OT:RR:CTF:VS H314981 AP
Rachael Goding, President
International Automated Brokers
1655 St. Andrews Cove
San Diego, California 92154
RE: USMCA Eligibility; Country of Origin Marking of a Finish Gel for Nails
Dear Ms. Goding:
This is in response to your October 13, 2020 ruling request, filed on behalf of Pacer Technology, regarding the eligibility for preferential tariff treatment under the U.S.-Mexico-Canada Agreement (“USMCA”) and the country of origin for marking purposes for a finish gel for nails packaged for retail sale in a glass bottle with cap and wiper plug.
FACTS:
The merchandise at issue is a finish gel for nails, which is a blended glue packed in a half ounce glass bottle with a brush attached inside a plastic screw-off cap for retail sale. The finish gel consists mainly of ethyl-2-cyanoacrylate, polymethyl methacrylate and hydroquinone, and is used as an adhesive in combination with acrylic powder to build layers on the nails. The finish gel for nails is classifiable in subheading 3506.10.50, Harmonized Tariff Schedule of the United States (“HTSUS”).
The finish gel is produced from E-3000 and E-40 glues sourced from Taiwan, which are classified in subheading 3506.99.00, HTSUS. The two glues contain almost identical ingredients in different viscosities and are imported in bulk into Mexico. The glues are blended with vitamin E and D-pantothenic acid of U.S. origin for four hours to make the final formulation for the correct viscosity in Mexico. The finish gel is then packaged in a half ounce glass bottle sourced from India, with a brush of the United States and plastic cap and wiper plug from India.
ISSUES:
Whether the finish gel is eligible for preferential tariff treatment under the USMCA.
What is the country of origin of the finish gel for marking purposes?
LAW AND ANALYSIS:
Eligibility for USMCA Preferential Tariff Treatment
The USMCA was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018. The USMCA was approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act, Pub. L. 116-113, 134 Stat. 11, 14 (19 U.S.C. § 4511(a)). General Note (“GN”) 11, HTSUS, implements the USMCA. GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA.
GN 11(b) states, in relevant part:
For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country … is eligible for the preferential tariff treatment provided for in the applicable subheading and quantitative limitations set forth in the tariff schedule as a “good originating in the territory of a USMCA country” only if-- (i) the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries;
(ii) the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials;
(iii) the good is a good produced entirely in the territory of one or more USMCA countries using nonoriginating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o)); ….
Since the finish gel contains non-originating materials, it is not considered a good wholly obtained or produced entirely in a USMCA country under GN 11(b)(i) and (ii). Therefore, we must next determine whether the non-originating materials undergo the tariff shift and other applicable requirements provided for under GNs 11(b)(iii) and 11(o).
The applicable rule of origin for merchandise under subheading 3506.10, HTSUS, is in GN 11(o), HTSUS, which provides, in relevant part:
Chapter 35
… 4. (A) A change to subheadings 3503.00 through 3507.90 from any other subheading, including another subheading within that group; or
(B) No change in tariff classification to a good of subheadings 3503.00 through 3507.90, provided there is a regional value content of not less than:
40 percent where the transaction value method is used; or
(2) 30 percent where the net cost method is used.
The E-3000 and E-40 glues from Taiwan are classified in subheading 3506.99, HTSUS. Since the non-originating E-3000 and E-40 glues are classified in a subheading other than subheading 3506.10, HTSUS, the tariff shift rule under GN 11(o), Rule 4(A) to Chapter 35, HTSUS, is met, Rule 4(B) is inapplicable, and we do not need to determine if the gel meets the regional value content requirement under GN 11(c).
It should be noted that the E-3000 and E-40 glues meeting the tariff shift under GN 11(o), Rule 4(A) to Chapter 35 are imported into the U.S. for retail sale packaged in a half ounce glass bottle with plastic cap and wiper plug sourced from India as a finish gel for nails under subheading 3506.10.50, HTSUS. Thus, in accordance with GN 11(h)(ii), the glass bottle with the plastic cap and the wiper plug is a container for retail sale and is disregarded in determining whether there was a change in tariff classification to subheadings 3503.00 through 3507.90, HTSUS, from any other subheading.
Accordingly, the finish gel is eligible for USMCA preferential tariff treatment pursuant to GN 11(b)(iii) and GN 11(o), Rule 4(A) to Chapter 35, HTSUS.
Marking
The marking statute, section 304, 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 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. Part 134 of the U.S. Customs and Border Protection (“CBP”) Regulations (19 C.F.R. Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. § 1304.
To provide a more seamless transition to the USMCA for Canadian and Mexican traders, at this time, CBP continues to utilize the marking rules in 19 C.F.R. Part 102, with the exception of 19 C.F.R. § 102.19, for purposes of country of origin marking with respect to goods of those countries.
Title 19, C.F.R. § 102.11(a) provides that the country of origin of a good is the country in which:
The good is wholly obtained or produced;
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.
The finish gel is neither “wholly obtained or produced” nor “produced exclusively from domestic materials.” Therefore, paragraphs (a)(1) and (a)(2) cannot be used to determine its country of origin, and we need to apply paragraph (a)(3).
The E-3000 and E-40 glues from Taiwan are foreign (non-Mexican) components. The tariff shift requirement in Section 102.20 for a good of subheading 3506.10, HTSUS requires “[a] change to subheading 3506.10 from any other subheading, except from heading 3505 or subheading 3501.90.” The E-3000 and E-40 glues are classified in subheading 3506.99, and undergo the requisite tariff shift. The glass bottle with the cap and the wiper plug is a container, in which the finish gel is packaged for retail sale, and is classified with the gel under subheading 3506.10.50. Thus, in accordance with 19 C.F.R. § 102.15(a), the bottle with the cap and the wiper plug is disregarded when determining whether the finish gel undergoes the applicable change in tariff classification set forth in Section 102.20.
Accordingly, since the E-3000 and E-40 glues undergo the applicable tariff shift, the country of origin of the finish gel for marking purposes is Mexico under 19 C.F.R.
§ 102.11(a)(3).
HOLDING:
Based on the information provided, the finish gel of subheading 3506.10.50, HTSUS, qualifies for duty-free treatment under the USMCA when imported into the United States from Mexico as described. Pursuant to 19 C.F.R. § 102.11(a)(3), its country of origin for marking purposes is Mexico.
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 this merchandise is 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 and Special Programs Branch