OT:RR:CTF:CPM H285605 RGR
Ms. Sandra Weston, LCB
Capin-Vyborny LLC
949 W. Bell Rd.
Nogales, AZ 85621
RE: Tariff classification of Buried Splice Kit; 9801.00.10; Country of origin marking
Dear Ms. Weston:
This letter is in response to your request on behalf of North American Interconnect (“NAI”) for a ruling regarding the proper classification of a buried splice kit under the Harmonized Tariff Schedule of the United States (“HTSUS”); the applicability of subheading 9801.00.10, HTSUS; and the proper country of origin for marking purposes. Your submission included a sample of the buried splice kit, which we are returning to you.
FACTS:
The XAGA 1650 buried splice kit is designed to protect a cable splice from the elements, including water and dirt, during cable repair in an underground cable application. The kit consists of a number of articles such as a heat shrinkable wraparound sleeve and bond bar. It also consists of a plastic mesh, tape wrap, plastic holder, end plug rod, isolated plastic cover, metal brackets, metal holders, rubber sealant strip, aluminum sealant strip, abrasive tape, instruction sheet, holder (underclip), alcohol wipe, tie wraps, box, and bag. The heat shrinkable wraparound sleeve is made of nylon or polyolefin and is designed to protect a cable splice from the elements (water, dirt, etc.). It serves as a cover to a splice created when a cable is damaged and subsequently repaired. It is coated internally with a hot-melt adhesive to provide a watertight seal to the cable jacket, which protects the repair from the elements. The bond bar is a bar that attaches to the wraparound sleeve and provides the point where both ends of the cable repair attach to form a secure position for the splice repair. It has a rubber coating to prevent damage to the wire connection/splice repair area from sharp surfaces or rubbing of the bond bar. Underneath the protective rubber layer, the bond bar is made of metal. The bond bar insulates the cable from electrical noise and also acts as a strength member to provide strength to the repair site. However, it is not designed to provide any electrically insulating properties.
NAI does not manufacture any of the components of the buried splice kit. Rather, it acquires the components from various distributors in different countries and packages them together as the XAGA 1650 buried splice kit. Each of the XAGA 1650 buried splice kits contain the same components. NAI provided a shipping document from the manufacturer of the heat shrinkable wraparound sleeve in support of its assertion that the country of origin of the sleeve is Belgium. According to NAI, other components of the kit are from Canada, China, Mexico, and the United States. NAI explains that the components are exported from the United States to Mexico, where they are packaged into a kit prior to re-importation into the United States within 3 years of the date of exportation. No manufacturing takes place in Mexico.
ISSUES:
Whether the buried splice kit is properly classified in subheading 3926.90.99, HTSUS.
Whether the buried splice kit is eligible for duty-free treatment under subheading 9801.00.10, HTSUS, upon importation into the United States after having been packaged in Mexico.
What are the country of origin marking requirements of the buried splice kits.
What is the country of origin for purposes of entry documentation, such as CBP Form 7501.
LAW AND ANALYSIS
Classification
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (“GRI”). GRI 1 provides that the classification of goods 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 GRIs 2 through 6 may be applied in order.
In understanding the language of the HTSUS, the Explanatory Notes (“ENs”) of the Harmonized Commodity Description and Coding System may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading, and are generally indicative of the proper interpretation of the Harmonized System at the international level. See T.D. 89-90, 54 Fed. Reg. 35127 (Aug. 23, 1989).
Under GRI 1, we must look to the terms of headings and any relevant section or chapter notes in order to classify the good. When no single heading provides for all of the articles in the kit, we must proceed to GRI 2. GRI 2 provides that unfinished articles, as well as mixtures and combinations, are to be classified pursuant to GRI 3. GRI 3(a) states that when merchandise is classifiable under more than one heading, the merchandise should be classified in the most specific heading. However, GRI 3(a) further states that “when two or more headings each refer to . . . part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods.”
GRI 3(b) states, in relevant part, that goods put up in sets for retail sale shall be classified as if consisting of the material or component which gives them their essential character, insofar as this criterion is applicable. Explanatory Note (X) to GRI 3(b) states that for purposes of Rule 3(b) the term "goods put up in sets for retail sale" means goods which: (a) consist of at least two different articles which are, prima facie, classifiable in different headings; (b) consist of products or articles put up together to meet a particular need or carry out a specific activity; and, (c) are put up in a manner suitable for sale directly to users without repacking (e.g., in boxes or cases or on boards). Under GRI 3(b), a retail set shall be classified according to the component which gives the kit its essential character. See Estee Lauder, Inc. v. United States, 46 Cust. B. & Dec. 4, 13 - 28 (Ct. Int'l Trade 2012).
The HTSUS provisions under consideration in this case are as follows:
3919 Self-adhesive plates, sheets, film, foil, tape, strip and other flat shapes, of plastics, whether or not in rolls
* * *
3923 Articles for the conveyance or packing of goods, of plastics; stoppers, lids,
caps and other closures, of plastics
* * *
3926 Other articles of plastics and articles of other materials of headings 3901 to 3914
* * *
4008 Plates, sheets, strip, rods and profile shapes, of vulcanized rubber other
than hard rubber
* * *
4819 Cartons, boxes, cases, bags and other packing containers, of paper,
paperboard, cellulose wadding or webs of cellulose fibers; box files, letter trays and similar articles, of paper or paperboard of a kind used in offices, shops or the like
* * *
4901 Printed books, brochures, leaflets and similar printed matter, whether or
not in single sheets
* * *
5603 Nonwovens, whether or not impregnated, coated, covered or laminated
* * *
6805 Natural or artificial abrasive powder or grain, on a base of textile material,
of paper, of paperboard or of other materials, whether or not cut to shape or sewn or otherwise made up
* * *
7326 Other articles of iron or steel
* * *
7607 Aluminum foil (whether or not printed, or backed with paper, paperboard,
plastics or similar backing materials) of a thickness (excluding any backing) not exceeding 0.2 mm
* * * *
The buried splice kit is comprised of various components. Analyzing it under GRI 1, there is no single provision in the HTSUS that completely describes the product. Likewise, the kit is not classifiable under GRI 2(a) or 2(b) because it is not in an unassembled or incomplete state. GRI 3(a) does not apply because there is no heading that provides a specific description that clearly identifies the buried splice kit, which includes a heat shrinkable wraparound sleeve, plastic mesh, bond bar, tape, and plastic holder, metal holder, metal brackets, isolated plastic cover, and sealant strips, among other items. Thus, it consists of several components, which are prima facie classifiable under different HTSUS headings. Moreover, all of the components are put up together to carry out the specific activity of protecting a cable splice during repair and are ready for retail sale without repacking. Thus, under GRI 3(b) the buried splice kit is a retail set and shall be classified according to the component which gives the kit its essential character. See Estee Lauder, Inc. v. United States, 815 F.Supp.2d 1287 (Ct. Int'l Trade 2012).
Explanatory Note (VIII) to GRI 3(b) states that "essential character will vary as between different kinds of goods . . . it may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods." There have also been several court decisions on "essential character" for purposes of classification under GRI 3(b). See, Conair Corp. v. United States, 29 C.I.T. 888 (2005); Structural Industries v. United States, 360 F. Supp. 2d 1330, 1337-1338 (Ct. Int'l Trade 2005); and Home Depot USA, Inc. v. United States, 427 F. Supp. 2d 1278, 1295-1356 (Ct. Int'l Trade 2006), aff'd 491 F.3d 1334 (Fed. Cir. 2007). "[E]ssential character is that which is indispensable to the structure, core or condition of the article, i.e., what it is." Home Depot USA, Inc. v. United States, 427 F. Supp. 2d at 1293 (quoting A.N. Deringer, Inc. v. United States, 66 Cust. Ct. 378, 383 (1971). In particular in Home Depot USA, Inc. v. United States, the court stated "[a]n essential character inquiry requires a fact intensive analysis." 427 F. Supp. 2d 1278, 1284 (Ct. Int'l Trade 2006).
Here, the buried splice kit is used during repair of electrical cable connections. It is designed to protect a cable splice from the elements, including water and dirt, during cable repair in an underground cable application. The kit is made up of several different components used during the repair of electrical cable connections, including a heat shrinkable wraparound sleeve, bond bar, plastic mesh, isolated plastic cover, tape, metal brackets, sealants, and plastic holders. The kit does not include electrical connectors, nor do any of the components function as conductors. While the bond bar provides strength to the repair site, it does not perform the repair or splice and according to the requester, it is not an electrical conductor and has no electrical insulation. The heat shrinkable wraparound sleeve serves as a cover to a splice created when a cable is damaged and subsequently repaired. It wraps around the area of the repair and provides a watertight seal to the cable jacket. The heat shrinkable wraparound sleeve is the largest component of the kit and represents the largest value of all the components, comprising 33% of the value of the entire kit. This component contributes significantly to the overall function of the repair operation by sealing and protecting the contents from the elements, such as water and dirt, which is the stated primary purpose of the kit. Thus, we find that the heat shrinkable wraparound sleeve imparts the essential character of the buried splice kit. Accordingly, the correct classification of the buried splice kit is in subheading 3926.90.99, HTSUS.
This conclusion is consistent with prior CBP rulings. For example, in HQ 966479, dated February 6, 2004, we addressed the classification of fiber optic cable joint protection kits. The protection kits contained the components necessary to provide outer protection for the undersea fiber optic cable joint. Those kits performed the same function as the subject buried splice kits; they protect the fiber optic cable from water intrusion after repair. Like the buried splice kits, the protection kits in HQ 966479 do not contain the component that connects one conductor to another. Where the primary function of the kit in HQ 966479 was to provide outer protection for a new joint that is formed as part of a fiber optic cable repair, but did not contain any of the connecting elements, we held that the essential character was imparted by the polyurethane buffers, which were used in “jointing” the cables. Thus, the kit was classified in heading 3926, HTSUS.
In contrast, in HQ 963719, dated September 6, 2001, CBP found that a similar splice kit’s essential character was imparted by its electrical connective function and classified in heading 8536, HTSUS (2001), as “[e]lectrical apparatus for switching or protecting electrical circuits, or for making connections to or in electrical circuits.” Though it is unclear in HQ 963719 whether the electrical connectors were included within the kits, the buried splice kits in the instant matter do not include any electrical components. Thus, where nothing in the buried splice kit could be classified in heading 8535, HTSUS, as an electrical apparatus for protecting electrical circuits or making connections to electrical circuits, we find that HQ 963719 is inapplicable in the instant matter. Rather, the buried splice kits are more akin to the fiber optic cable joint protection kits in HQ 966479, which provide similar primary functions and do not include the electrical connector components.
9801.00.10 Duty Exemption
Section 904(b) of the Trade Facilitation and Trade Enforcement Act of 2015 (Pub. L. 114-125, February 24, 2016) amended subheading 9801.00.10, HTSUS, to include any products which are returned within three years after having been exported. Previously, subheading 9801.00.10, HTSUS, only applied to products of the United States. Subheading 9801.00.10, HTSUS, now provides for the duty free treatment of:
Products of the United States when returned after having been exported, or any other products when returned within 3 years after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad.
In HQ H276787, dated August 17, 2016, we explained that the amendment to subheading 9801.00.10, HTSUS, removes the requirement that goods entered under that subheading be of U.S. origin if they are returned within three years of having been exported from the United States.
In United States v. John V. Carr & Sons, Inc., 347 F. Supp. 1390 (Cust. Ct. 1972), 496 F.2d 1225 (CCPA 1974), the court stated that absent some alteration or change in the item itself, the mere repacking of the item at issue, even for the purpose of resale to the ultimate consumer, was not sufficient to preclude the merchandise from being classified under Item 800.00, Tariff Schedules of the United States (“TSUS”) now subheading 9801.00.10, HTSUS.
In the instant case, all components are exported to Mexico from the United States, having either been manufactured in the United States or imported from Belgium, Canada, China, or Mexico. Once exported to Mexico, they are packaged together as kits, and returned to the United States within three years after exportation. No other operations besides packaging the components into kits are performed while in Mexico. As mere repacking of the components into kits is not an advancement in value or improvement in condition, the buried splice kits are eligible for duty-free treatment under subheading 9801.00.10, HTSUS.
Country of Origin Marking
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. § 1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit in such a manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article. The regulations implementing the requirements and exception to 19 U.S.C. § 1304 are set forth in Part 134, Customs Regulations (19 C.F.R. Part 134).
Section 134.1(b) defines "country of origin" as:
[T]he country of manufacture, production, or growth of any article of foreign origin entering the United States. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the "country of origin" within the meaning of this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin.
Section 134.1(j) provides that the “NAFTA Marking Rules” are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. Section 134.1(g) defines a “good of a NAFTA country” as an article for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules.
Part 102 of the CBP Regulations sets forth the NAFTA Marking Rules. Section 102.11 sets forth the required hierarchy for determining country of origin for marking purposes, which is provided in pertinent part:
The following rules shall apply for purposes of determining the country of origin of imported goods other than textile and apparel products covered by § 102.21.
(a) 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 § 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied. * * *
(c) Where the country of origin cannot be determined under paragraph (a) or (b) of this section and the good is specifically described in the Harmonized System as a set or mixture, or classified as a set, mixture or composite good pursuant to General Rule of Interpretation 3, the country of origin of the good is the country or countries of origin of all materials that merit equal consideration for determining the essential character of the good.
As the origin of the buried splice kit cannot be determined under 19 C.F.R. § 102.11(a) or (b) and it is classified as a set pursuant to GRI 3(b), 19 C.F.R. § 102.11(c) applies. In this case, we find the items that merit equal consideration for determining the essential character of the set are the heat shrinkable wraparound sleeve, bond bar, plastic mesh, and isolated plastic cover. Each of these items merit equal consideration for determining the essential character of the set because they provide strength, stability, and protection to the repair. The heat shrinkable wraparound sleeve is a product of Belgium, while the bond bar, plastic mesh, and isolated plastic cover are products of the United States. Therefore, the country of origin of the buried splice kit is Belgium and the United States. We note, however, that inasmuch as the marking requirements of 19 U.S.C. § 1304 are applicable only to articles of "foreign origin," the buried splice kits are not required to be marked with a reference to the United States origin upon importation into the United States. Claims of U.S. origin are a matter under the jurisdiction of the Federal Trade Commission (“FTC”). Therefore, should you wish to identify any of the articles as "Made in the USA", we recommend that you contact that agency. Further guidance may be found at the FTC website at https://www.ftc.gov/tips-advice/business-center/guidance/complying-made-usa-standard.
Country of Origin on CBP Form 7501
NAI proposes to declare the country of origin of the buried splice kit on CBP Form 7501 as Belgium because the heat shrinkable wraparound sleeve, which is a product of Belgium, imparts the essential character of the set for classification purposes under GRI 3(b).
According to Section 141.4(a), CBP Regulations (19 C.F.R § 141.4(a)), “[a]ll merchandise imported into the United States is required to be entered, unless specifically excepted.” See also 19 U.S.C. § 1484(a)(1)(A). An importer is required to complete the entry by filing the declared value, classification and rate of duty applicable to the merchandise, and such other information as is necessary to enable CBP to collect accurate statistics with respect to the merchandise. See 19 U.S.C. § 1484(a)(1)(B)(ii); see also 19 C.F.R. § 141.61(a) and (3). The General Statistical Notes (“GSNs”) to the HTSUS list the statistical information an importer is required to provide, which includes the country of origin, a description of the goods, the 10-digit HTSUS number under which the goods are classified, the gross weight of the goods imported, and the value of the goods. See GSN 1(a)(vi), (ix), (x), (xi), and (xiii), HTSUS.
The “CBP Form 7501 Instructions,” dated July 24, 2012, describe how the entry summary is to be prepared for GRI 3(b) and (c) sets. The Instructions state: “[E]ach article in the set (including the article designated with a prefix of 'X') should be reported on a separate line as if it were separately classified. Precede these HTS numbers with an SPI of 'V.'” The Instructions also require that each line include the applicable classification code, entered value, AD/CVD number, gross weight, and country of origin.” See also HQ 231334, dated May 25, 2006 (explaining that each component of a set must be reported on a separate line on the entry summary, as if it were separately classified.) Moreover, the Instructions indicate that in Block 10 for Country of Origin on CBP Form 7501, “[w]hen an entry summary covers merchandise from more than one country of origin, record the word ‘MULTI’ in this block.”
Here, the buried splice kit is a set under GRI 3(b). Accordingly, each article in the buried splice kit must be reported on a separate line on CBP Form 7501 as if it were separately classified. This includes a country-specific origin breakdown for each line of merchandise appearing in column 28 of the CBP Form 7501. Further, Block 10 for Country of Origin on CBP Form 7501 must be denoted with the word “MULTI” since the buried splice kit includes multiple items of merchandise from more than one country of origin. Therefore, NAI’s proposed declaration of the country of origin of the buried splice kit as Belgium is incorrect for purposes of CBP Form 7501.
HOLDING:
Based on the foregoing, we conclude that:
The correct classification of the buried splice kit is in heading 3926, HTSUS. Specifically, it is classifiable under subheading 3926.90.99, HTSUS, which provides for “Other articles of plastics and articles of other materials of headings 3901 to 3914: Other: Other.” The column one, general rate of duty is 5.3%.
The buried splice kit will be eligible for duty-free treatment under subheading 9801.00.10, HTSUS.
Under the NAFTA Marking Rules, pursuant to 19 C.F.R § 102.11(c), the country of origin of the buried splice kit is Belgium and the United States; however, only Belgium must be indicated on the outside packaging pursuant to 19 U.S.C. § 1304.
For purposes of CBP Form 7501, each article in the buried splice kit must be reported on a separate line as if it were separately classified, including the country of origin for each article in the buried splice kit. In addition, Block 10 for Country of Origin on the CBP Form 7501 must be denoted with the word “MULTI” since the buried splice kit includes multiple items of merchandise from more than one country of origin.
Duty rates are provided for your convenience and subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov.
A copy of this decision should be filed with the port of entry at the time of entry.
Sincerely,
Allyson R. Mattanah, Acting Chief
Chemicals, Petroleum, Metals and Miscellaneous Branch