OT:RR:CTF:VS H303986 JMV
Madalina Tampu
Customs Specialist
Siemens Canada Limited
1577 North Service Rd. East
Oakville, ON
L6H 0H6
RE: Country of Origin and Classification of Flowmeter; NAFTA marking
Dear Ms. Tampu,
This is in response to your letter dated April 25, 2019, on behalf of Siemens Canada Limited (“Siemens”). In your letter, you request a ruling pursuant to 19 C.F.R. Part 177 regarding the country of origin and classification of Sitrans FM MAG Electromagnetic Flowmeters (“flowmeter”).
FACTS:
The flowmeter at issue is an electromagnetic meter designed for measuring the flow of electrically conductive mediums. The flowmeter measures the flow of almost all electrically conductive liquids, pastes and slurries and is used in a variety of sectors (e.g. chemical, pharmaceutical, power, and utility industries). The flowmeter at issue consists of two main components: 1) a flow sensor, and 2) a transmitter, which is a microprocessor-based signal converter.
Flow Sensor
The flow sensor is composed of a Canadian terminal box (“T-box”) and a flow tube imported into Canada from either China or France. The flow tube will be imported into Canada as a lined tube with coils and electrodes. The magnetically non-conducting tube is made of either cast iron or stainless steel, and the liner is composed of either ceramic, rubber, or plastic materials such as PFA (Polytetrafluoroethylene) or Teflon. The magnetic coils are located between the liner and the metering tube, and the electrodes are inserted through the internal liner. Once in Canada, the flow tube is connected to the Canadian T-box.
The T-box, also known as an electrical box, is assembled in Canada. The function of the T-box is to provide electrical connections for the flow sensor to connect to the appropriate transmitter. The connections provided by the T-box allow for necessary testing to take place. Once the flow tube and T-box are connected in Canada they become an operable flow sensor designed for further assembly into a flow meter.
Transmitter
The transmitter will be imported without its memory units from France into Canada, where it will be fully programed and paired. The main function of the transmitter is to evaluate the signals from the associated flow sensor. It will also function as a power supply unit for the flowmeter by providing the magnet coils with a constant current. For the transmitter to operate, a Sensor Programmable Read-Only Memory chip (“PROM”) will be installed in the transmitter’s connection board. The memory unit will serve the critical function of allowing the transmitter to link and communicate with the appropriate flow sensor. The sensor calibration information will be stored on the PROM. Without this information, the tube and the transmitter cannot communicate with each other; therefore, the transmitter would not be able to interpret the signals and provide accurate readings.
The PROM and the transmitter are paired once the PROM is programmed. The programming will take place in Canada using proprietary electronics and software.
Flowmeter
Together, the transmitter and flow sensor form a complete flowmeter. The importer has presented two scenarios in which the flowmeter components will be shipped to an end user in the United States. In scenario 1, a flowmeter will be ordered in a complete configuration, wherein the transmitter and sensor are ordered, shipped, and invoiced together. In scenario 2, the transmitter and sensor are ordered individually, invoiced separately, but shipped together. In both these scenarios, the two components (i.e. the flow sensor and transmitter) are shipped together and delivered to an end user under the same Bill of Lading. The end user need only to mount the flow sensor to the transmitter to complete the flowmeter.
Issue:
Whether the flow sensor and transmitter are classifiable as an electric flowmeter under subheading 9026.10.2040, HTSUS.
Whether the country of origin is Canada for marking purposes.
LAW AND ANALYSIS:
Classification
Classification decisions under the HTSUS are made in accordance with the General Rules of Interpretation (“GRIs”). GRI 1 provides that the classification of goods shall be determined according to the terms of the 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 GRIs 2 through 6 may then be applied in order. GRI 2(a) states as follows:
Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), entered unassembled or disassembled.
The following HTSUS provision is under consideration:
9026 Instruments and apparatus for measuring or checking the flow, level, pressure or other variables of liquids or gases (for example, flow meters, level gauges, manometers, heat meters), excluding instruments and apparatus of heading 9014, 9015, 9028 or 9032; parts and accessories thereof
9026.10 For measuring or checking the flow or level of liquids:
9026.10.20 Electrical . . .
9026.10.2040 Flowmeters
The Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of the headings. It is U.S. Customs and Border Protection’s (“CBP”) practice to consult, whenever possible, the terms of the ENs when interpreting the HTSUS. See T.D. 89–80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The EN (V) to GRI 2(a) states, in relevant part:
(V) … complete or finished articles presented … disassembled are to be classified in the same heading as the assembled article ….
Under GRI 1, we look to the terms of the headings and any relevant section or chapter notes. Here, the merchandise is disassembled and therefore we cannot classify it under GRI 1. Under GRI 2(a), the disassembled flow sensor and transmitter create an unfinished flowmeter. Once assembled, in the United States, the parts will form a complete flowmeter. Therefore, the flow sensor and the transmitter, when entered together are classified under subheading 9026.10.2040, HTSUS.
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 imported into the United states shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the United States the English name of the country of origin of the article. By enacting 19 U.S.C. § 1304, Congress intended to ensure that the ultimate purchaser would be able to know by inspecting the marking on the imported goods the country of which the goods are the product. “The evident purpose is to mark the goods so that at the time of purchaser the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will.” United States v. Friedlaender & Co., 27 C.C.P.A. 297, 302 C.A.D. 104 (1940).
Section 134.1(b), CBP Regulations (19 C.F.R. § 134.1(b)), defines “country of origin” as:
the 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 (19 C.F.R. Part 102), sets forth the NAFTA Marking Rules. Section 102.11 provides a hierarchy for determining the country of origin of a good for marking purposes. See 19 C.F.R. § 102.11. Applied in sequential order, the hierarchy establishes that the country of origin of a good is the country in which:
(a)(1) The good is wholly obtained or produced;
(a)(2) The good is produced exclusively from domestic materials; or
(a)(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.
Here, sections 102.11(a)(1) and 102.11(a)(2) do not apply because the product will neither be wholly obtained or produced nor produced exclusively from “domestic” (Canadian, in this case) materials. Accordingly, each foreign material must meet the applicable change in tariff classification set out in Section 102.20 in order for the product to qualify to be marked as a product of Canada.
“Foreign material” is defined in 19 C.F.R. § 102.1(e) as “a material whose country of origin as determined under these rules is not the same country as the country in which the good is produced.” The tariff shift requirement in § 102.20 for a good of subheading 9026.10.20, HTSUS, requires “[a] change to subheading 9026.10 through 9026.80 from any other heading, including another subheading within that group.”
As previously stated, the transmitter and flow tube that comprise the subject flowmeter originate from China and France. While the flowmeter is classified in subheading 9026.10.20, HTSUS, the transmitter and flow tube are not. Thus, for purposes of marking, the country of origin of the complete flowmeter is Canada.
However, while the flowmeter may be marked as a product of Canada, we note that this ruling does not address whether the flowmeter should also receive preferential tariff treatment under NAFTA. Further, we note that the flow tube may be imported from either China or France. This ruling does not address whether a flow tube from China would be substantially transformed by its incorporation into the flowmeter in Canada, and therefore, exempt from the additional tariff on certain products of China classified in the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(b), HTSUS.
HOLDING:
The tariff classification of the flow sensor and the transmitter, when entered together, is subheading 9026.10.2040, HTSUS by application of GRIs 1, 2(a), and 6. The flowmeter may be marked as a product of Canada.
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a CBP field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.”
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 of this ruling, it should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Monika R. Brenner, Chief
Valuation and Special Programs Branch