MAR-05 RR:CR: SM W562873 KKV
Taylor Pillsbury, Esq.
Meeks, Sheppard & Pillsbury, LLP
100 Newport Center Dr.
Suite 220
Newport Beach, CA 92660
RE: Eligibility of rear projection flat screen color televisions incorporating a printer for preferential tariff treatment under NAFTA
Dear Mr. Pillsbury:
This is in response to your letter dated October 2, 2003, on behalf of your client, Delta Products Corporation, regarding the eligibility of rear projection flat screen color televisions incorporating a printer for preferential tariff treatment under the North American Free Trade Agreement (NAFTA) when imported from Mexico.
FACTS:
The article under consideration are rear projection television sets, or RPTVs, incorporating a printer, that are described as being fully functional and complete televisions that have a tuner, for the reception and demodulation of an NTSC or ATSC signal, and a flat acrylic screen that is configured in diagonal lengths of 42, 47, 56, 57 and 65 inches. The televisions will be marketed under the trade names of Delta, Epson, Gateway and Viewsonic.
The various configurations of the televisions will have either a screen aspect ratio of 16:9 or 4:3 and the models will be capable of displaying 1284 X 724 pixels. The televisions will either have a rear projection mechanism of LCD optical engine technology or an optical engine employing digital light processing (DLP) technology. Some of the models will also be configured with an additional tuner for the picture in picture feature (PIP). None of the configurations aforementioned will employ the standard 3 cathode ray tube technology for use as a rear projection device.
In addition to the above, the television sets also incorporate a digital photo printer, located inside the lower rear portion of the main RPTV housing. The printer is designed to allow the user to print on paper images projected by the rear projection color television. It is anticipated that the consumer will primarily use the printer to print images from peripheral devices, such as a digital camera, connected to the RPTV for display purposes.
In response to a previous request for a binding ruling regarding the tariff classification of the subject merchandise, Customs issued New York Ruling NY J88807, dated September 19, 2003, whereby it classified the rear projection color televisions incorporating a printer under subheading 8528.12.7201, Harmonized Tariff Schedule of the United States (HTSUS), as a “Reception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus; video monitors and video projectors: Reception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus: Color: With a flat panel screen: Other: Other.”
You indicate that the subject televisions will be assembled in Mexico with foreign and Mexican components. The country of origin of the foreign (non-Mexican) components and their tariff classification under the HTSUS are set forth below:
Origin HTSUS
1) Screen Assembly
Sponges China 3506.10.50
Screen Protect Tape Long China 3919.90.50
Screen Protect Tape Short China 3919.10.10
Front Lens Japan 9001.90.90
Fresnel Lens Japan 9001.90.90
Lenticular Lens Japan 9001.90.90
Double Side Tape Upper China 3919.90.50
Double Side Tape Down China 3919.90.50
Upper Tape China 3919.90.50
Screws China 7318.15.80
2)Sound Speaker Assembly
Bass Ref. Plastic Cover China 8529.90.99
Speaker China 8518.29.80
Sponge China 3506.10.50
Screws China 7318.15.80
Absorber Sound China 5602.29.00
Metal Clip China 3926.90.85
Speaker Cable Out China 8544.51.90
3)Printer Cover Unit
Printer Cover (Plastic) China 8529.90.99
Acrylic Window Sheet Japan 8529.90.00
Printer Cover Sheet Label China/Mexico 3919.90.50
Tilt Unit Taiwan 8536.90.85
Latch Taiwan 8529.90.99
Screws China 7318.15.80
Logo Name Plate Taiwan 8529.90.99
4) Main Board Unit
Main Board China 8529.90.29
Shields China 7616.99.50
Screws China 7318.15.80
RCA Shield China 7316.99.50
Card Seal Label Taiwan/Mexico 3919.90.50
Connector Taiwan 8536.90.85
5) Tuner Board Unit
Tuner Board China 8529.90.29
Shield China 7616.99.50
Cable Tuners China 8544.51.90
Screws China 7318.15.80
RCA Shield China 7616.99.50
Distributor China 8536.90.85
Adapter China 8536.90.85
6) Optical Engine
Optical Engine China 8529.90.99
Screws China 7318.15.80
Fuse China 8536.10.00
Cables China 8544.59.20
Sponges China 3506.10.50
7) Mirror Assembly
Mirror USA 7009.91.10
Protect Tape China 3919.10.10
Sponge China 3919.10.10
Metal Holders China 7326.90.85
Screw China 7318.15.80
Ballast Assembly Unit
Lamp Ballast Taiwan 8504.10.00
Ballast Power Cable China 8544.41.80
Spacer Support Taiwan 3919.90.50
Cable China 8544.51.90
Screw China 7318.15.80
Lamp China 8539.39.00
Lamp Power Supply Japan 8540.40.60
Lamp Exchange Direction Sheet Label Taiwan/Mexico 3919.90.50
Sponges China 3506.10.50
Air Filter Frame Unit
Air Filter Frame China 8529.90.99
Sponges China 3506.10.50
Screw China 7318.15.80
PCB Board Unit
PCB FIF Board China 8529.90.29
Screw China 7318.15.80
Spring Washer China 7318.21.00
RCA Shield China 7616.99.50
Plastic Materials Assembly
Switches China 8536.50.90
Plastic Covers China/Mexico 8529.90.29
Latch China 8529.90.29
Sponge China 3506.10.50
Screws China 7318.15.80
Printer Device
Printer Japan 8471.60.61
Screws China 7318.15.80
Serial Number Label China/Mexico 4821.10.20
Rating Label China/Mexico 4821.10.40
Manual China/Mexico 4901.10.00
Warranty Card China/Mexico 4911.99.80
Ink Media Set Japan 9612.10.90
ISSUE:
Whether the subject rear projection color televisions incorporating a printer manufactured in Mexico are eligible for preferential tariff treatment under NAFTA upon importation into the U.S.
LAW AND ANALYSIS:
Article 401 of the NAFTA is incorporated into General Note 12, HTSUS, which provides, in pertinent part, as follows:
(a)(ii) Goods that originate in the territory of a NAFTA party under 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 (whether or not 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 North American Free Trade Implementation Act.
Thus, by operation of General Note 12, the eligibility of a particular article for NAFTA duty preference is predicated, in part, upon a determination under the NAFTA Marking Rules that the good is a product of Mexico.
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 an 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:
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.
“Foreign material” is defined in 19 CFR 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.” Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because the rear projection television is assembled in Mexico from Mexican and foreign (non-Mexican) components and therefore is neither wholly obtained or produced, nor produced exclusively from domestic materials. Since an analysis of sections 102.11(a)(1) and 102.11(a)(2) will not yield a country of origin determination, we look to section 102.11(a)(3).
Section 102.11(a)(3) provides that the country of origin is the country in which “each foreign material incorporated in that good undergoes an applicable change in tariff classification as set forth in 19 CFR 102.20...” As per NY J88807, supra, the fully assembled rear projection color television set is classifiable in subheading 8528.12.72, HTSUS. The applicable tariff shift rule found in section 102.20(o) provides as follows:
A change to subheading 8528.12 through 8528.30 from any other subheading, including another subheading in that group, except from 8540.11 through 8540.12
Under the facts provided, foreign component materials initially classifiable in headings 3506, 3919, 3926, 4821, 4901, 4911, 5602, 7009, 7316, 7318, 7326, 7616, 8471, 8504, 8518, 8529, 8536, 8539, 8544, 9001, 9612, HTSUS, and subheading 8540.40., HTSUS are subsequently classifiable in subheading 8528.12.72, HTSUS, as a result of assembly operations in Mexico. Therefore, the requisite tariff shift rule is met and the country of origin of the fully-assembled flat screen color televisions is Mexico, pursuant to 19 CFR 102.11(a)(3).
With regard to the status of the assembled television receiver as an “originating good” pursuant to the rules of origin in General Note 12, subdivision (b) provides, in pertinent part:
For 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
they have been transformed in the territory of Canada, Mexico, and/or the United States so that-
except as provided in subdivision (f) of this note, 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 United States exclusively from originating materials.
Inasmuch as the televisions are made with non-originating components, General Note 12(b)(i) and (iii) are inapplicable. Therefore, to determine whether the television receiver is considered to be “originating,” consideration must be given to General Note 12(b)(ii)(A) which provides, in pertinent part, that the goods are “transformed in the territory of Canada, Mexico and/or the United States” in such a manner that “…each of the non-originating materials undergoes a change in tariff classification described in subdivisions (r), (s) and (t)…or the rules set forth therein.”
As previously indicated, the fully assembled receiver is classifiable in subheading 8528.12.72, HTSUS. With respect to General Note 12(b)(ii)(A), the applicable tariff shift rule under General Note 12(t)85.90 states:
90 A change to tariff items 8528.12.62, 8528.12.64, 8528.12.68 or 8528.12.72 from tariff items 8528.12.04 or 8528.12.08 or any other heading, except from tariff item 8529.90.53.
Based upon the information provided, all of the non-originating component materials (comprised of items in headings 3506, 3919, 3926, 4821, 4901, 4911, 5602, 7316, 7318, 7326, 7616, 8471, 8504, 8518, 8536, 8539, 8540, 8544, 9001, 9612, HTSUS, and subheadings 8529.90.00, 8529.90.29, 8529.90.99, HTSUS) undergo the necessary tariff shift as a result of processing in Mexico. Because none of the components are classifiable in subheading 8529.90.53, a provision from which a change is disallowed, the component materials satisfy the tariff shift rule in General Note 12(t)85.90. Accordingly, the fully assembled flat screen color television is an “originating good” for purposes of General Note 12 and 19 CFR Part 181.1(q).
Consequently, the completed rear projection flat screen color televisions incorporating a printer will be entitled to NAFTA duty preference when imported into the U.S. from Mexico.
HOLDING:
Based upon the information provided, where non-originating component materials meet the requisite tariff shift rule set forth in General Note 12(t) to the HTSUS, the fully assembled rear projection flat screen color televisions incorporating a printer will qualify for preferential tariff treatment under the NAFTA. Pursuant to 19 CFR 102.11(a)(3), the country of origin of the television sets is Mexico, which must be marked accordingly.
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 Customs officer handling the transaction.
Sincerely,
Myles B. Harmon
Director
Commercial Rulings Division