CLA-2 RR:TC:MM 959560 JAS
Mr. C.E. Walker
INCO Limited
145 King Street West, Suite 1500
Toronto, Canada M5H 4B7
RE: Nicke l Coated Carbon Fibers Covered With Polycarbonate Resin; Nickel Oxide Sinter Matte Thermally Deposited onto Carbon Fibers and Coated With Polycarbonate Resin; INCOSHIELD; Composite Good, GRI 3(b), Essential Character; Originating Goods, North American Free Trade Agreement (NAFTA), General Note 12(b)(ii)(A)
Dear Mr. Walker:
In a letter, dated July 31, 1996, you inquire as to the
tariff classification and country of origin of a nickel-coated
carbon fiber material to be used in frequency interference
shielding. You provided additional information by telephone on
February 5, 1997, and requested country of origin information
both for marking purposes and for the purpose of determining
eligibility under the North American Free Trade Agreement
(NAFTA). As we advised, you will receive a separate country of
origin marking ruling.
FACTS:
The merchandise in issue, designated INCOSHIELD, is a
nickel-coated carbon graphite fiber product designed to provide
electrical conductivity in injection molded shapes for the
purpose of shielding sensitive electronic equipment from
electromagnetic and radio frequency interference. You describe
the product as a composite of carbon fiber, elemental nickel and
polycarbonate resin.
INCOSHIELD is produced from carbon graphite fibers of United
States origin, 7 microns in diameter and in spools of continuous
filaments, processed in Wales by the thermal deposition of a 99
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percent pure nickel oxide sinter matte, of Canadian origin, for
the purpose of achieving a final specific electrical resistivity.
The nickel-coated fibers are then shipped to Canada where they
are coated in bundles with a polycarbonate resin, then chopped to
lengths of 7 mm. This is the condition of the merchandise as
imported.
You note that a similar process by which the company's
nickel powders are produced allows you to use heading 7504.00.00,
Harmonized Tariff Schedule of the United States (HTSUS), nickel
powders and flakes. Moreover, you advised us by telephone that
the thermal deposition of nickel is not an alloying process; the
nickel content is 45-55 percent, by weight, of the graphite
fibers; the resin serves merely as a binder for handling purposes
and to facilitate the injection molding of specific shapes; and
finally, that while the carbon imparts strength to the final
product, it is the nickel that imparts the critical electro-magnetic shielding characteristics for which INCOSHIELD is
marketed.
ISSUE:
Whether the essential character of INCOSHIELD is carbon or
nickel; whether the combining of originating materials in a non-NAFTA country affects originating good status.
LAW AND ANALYSIS:
Merchandise is classifiable under the Harmonized Tariff
Schedule of the United States (HTSUS) in accordance with the
General Rules of Interpretation (GRIs). GRI 1 states in part
that for legal purposes, classification shall be determined
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 frequency interference shielding material in issue is a
composite good consisting in part of carbon graphite fibers and
in part of nickel. Heading 6815, Harmonized Tariff Schedule of
the United States (HTSUS), provides for articles of other mineral
substances (including carbon fibers and articles of carbon
fibers), while heading 7508 provides for other articles of
nickel. Each heading describes part only of this composite good.
There is no indication that heading 7504.00.00 merits
consideration. GRI 3(b), HTSUS, in part requires that composite
goods be classified as if consisting of that material that gives
the good its essential character. The nature of a material or
its role in relation to the use of the good are among relevant -3 -
factors to be considered. In this case, while the carbon imparts
mechanical strength to the injection molded shape it is the
nickel that dissipates the static electricity, which clearly is
the purpose the frequency interference shielding material serves.
We conclude, therefore, that nickel imparts the essential
character to the whole such that the INCOSHIELD is to be
classified as if it were an article of nickel of heading 7508.
Paragraph (b) of General Note 12, HTSUS, North American Free
Trade Agreement, establishes the criteria under which goods
imported into the customs territory of the United States qualify
as originating goods for NAFTA purposes. General Note 12(l),
HTSUS, Transshipment, states that a good shall not be considered
to be an originating good by reason of having undergone
production that satisfies the requirements of this note if,
subsequent to that production, the good undergoes further
production or any other operation outside the territories of the
NAFTA parties, other than unloading, reloading or any other
operation necessary to preserve it in good condition or to
transport the good to the territory of Canada, Mexico and/or the
United States. Rule 12(l) is interpreted by the NAFTA Rules of
Origin Regulations which appear in the Appendix to Part 181 of
Title 19, Code of Federal Regulations (19 CFR 181). Paragraph
(1)(a) of PART VI, SECTION 16. TRANSSHIPMENT, states in relevant
part that a good otherwise qualifying as an originating good
loses that status if the good is withdrawn from customs control
outside the territories of the NAFTA countries. The combining in
Wales of carbon graphite fibers of U.S. origin with the nickel
sinter matte of Canadian origin, results in nickel-coated
graphite carbon fibers which are not originating goods under
General Note 12.
However, the non-originating fiber bundles may still qualify
as originating goods if the coating with polycarbonate resin and
chopping to 7 mm. lengths in Canada results in an authorized
change in tariff classification. The required change in this
case is to headings 7507 through 7508 from any heading outside
that group. See General Note 12(t) Ch. 75 (6), HTSUS. As the
fibers, both before and after the coating and chopping operations
performed in Canada, are provided for in heading 7508, the
additional processing in Canada does not produce the required
change.
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HOLDING:
Under the authority of GRI 3(b), HTSUS, the nickel-coated
carbon graphite fibers, designated INCOSHIELD, are provided for
in heading 7508. They are classifiable in subheading 7508.90.50,
HTSUS, as other articles of nickel. The rate of duty under this
provision is 4.5 percent ad valorem. For the stated reasons,
INCOSHIELD does not qualify as an originating good for NAFTA
purposes.
Sincerely,
John Durant, Director
Tariff Classification
Appeals Division