CLA-2 RR:CTF:VS H238029 KSG
Port Director
U.S. Customs and Border Protection
9777 Via de la Amistad
San Diego, CA 92154
RE: Protest # 2506-12-100101; Eligibility of brake lines for preferential tariff treatment under the NAFTA; banjo fitting
Dear Director:
This is in response to Application for Further Review #2506-12-100101 filed by counsel on behalf of Goodridge, Inc., involving imported brake lines and their eligibility for preferential tariff treatment under the North American Free Trade Agreement (“NAFTA”).
FACTS:
Your office verified the origin of certain brake lines which were entered in 2011. Your office indicates that the goods were classified under subheadings 8708.99 and 8709.90, Harmonized Tariff Schedule of the United States (“HTSUS”). The Certificate of Origin indicates that the brake linings were produced by Goodridge de Mexico in Tijuana, Mexico. The NAFTA Verification of Origin Questionnaire indicated the components that were used to produce the brake lines at issue, including steel banjo fittings and DOT collar sub-assemblies. Although the origin of the DOT collar sub-assemblies was claimed to be the U.S., no Certificate of Origin was provided to substantiate this claim; as such, the DOT collar sub-assemblies were treated as non-originating materials. Your office classified the Dot collar sub-assemblies as parts in heading 8708, HTSUS. Counsel argues that they should be classified in heading 7412, HTSUS.
Furthermore, your office classified the banjo fittings in heading 8708, HTSUS. Counsel argues that the banjo fittings are properly classifiable in heading 7318, HTSUS.
Banjo fittings are perforated hollow bolts with a spherical union. This design allows fluid to transfer. Banjo fittings are commonly used in automotive, motorcycle, ATV and utility vehicles, and in fuel, brake, clutch, and other fluid hydraulic systems.
ISSUE:
Whether the imported brake lines are eligible for preferential tariff treatment under the NAFTA?
LAW AND ANALYSIS:
General Note 12, HTSUS, incorporates Article 401 of NAFTA into the HTSUS. General Note 12(a)(ii) provides, in pertinent part:
(ii) Goods that originate in the territory of a NAFTA party under the terms of subdivision (b) of this note and that qualify to be marked as goods of Mexico under the terms of the marking rules set forth in regulations issued by the Secretary of the Treasury (without regard to whether the goods are marked), … when such goods are imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appears in the “Special” subcolumn followed by the symbol “MX” in parentheses, are eligible for such duty rate, in accordance with section 201 of the NAFTA Implementation Act.
General Note 12(b), HTSUS, provides, in pertinent part:
For the purposes of this note, goods imported into the customs territory of the United States 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—
(i) they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; or
(ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that—
(A) except as provided in subdivision (f) of this note, each of the non-originating materials 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
(B) 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
(iii) they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials;
Because the imported automotive parts are not produced entirely in Mexico and/or the United States, pursuant to GN 12(b)(i), we must determine whether GN 12(b)(ii)(A) is met.
The GN 12(t)/87.36 rule for subheading 8708.99 is:
A change to subheading 8708.99 from any other heading; or ….
The GN 12(t)/87.38 rule for subheading 8709.90 is also from any other heading.
Classification of goods under the HTSUS is governed by the General Rules of Interpretation (“GRI”). GRI 1 provides that classification shall be determined according to the terms of headings of the tariff schedule 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 then be applied in order.
The HTSUS provisions under consideration for the banjo fitting are as follows:
7318: Screws, bolts, nuts, coach screws, screw hooks, rivets, cotters, cotter pins, washers (including spring washers) and similar articles, of iron or steel:
8708: Parts and accessories of the motor vehicles of headings 8701 to 8705:
The HTSUS provisions under consideration for the DOT collar sub-assembly are heading 8708 (see above) and:
7412: Copper tube or pipe fittings (for example couplings, elbows, sleeves):
The Harmonized Commodity Description and Coding System Explanatory Notes (“EN’s”) constitute the official interpretation of the Harmonized System. While not legally binding on the contracting parties, and therefore not dispositive, the EN’s provide a commentary on the scope of each heading of the Harmonized System and thus are useful in ascertaining the classification of merchandise under the system. CBP believes the EN’s should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).
HTSUS Chapter 87, Section XVII, Note 2(b) states that the expression “parts” and “parts and accessories” do not apply to…parts of general use, as defined in note 2 to section XV.
In Honda of America Mfg., Inc. v. United States, 625 F. Supp. 2d 1324 (CIT 2009), the Court of International Trade classified imported oil bolts in heading 7318 and not in 8708 because it concluded that the oil bolt was within the definition of a screw and therefore was a part of general use.
The banjo fittings in this case are similar to the oil bolts in Honda and would similarly be classified in heading 7318 as a screw of general use.
For similar reasons, we find that the DOT collar sub-assembly is a part of general use classifiable in subheading 7412.20, HTSUS, which provides for copper tube or pipe fittings (For example, couplings, elbows, sleeves): of copper alloys, for brake hoses for vehicles of subheading 8701.20 or heading 8702, 8703, 8704, or 8705. It is therefore excluded from heading 8708. Accordingly, both parts would undergo the applicable tariff shift and satisfy the GN 12 rules at issue.
We next have to determine if the brake lines qualify to be marked as a product of Mexico. The hierarchy set forth in 19 CFR 102.11 is applicable to determine the country of origin marking of goods produced in countries that are a party to the NAFTA. Pursuant to 19 CFR 102.11, the country of origin for non-textile goods is determined to be the country in which:
(a)(1) The good is wholly obtained or produced;
(a)(2) The good is produced exclusively from domestic materials:
Since none of the components are produced in Mexico, 19 CFR 102.11(a)(1) and (2) are not satisfied.
The next rule is 102.11(a)(3) which provides as follows: 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.
The applicable tariff shift rule for subheading 8708.99 set forth at 19 CFR 102.20 is as follows:
A change to subheading 8708.99 from any other subheading, except from parts or accessories of the goods of subheading 8708.40, 8708.50, 8708.80, 8708.91, 8708.92, 8708.94, or 8708.95.
The applicable tariff shift rule for subheading 8709.90 set forth at 19 CFR 102.20 is as follows:
A change to subheading 8709.90 from any other heading, except from subheading 8431.20 or heading 8708.
For each brake line under consideration, both the banjo fittings and the DOT collar sub-assembly undergo the necessary tariff shift as the case may be. Therefore, the imported brake lines qualify to be marked as a product of Mexico. Accordingly, the goods are originating goods under the NAFTA and therefore, eligible for preferential tariff treatment.
We find that the Protest should be granted.
HOLDING:
The imported brake lines are originating goods and therefore, entitled to preferential tariff treatment under the NAFTA. The Protest should be granted in full.
In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision, Regulations and Rulings of the Office of International Trade will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial Rulings Division