CLA-2-84:OT:RR:NC:1:104
Mr. Douglas A. Kalvig LCB
FTZ Director
Decatur Mold Tool & Engineering, Inc.
3330 N SR 7
North Vernon, IN 47265
RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), and country of origin marking of a mold from a Foreign Trade Zone; Article 509
Dear Mr. Kalvig:
In your letter dated April 17, 2008 you requested a ruling on the status of a mold produced in a Foreign Trade Zone (FTZ) under the NAFTA.
You state that Decatur Mold Tool & Engineering, Inc. produces steel molds for the injection molding of plastics. While the mold components are engineered in the United States, some components may be produced in other countries. Duty is paid upon importation of these foreign parts prior to their assembly into a complete mold. In this instance, the foreign parts are manufactured in China. In the FTZ, the foreign components and domestically manufactured components will be used to manufacture molds. While the components are advanced beyond a casting state, they still require machining (such as cutting and trimming) in the FTZ to bring the parts to a finished assembly level. Depending upon need, welding is sometimes performed. The assembly process also involves a “Blue in process” step whereby a dye is put on the mold faces, Once the mold is put together, the location of the dye allows for verification that the fit is proper.
The applicable tariff provision for the mold described above will be 8480.71.8045, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Molding boxes for metal foundry; mold bases; molding patterns; molds for metal (other than ingot molds), metal carbides, glass, mineral materials, rubber or plastics: Molds for rubber or plastics: Injection or compression types: Other … Other: Injection type. The general rate of duty will be 3.1 percent ad valorem.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at http://www.usitc.gov/tata/hts/.
In your original letter dated January 5, 2007, you pose four questions:
Will the tariff shift of the non-originating parts into a steel mold satisfy the Tariff Shift requirement?
Will the mold be entitled to NAFTA status?
How would the mold need to be marked?
Is there a regional value content that needs to be considered?
The rules of origin as set out in Section 3332(a)(1)(B) of Title 19 of the U.S. Code [“19 U.S.C. §3332(a)(1)(B)] outlines the treatment of nonoriginating material used in the production of a good. However, 19 U.S.C. §3332(a)(2) contains “Special Rules” for goods produced in a FTZ. 19 U.S.C. §3332(a)(2)(A) states that
Subparagraph (B) of paragraph (1) shall not apply to a good produced in a foreign-trade zone or subzone (established pursuant to the Act of June 18, 1934, commonly known as the Foreign Trade Zones Act [19 U.S.C. 81a et seq.]) that is entered for consumption in the customs territory of the United States.
Thus, pursuant to 19 U.S.C. §3332(a)(2)(A), the merchandise in question is not eligible for NAFTA preference upon withdrawal for consumption in the United States. As a result, the NAFTA tariff shift and regional value content rules are not applicable. The fact that there is no regional value content requirement in NAFTA for subheading 8480.71.8045, HTSUS, becomes a moot point in this case.
As the merchandise is not entitled to NAFTA preference, the country of origin for marking purposes cannot be determined under the NAFTA marking rules. This determination will be made in accordance with the requirements of Section 304 of the Tariff Act of 1930 (19 U.S.C. §1304) and Part 134, CBP Regulations (19 CFR Part 134).
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.
The "country of origin" is defined in 19 CFR 134.1(b) 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.” For tariff purposes, the courts have held that a substantial transformation occurs if a new and different article emerges having a distinctive name, character or use. Anheuser Busch Brewing Association v. The United States, 207 U.S. 556 (1908) and Uniroyal Inc. v. United States, 542 F. Supp. 1026 (1982).
19 U.S.C. § 81c, i.e., “Exemption from customs laws of merchandise brought into foreign trade zone”, must also be considered. In particular, 19 U.S.C. § 81c(a) states, in part,
…Foreign and domestic merchandise of every description, except such as is prohibited by law, may, without being subject to the customs laws of the United States, except as otherwise provided in this chapter, be brought into a zone and may be stored, sold, exhibited, broken up, repacked, assembled, distributed, sorted, graded, cleaned, mixed with foreign or domestic merchandise, or otherwise manipulated, or be manufactured except as otherwise provided in this chapter, and be exported, destroyed, or sent into customs territory of the United States therefrom…when foreign merchandise is so sent from a zone into customs territory of the United States… it shall be subject to the laws and regulations of the United States affecting imported merchandise...articles, the growth, product, or manufacture of the United States, on which all internal-revenue taxes have been paid, if subject thereto, and articles previously imported on which duty and/or tax has been paid, or which have been admitted free of duty and tax, may be taken into a zone from the customs territory of the United States, placed under the supervision of the appropriate customs officer, and whether or not they have been combined with or made part, while in such zone, of other articles, may be brought back thereto free of quotas, duty, or tax…
In addition, 19 CFR Part 146, which outlines the requirements of FTZs, must be considered. Zone status has not been indicated in your letter. Lacking specific information as to the status of the foreign components, this office has assumed for purposes of our response that the automotive parts admitted in the FTZ will be treated as nonprivileged foreign merchandise. Section 146.65(a)(2) states:
Nonprivileged foreign merchandise provided for in this section will be subject to tariff classification in accordance with its character, condition and quantity as constructively transferred to Customs territory at the time the entry or entry summary is filed with Customs.
As described above, the foreign components are substantially transformed by the processing with domestic components in the FTZ into a complete mold. The assembled mold does have a distinctive name, character or use different from the unassembled components, and therefore is a good of the United States for marking purposes. Upon withdrawal from the FTZ, the mold is subject to the duty provisions applicable to a mold which is a product of the United States. The mold will be a good of the United States for duty and country of origin marking purposes. Accordingly, it will not be required to have any country of origin marking pursuant to 19 U.S.C. 1304 when imported into the United States.
If a good is determined to be an article of U.S. origin, it is not subject to the country of origin marking requirements of 19 U.S.C. §1304. Whether an article may be marked with the phrase "Made in the USA" or similar words denoting U.S. origin, is an issue under the authority of the Federal Trade Commission (FTC). We suggest that you contact the FTC Division of Enforcement, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580 on the propriety of proposed markings indicating that an article is made in the U.S.
This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 C.F.R. 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 Patricia O’Donnell at 646-733-3011.
Should you wish to request an administrative review of this ruling, submit a copy of this ruling and all relevant facts and arguments within 30 days of the date of this letter, to the Director, Commercial Rulings Division, Headquarters, U.S. Customs and Border Protection, 1300 Pennsylvania Ave. N.W., (Mint Annex), Washington, D.C. 20229.
Sincerely,
Robert B. Swierupski
Director,
National Commodity
Specialist Division