CLA-2-84:RR:NC:1:103 D87287
Mr. Thomas A. Penksa
PBB USA Inc.
PO Box 950
Buffalo, NY 14213
RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of plastic injection molding machine castings; Article 509
Dear Mr. Penksa:
In your letter dated Jan. 15, 1999 on behalf of Husky Injection Molding Systems Ltd. you requested a tariff classification ruling.
Your client intends to import castings from Korea into Canada or the United States. Once in Canada or the United States the castings will undergo further machining in order to finish them into components of the clamp section of a new series of plastic injection molding machines known as the Index line. In conventional injection molding machines a large portion of the total mold cycle time is needed to cool the molded items prior to ejecting them from the mold. The Index series, consisting of the I90, I250, and I400 models, will feature a unique horizontally rotating turret which will allow the use of up to four identical mold halves. After the injection and hold portion of a cycle is complete, the turret will rotate 90 or 180 degrees, thus enabling additional mold cycles to occur while a previously molded article cools in its mold. You have requested a ruling as to the tariff classification and NAFTA eligibility of these castings under the following three scenarios:
A) The machined and finished castings are assembled, along with other components of Canadian origin, to produce complete Index series plastic injection molding machines which are exported from Canada to the United States.
B) The machined and finished castings are exported from Canada to the United States as replacement parts for Index series plastic injection molding machines.
C) The castings are imported directly from Korea into the United States, where they are machined and finished and then exported to Canada.
The articles which will be exported from Korea consist of castings of a stationary platen, a non-operator side carrier, an operator side carrier, and a turret gear. In their condition as received from Korea, the raw castings will be made of ductile iron and will be prime painted.
In Canada or the United States the raw stationary platen casting will undergo the following operations:
1. Rough and finish mill all machined surfaces.
2. Drill and counterbore all holes.
3. Inspect and finish paint.
The finished stationary platen will be used both to support the cavity half of the mold and as the main structure of the clamp assembly. It will house the four clamp pistons required to obtain clamp tonnage as well as support the mold stroke cylinders, shutter cylinder, shutter linkage, and clamp manifold assembly.
In Canada or the United States the raw non-operator side carrier casting will undergo the following operations:
1. Rough and finish mill all machined surfaces.
2. Drill and counterbore all holes.
3. Inspect and finish paint.
After completion, the non-operator side carrier, along with the operator side carrier, will be used to support the rotating turret assembly which will contain up to four identical mold halves. It will also serve to transmit clamp tonnage to the turret assembly through tiebars (two per carrier) which pass through support bushings which will be housed in the non-operator side carrier.
The raw operator side carrier casting will undergo the following operations in Canada or the United States:
1. Rough and finish mill all machined surfaces.
2. Drill and counterbore all holes.
3. Inspect and finish paint.
The finished operator side carrier will serve the same functions as the non-operator side carrier. In addition, it will serve as the structure for mounting components of the turret servo system which will be used, along with the turret gear, to rotate the turret assembly.
After importation into Canada or the United States, the raw turret gear casting will undergo the following operations:
1. Rough and finish turn outer and inner diameter.
2. Drill and counterbore holes for mounting blocks.
3. Cut teeth on outer diameter.
4. Inspect and finish paint.
The completed turret gear will transmit torque to the turret assembly. It will also act, along with the operator side carrier, to support the turret’s tapered roller bearing assembly, as well as a hydraulic locking pin cylinder assembly.
As imported from Korea, the total value of the stationary platen, non-operator side carrier, and operator side carrier castings will represent 0.9 percent of the factory price of the I90 injection molding machine (this model does not require a turret gear). The total value of the stationary platen, non-operator side carrier, operator side carrier, and turret gear castings will represent 1.4 percent and 1.6 percent of the factory price of the I250 and I400 injection molding machines respectively.
To be eligible for tariff preferences under the NAFTA, goods must be "originating goods" within the rules of origin in general note 12(b), HTS. General note 12(b) states:
For the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitive 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....
Under scenario A, the plastic injection molding machine will be assembled in Canada from the finished Korean-made raw castings as well as other components of Canadian origin and then exported to the United States (you have advised us that a U.S. Customs NAFTA verification in 1996 and a U.S. Customs NAFTA audit in 1997 have concluded that plastic injection molding machines made by Husky in Canada qualify under NAFTA, except for the issue of any foreign-made castings). The stationary platen casting, non-operator side carrier casting, and operator side carrier casting, prior to finishing in Canada, have the essential character of the finished stationary platen, non-operator side carrier and operator side carrier. Accordingly, the stationary platen casting would be classifiable in subheading 8477.90.2500, Harmonized Tariff Schedule of the United States (HTS), which provides for parts of machinery for working rubber or plastics or for the manufacture of products from these materials, not specified or included elsewhere (in chapter 84): base, bed, platen, clamp cylinder, ram and injection castings, weldments and fabrications: other. The non-operator side carrier and operator side carrier castings would each be classifiable in subheading 8477.90.8515, HTS, which provides for parts of machinery for working rubber or plastics or for the manufacture of products from these materials, not specified or included elsewhere (in chapter 84): other: other: of injection molding machines. The raw turret gear casting, lacking teeth, does not have the essential character of the finished turret gear. Accordingly, it would be classifiable in subheading 7325.99.1000, HTS, which provides for other cast articles of iron or steel: other: other: of cast iron. The applicable subheading for a complete Index plastic injection molding machine will be subheading 8477.10.90, HTS, which provides for other injection molding machines. The general rate of duty for articles classified in subheading 8477.10.90, HTS, will be 3.1 percent ad valorem.
As the Index series of plastic injection molding machines exported from Canada will incorporate a stationary platen, non-operator side carrier, operator side carrier, and turret gear produced from castings made in Korea, general note 12(b)(i) is not applicable. Thus, we must resort to general note 12(b)(ii)(A), HTS, in order to decide the NAFTA eligibility of these plastic injection molding machines.
General Note 12(b)(ii)(A) indicates that the non-originating castings must undergo a change in tariff classification in order for the plastic injection molding machines in which they are incorporated to be considered as originating goods. General note 12(t)/84.222, HTS, describes the acceptable tariff classification change as:
A change to subheading 8477.10 from any other subheading, except from tariff items 8477.90.15 or 8477.90.25 or more than one of the following:
(A) tariff items 8477.90.35 or 8477.90.45,
(B) subheading 8537.10.
As the non-operator side carrier and operator side carrier castings are classifiable in subheading 8477.90.8515, HTS, and the turret gear casting is classifiable in subheading 7325.99.1000, HTS, assembly of these parts with other Canadian parts to form a complete plastic injection molding machine in Canada imparts the requisite tariff change per general note 12(b)(ii)(A), HTS.
As the stationary platen is classifiable in subheading 8477.90.2500, HTS, it will not undergo an acceptable tariff classification change as set forth in General Note 12(t)/84.222. However, General Note 12(f)(i) states in part that:
a good shall be considered to be an originating
good if the value of all non-originating materials
used in the production of the good that do not undergo
an applicable change in tariff classification set out
in subdivision (t) of this note is not more than
7 percent of the transaction value of the good, adjusted
to an F.O.B. basis....
Based on the value information supplied with your submission, the stationary platen is valued at less than 7 percent of the transaction value of the Index series of injection molding machines, adjusted to an FOB basis, and thus is also an originating good in accordance with General Note 12 (f)(i).
Therefore the complete Index series of plastic injection molding machines will be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.
In scenario B, the stationary platen, non-operator side carrier, operator side carrier, and turret gear will be exported to the United States from Canada in their finished condition. The applicable subheading for the finished stationary platen will be subheading 8477.90.2500, HTS, which provides for parts of injection-molding machines: ...platen.... The general rate of duty will be 3.1 percent ad valorem. The applicable subheading for the finished non-operator side carrier and operator side carrier will be subheading 8477.90.8515, HTS, which provides for other parts of injection molding machines: other: other. The general rate of duty will again be 3.1 percent ad valorem. General Note 12(t)/84.226 describes an acceptable tariff change as:
A change to subheading 8477.90 from any other heading.
However, as the raw stationary platen, non-operator side carrier and operator side carrier castings are also classifiable in heading 8477, HTS, no such tariff change will occur and thus these components are not eligible for preferential treatment under the NAFTA when exported in a finished condition from Canada to the United States.
Under scenario B, the turret gear will also be exported to the United States from Canada in its finished condition. The applicable subheading for the finished turret gear will be subheading 8483.90.5000, HTS, which provides for parts of gearing, gear boxes and other speed changers. The general rate of duty will be 2.5 percent ad valorem. The acceptable tariff classification change set out in General Note 12(t)/84.247), HTS, is:
A change to subheading 8483.90 from any other heading.
As the ring gear casting would be classifiable in subheading 7325.99.1000, HTS, finishing of the ring gear casting in Canada imparts the requisite tariff change and the finished ring gear, when exported from Canada to the United States, will be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.
Under scenario C, castings of the stationary platen, non-operator side carrier, operator side carrier, and turret gear will be produced in Korea and exported directly to the United States. The applicable classification and general rate of duty for these articles is as follows:
ARTICLE HTS SUBHEADING DUTY RATE
Stationary platen casting 8477.90.2500 3.1% ad val
Non-operator side carrier
casting 8477.90.8515 3.1% ad val
Operator side carrier
casting 8477.90.8515 3.1% ad val
Turret gear 7325.99.1000 Free
Under scenario C none of the articles imported into the United States are eligible for NAFTA treatment since they are of Korean origin.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Alan Horowitz at 212-637-7027.
Should you wish to request an administrative review of the portion of this ruling which denies NAFTA preferential treatment to the stationary platen, non-operator side carrier and operator side carrier under scenario B, submit a copy of this ruling and all relevant facts and arguments within 30 days of the date of this letter, to the Office of Regulations and Rulings, U. S. Customs Service Headquarters, 1300 Pennsylvania Avenue, NW, Washington, DC 20229.
Sincerely,
Robert B. Swierupski
Chief, Metals & Machinery Branch
National Commodity
Specialist Division