MAR-2 RR:E:NC:N1:106
Mr. C. J. Erickson
Cowan, Liebowitz & Latman, P.C.
1133 Avenue of the Americas
New York, NY 10036
RE: THE COUNTRY OF ORIGIN MARKING OF A CRANE ASSEMBLED IN CANADA; ARTICLE 509
Dear Mr. Erickson:
This is in response to your letter dated November 28, 2006, on behalf of Palfinger North America, requesting a ruling on whether the proposed marking "Made in Canada" is an acceptable country of origin marking for the PK 15002 Performance hydraulic crane. This item is assembled in, and exported from, Canada of Canadian and European components.
The subject machine is the PK 15002 Performance standard hydraulic crane. It possesses a maximum stabilizer spread of 21’ 8”, operates under a pressure of 4350 psi, and weighs 3,630 lbs exclusive of mounting parts, pump and oil. As described in the submitted product catalogue, the crane is used for the handling of building materials in the municipal sector, as well as on construction sites. The PK 15002 Performance crane is assembled in Canada from over 290 components. These components are manufactured in different countries including Austria, Bulgaria, Canada, Czech Republic, Germany, Italy, Malta, and the United Kingdom. A detailed bill of materials identifying the components, their origin and values was attached. The production process involves the manual assembly of each of the components, along with soldering and welding.
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 U.S. 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 U.S. the English name of the country of origin of the article. Part 134, Customs Regulations (19 CFR Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.
The country of origin marking requirements for a "good of a NAFTA country" are also determined in accordance with Annex 311 of the North American Free Trade Agreement ("NAFTA"), as implemented by section 207 of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat 2057) (December 8, 1993) and the appropriate Customs Regulations. The Marking Rules used for determining whether a good is a good of a NAFTA country are contained in Part 102, Customs Regulations. The marking requirements of these goods are set forth in Part 134, Customs Regulations.
Section 134.1(b) of the Customs Regulations defines "country of origin" as:
the country of manufacture, production, or growth of any article of foreign origin entering the U.S. 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 this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin. (Emphasis added).
Section 134.45(a)(2) of the regulations, provides that "a good of a NAFTA country may be marked with the name of the country of origin in English, French or Spanish.” Section 134.1(g) of the regulations, 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.
Section 102.11 of the Customs Regulations (19 CFR 102.11), sets forth the required hierarchy for determining country of origin of goods from NAFTA countries for marking purposes. Section 102.11(a) of the Customs Regulations states that
[t]he 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 section 102.20 and satisfies any other applicable requirements of that section, and all other requirements of these rules are satisfied."
"Foreign Material" is defined in section 102.1(e) of the interim Customs regulations 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."
Since the PK 15002 Performance cranes are assembled in Canada from NAFTA and non-NAFTA components, the cranes are neither wholly obtained/produced nor produced exclusively from domestic materials. Therefore, paragraphs (a)(1) and (a)(2) of section 102.11 cannot be used to determine the country of origin of the cranes. Thus, paragraph (a)(3) of section 102.11 is the applicable rule that must next be applied to determine the origin of the finished article.
This rule involves the tariff shift of all components, excluding certain components of de minimus foreign value. For the purposes of this ruling, we accept your assertion that the PK 15002 Performance crane is classified in subheading 8426.91.0000, Harmonized Tariff Schedule of the United States, which provides for cranes designed for mounting on road vehicles. This provision is free of duty.
The NAFTA Tariff shift rules for heading 8426 prohibit a change from subheading 8431, a parts provision where many of the crane’s components would be separately classified, unless certain regional value content percentages are met. For purposes of this ruling, we accept your assumption that there are certain crane components that fall under this subheading that do not meet the applicable regional content percentages. Accordingly, paragraph (a)(3) of section 102.11 under section 102.11(a) does not apply. Since the country of origin cannot be determined under paragraph (a) of section102.11, section 102.11(b) must be looked to under the marking rules of origin hierarchy. Under (b), the country of origin of the good is the:
(1) country or countries of origin of the single material that imparts the
essential character of the good.
The PK 15002 Performance crane is a complex assembly of structural, electronic and hydraulic components, comprising the stabilizer system, boom extension system and hydraulic control system which are all assembled in Canada. No single component can be said to impart the essential character of the completed crane. Therefore, this rule under section102.11(b) of the NAFTA rules of origin does not apply.
Section 102.11(c) must be looked to next. This rule relates to sets, mixtures or composite goods and would thus be inapplicable to the subject crane.
Section 102.11(d) is next in the rules of origin hierarchy. These rules state that the country of origin of a NAFTA good shall be determined as follows:
(1) If the good was produced only as a result of minor processing, the country of origin of the good is the country or countries of origin of each material that merits equal consideration for determining the essential character of the good.
(2) If the good was produced by simple assembly and the assembled parts that merit equal consideration for determining the essential character of the good are from the same country, the country of origin is the country of origin of those parts.
(3) The country of origin of the good is the last country in which the good underwent production.
You state that the PK 15002 Palfinger crane is manufactured through a complex assembly of almost 300 individual components, by skilled laborers and technicians with expertise in electronics and hydraulics. All of the assembly technicians are trained either in-house by senior shop personnel through the formal Palfinger University (service) training or by attending direct factory training. Palfinger has a formal skill level requirement that culminates in senior personnel requiring formal education and certification as mechanics, millwrights or ticketed welders. The assembly time relating to these steps performed in Canada is approximately 30 hours per crane. This assembly process far exceeds the standard for “minor processing” or “simple assembly” as addressed by the NAFTA marking regulations of section 102.1(o), which defines “simple assembly as the fitting together of five or fewer parts.” Accordingly, origin for marking purposes will be based on the final rule.
“Production” is defined in section 102.1(n) as “assembling a good,” among other processes. Production in this case involves the assembly of over 290 components in Canada into the completed crane. Thus, for country of origin marking purposes, the PK 15002 Palfinger Crane is, as you argue, a product of Canada.
Your proposed marking of “Made in Canada” or “Assembled in Canada” is, if marked conspicuously, legibly and permanently in satisfaction of the marking requirements of 19 U.S.C. 1304 and 19 CFR Part 134, an acceptable country of origin marking for the imported cranes.
This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 CFR Part 181).
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 Patrick Wholey at 646-733-3013.
Sincerely,
Robert B. Swierupski
Director,
National Commodity
Specialist Division