 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).
Heading 3808, HTSUS, provides for insecticides, rodenticides, fungicides, herbicides, antisprouting products and plant-growth regulators, disinfectants and similar products, put up in forms or packings for retail sale or as preparations or articles. Relevant 38.08 ENs include within that heading goods put up in the form of articles such as...fly-papers (including those coated with glue not containing poisonous matter). The facts presented indicate that the glue board meets the EN description and, at GRI 1, it is provided for in heading 3808. The applicable subheading will depend on the chemical composition of the coating material or other subheading description. In this case, the classification is in subheading 3808.10.1000, HTSUS, as fly ribbons (ribbon fly catchers). See NY A82387 (April 22, 1996).
The final good, The Original House Fly Trap, is likewise considered to be a good put up in the form of articles within the cited 38.08 EN description. It, too, is classifiable in subheading 3808.10.1000. See HQ 960622 (April 3, 1998); and NY 866232 (September 16, 1991).
A good is eligible for NAFTA preferential tariff treatment provided that it qualifies as “originating” within the meaning of General Note 12, HTSUS and the specific rules set out thereunder. Pursuant to those rules a good is originating if each non-originating material used in the production of the good undergoes the change in tariff classification prescribed for that good, and provided that the good otherwise satisfies applicable requirements.
The General Note 12 rule of origin for goods classified in subheading 3808.10 provides:
7. A change to heading 3808 from any other heading, provided there is a regional value content of not less than:
(A) 60 percent where the transaction value method is used and the good contains no more than one active ingredient,
or 80 percent where the transaction value method is used and the good contains more than one active ingredient;
or
(B) 50 percent where the net cost method is used and the good contains no more than one active ingredient, or 70
percent where the net cost method is used and the good contains more than one active ingredient.
Applying this rule to the production in Canada of the House Fly Trap, we find that the non-originating glue board, classified in subheading 3808.10, does not undergo the prescribed change in tariff classification when used to produce the finished House Fly Trap in Canada. Both the glue board and finished article are classified in the same tariff subheading. We note that the parts of the rule concerning regional value content (RVC) do not come into play; these requirements are triggered only if the non-originating materials undergo a change of heading, i.e. from another four-digit tariff category to heading 38.10.
However, by application of the de minimis allowances of General Note 12(f), it is possible that the presence of the non-originating glue board may be disregarded. The NAFTA de minimis provisions state, in relevant part:
(f) De minimis.
(i) Except as provided in subdivisions (f)(iii) through (vi), inclusive [inapplicable exceptions], 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.
(ii) A good that is otherwise subject to a regional value-content requirement shall not be required to satisfy such
requirement if the value of all non-originating materials used in the production of the good 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 of the good is unacceptable under section 402(b) of the Tariff Act of 1930, the value of all non-originating materials is not more
than 7 percent of the total cost of the good, provided that the good satisfies all other applicable requirements of this note.
Applying this exception to the product under review, if the value of the Swedish-origin glue board is not more than 7 percent of the transaction value or total cost of the good, as the case may be, the House Fly Trap would be considered a NAFTA originating good. This is based on the assumption that the glue board is the only non-originating material used in the production of the good.
It is noted that in connection with Flystar’s earlier request for a ruling, information was submitted indicating the wholesale “cost” of each House Fly Trap and the wholesale “cost” of the Swedish-origin glue board. See Headquarters file 562989 (April 21, 2004). This data suggests that the value of the glue board may have amounted to more than 33 percent of the transaction value or total cost of the House Fly Trap. However, the legal standard calls for comparison of transaction values or total costs, terms that have specific meanings under the HTSUS. Moreover, transaction values and total costs generally are determined as part of appraised value at the time of importation. Flystar should be advised to examine the appraised values at which it would import the House Fly Trap into the U.S. in order to reach an accurate determination as to whether the value of the non-originating glue boards exceeds the 7 percent de minimis threshhold as set forth in General Note 12(f).
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,
Myles B. Harmon, Director,
Commercial Rulings Division