CLA-2 CO:R:C:T NLP
John C. Haryett, President
A.P.T. Industries Ltd.
No.1, Wessex Place, 2620
22 St. N.E. Calgary, Alberta T2E 7L9
RE: Partially printed lottery tickets; heading 4911; Explanatory
Notes to heading 4911; U.S.-Canada Free-Trade Agreement;
General Note 3(c)(vii)(B), (L) and (R); goods originating in
the territory of Canada and/or the U.S.
Dear Mr. Haryett:
This is in response to your letter of December 22, 1992, in
which you inquired as to whether partially printed lottery
tickets from Canada are eligible for preferential treatment under
the U.S.-Canada Free-Trade Agreement (CFTA).
FACTS:
The articles at issue are lottery tickets that are made from
recycled U.S. paper products. They are partially printed in
Canada and will be shipped to your affiliate company in Oregon.
ISSUES:
1) What is the classification of the partially printed
lottery tickets under the Harmonized Tariff Schedule of the
United States (HTSUS)?
2) Are the partially printed lottery tickets eligible for
preferential treatment under the CFTA?
LAW AND ANALYSIS:
CLASSIFICATION
The classification of goods under the HTSUS is governed by
the General Rules of Interpretation (GRI's), taken in order. GRI
1 provides that classification shall be determined according to
the terms of the headings and any relative section or chapter
notes. In the event that the goods cannot be classified solely
on the basis of GRI 1, and if the headings and legal notes do not
otherwise require, the remaining GRI's may be applied, taken in
order.
Heading 4911, HTSUS, provides for "[o]ther printed matter,
including printed pictures and photographs." The Harmonized
Commodity Description and Coding System Explanatory Notes (ENs)
to heading 4911 state, on page 699, that this heading "covers all
printed matter... of this Chapter... but not more particularly
covered by any of the preceding headings of the Chapter." The
ENs state that this heading includes "[c]inema, theatre, concert,
railway and other tickets." The partially printed lottery
tickets are not covered by any of the preceding headings of
Chapter 49, HTSUS, and as they are printed matter, they are
classifiable in this heading. The tickets are classified in
subheading 4911.99.6000, HTSUS, which provides for "[o]ther
printed matter, including printed pictures and photographs:
[o]ther: [o]ther: [o]ther: [p]rinted on paper in whole or in part
by a lithographic process." If the tickets are printed by
another process, they are classified in subheading 4911.99.8000,
HTSUS, which provides for [o]ther printed matter, including
printed pictures and photographs: [o]ther: [o]ther: [o]ther:
[o]ther."
U.S.-CANADA FREE-TRADE AGREEMENT APPLICABILITY
General Note 3(c)(vii) to the HTSUS sets forth the terms and
conditions in which the CFTA applies. To be eligible for tariff
preferences under the CFTA, goods must be "originating goods"
within the rule of origin in General Note 3(c)(vii)(B), HTSUS,
which provides:
For the purposes of subdivision (c)(vii) of this note,
goods imported into the customs territory of the United
States are eligible for treatment as "goods originating
in the territory of Canada" only if--
(1) they are goods wholly obtained or produced in the
territory of Canada and/or the United States, or
(2) they have been transformed in the territory of
Canada and/or the United States, so as to be
subject--
(I) to a change in tariff classification as
described in the rules of subdivision
(c)(vii)(R) of this note, or
(II) to such other requirements subdivision
(c)(vii)(R) of this note may provide when no
change in tariff classification occurs, and
they meet the other conditions set out in
subdivision (c)(vii)(F),(G), (H), (I), (J)
and (R) of this note.
A product which is wholly obtained or produced in the
territory of Canada and/or the U.S is one which is grown, mined,
harvested, born and raised in Canada and/or the U.S., or
otherwise intimately connected to the two countries and their
land, air and sea territories as defined in General Note
3(c)(vii)(L)(1-8), HTSUS. Moreover, goods produced in the
territory of Canada and/or the U.S. exclusively from goods grown,
mined, harvested, etc... in Canada and/or the U.S., or from their
derivatives, at any stage of production, are also considered to
be wholly obtained or produced in Canada and/or the U.S. Based
on the information provided, the partially printed lottery
tickets are considered "goods originating in the territory of
Canada" as they are wholly obtained and produced in the U.S. and
Canada. The tickets are made of paper sourced from the U.S and
the manufacture and printing is done in Canada.
If it is determined that the partially printed lottery
tickets are not considered "originating goods" pursuant to
General Note 3(c)(vii)(B)(1), HTSUS, we would consider them to be
"originating goods" pursuant to General Note 3(c)(vii)(B)(2),
HTSUS. Specifically, the relevant provision in General Note
3(c)(vii)(R), HTSUS, reads:
Change in Tariff Classification Rules
(10) Section X: Chapters 47 through 49.
(aa) A change from one chapter to another
On importation into Canada, the paper would be classified in
Chapter 48, HTSUS, which provides for "[p]aper and paperboard:
articles of paper pulp, of paper or of paperboard." After the
lottery tickets are manufactured and printed, they would be
classifiable in Chapter 49, HTSUS. This is a change in
classification which results in a recognized transformation under
the CFTA. Therefore, the lottery tickets would be considered of
Canadian origin for purposes of the CFTA and would be entitled to
preferential treatment under the CFTA.
HOLDING:
If the partially printed lottery tickets are printed on
paper in whole or in part by a lithographic process they are
classified in subheading 4911.99.6000, HTSUS, which provides for:
[o]ther printed matter, including printed pictures and
photographs: [o]ther: [o]ther: [o]ther: [p]rinted on paper in
whole or in part by a lithographic process." The rate of duty is
0.4% ad valorem.
If the partially printed lottery tickets are printed by
another process, other than lithographic, they are classified in
subheading 4911.99.8000, HTSUS, which provides for "[o]ther
printed matter, including printed pictures and photographs:
[o]ther: [o]ther: [o]ther: [o]ther." The rate of duty is 4.9%
ad valorem.
As the partially printed lottery tickets are considered
"goods originating in the territory of Canada" in accordance with
General Note 3(c)(vii)(B), HTSUS, they are eligible for
preferential duty treatment under the CFTA. Articles classified
in the above subheadings that originate in Canada are entitled to
entry free of duty under the CFTA, upon compliance with all
applicable regulations.
Sincerely,
John Durant, Director