OT:RR:CTF:VS H185120 KSG
Nancy-lee Glover
1510 Walkley Road
Ottowa Ontario
Canada K1V 6P5
Re: NAFTA eligibility of 2GB powerstick
Dear Ms. Glover:
This is in response to your letter dated December 5, 2011 requesting a binding ruling on behalf of Ecosol Solar Technologies whether certain powersticks are eligible for preferential treatment under the North American Free Trade Agreement (“NAFTA”).
FACTS:
The imported 2GB powerstick is classified in subheading 8504.40.95 of the Harmonized Tariff Schedule of the United States (“HTSUS”). The components of the 2GB powersticks are as follows:
Component Origin Tariff Number Value USD
printed circuit China 8504.90 xxx
assembly
2GB memory Korea 8523.51 xxx
plastic membrane China 3924.90 xxx
clamshell housing Canada xxx
labels Canada xxx
box China 4819.20 xxx
wire connectors China 8544.42 xxx
The transaction value of the 2GB powersticks are as follows:
Quantity Base price (USD)
43.00
41.00
500-999 39.00
The 2GB powersticks are assembled into final products in Canada.
ISSUE:
Whether the imported 2GB powersticks are eligible for preferential tariff treatment under the NAFTA?
LAW AND ANALYSIS:
Pursuant to General Note (“GN”) 12, HTSUS, for an article to be eligible for NAFTA preference, two criteria must be satisfied. First, the article in question must be “originating” under the terms of GN 12 and second, the article must qualify to be marked as a good of a NAFTA country under the NAFTA Marking Rules set forth in 19 CFR 102.20.
With regard to the first criteria, GN 12(b) provides, in pertinent part, as follows:
For purposes of this note, goods imported into the customs territory of the U.S. are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as goods originating in the territory of a NAFTA party only if they are goods wholly obtained or produced in the territory of Canada, Mexico and/or the U.S.; or they have been transformed in the territory of Canada, Mexico, and/or the U.S. so that each of the non-originating material used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s), and (t) of this note or the rules set forth therein, or the goods otherwise satisfy the applicable requirements of subdivisions (r), (s), and (t) where no change in tariff classification is required, and the goods satisfy all other requirements of this note; or they are goods produced entirely in the territory of Canada, Mexico and/or the U.S. exclusively from originating materials.
The imported powersticks are neither wholly obtained nor produced in the territory of Canada, Mexico, and the U.S. Therefore, it is necessary to apply the tariff-shift rules set forth in GN 12(t), HTSUS, to determine if the nonoriginating materials satisfy the rule. The tariff shift rule provided for goods of subheading 8504.40, HTSUS, is as follows:
A change to subheading 8504.40 from any other heading; or a
a change to subheading 8504.40 from subheading 8504.90,
whether or not there is also a change from any other heading, provided there is a regional value content of not less than:
60 percent when the transaction value method is used or
50 percent where the net cost method is used.
The printed circuit assembly does not undergo the required heading change. The formula set forth in GN 12 (c), HTSUS, for the transaction value method is:
RVC = TV- VNM x 100
TV
where RVC is the regional value content, expressed as a percentage; TV is the transaction value of the good adjusted to a F.O.B. basis; and VNM is the value of non-originating materials used by the producer in the production of the good.
The regional value content under the transaction method is met in this case:
39- 14.73=62.3%
39
transaction value of the good = 39
value of non-originating materials used in the production of the good = 14.73
Since the regional value content under the transaction method is met, the GN 12, HTSUS, NAFTA tariff-shift rule is met in this case.
Since no information was provided regarding the transaction value or the value of non-originating materials for the 4GB powerstick, we are unable to determine if the 4GB powerstick is an originating good under the NAFTA.
Section 102.11, Customs Regulations (19 CFR 102.11), sets forth the required hierarchy for determining whether a good is a good of a NAFTA country for the purposes of country of origin marking and determining the rate of duty and staging category applicable to a NAFTA originating good as set out in Annex 302.2. 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.
Since the 2GB powersticks are not wholly obtained or produced in a NAFTA country or produced exclusively from domestic materials, we proceed to 102.11(a)(3). The tariff shift rule set forth in 19 CFR 102.20 for goods of subheading 8504.40 is as follows:
A change to subheading 8504.10 from 8504.50 from any other subheading outside that group.
Since none of the non-originating materials are classified in subheadings 8504.10 through 8504.50, the tariff-shift rule is satisfied in this case. Canada would be the country of origin of the imported 2GB powersticks for marking and duty purposes.
HOLDING:
The imported 2GB powersticks satisfy the GN 12, HTSUS, tariff-shift rule. The 2GB powersticks are eligible for preferential tariff treatment under the NAFTA. Canada would be the country of origin of the 2GB powersticks for duty and marking purposes.
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 CBP officer handling the transaction.
Sincerely,
Monika R. Brenner, Chief,
Valuation & Special Programs Branch