CLA-2-90:OT:RR:NC:N1:105
Mr. Nicholas D’Andrea
Delmar International Inc.
147-55 175th St.
Jamaica, NY 11434
RE: The tariff classification of electronic thermostats altered in Canada
Dear Mr. D’Andrea:
In your letter dated May 7, 2008, for AED Electronics Inc., you requested a tariff classification ruling. Your samples are being returned to you as requested.
You state:
“The subject electronic thermostats are identified by item # CT07TC2W when first imported into the United States and then by item # P286-1300 when returned to the United States from Canada. The thermostats are an electrical type with a digital display used to control room temperature. The country of origin will be China.
When first imported into the United States, the thermostats will be classified under 9032.10.0090 HTSUS and duty will be paid at the current rate of 1.7% ad valorem. When first imported into the United States, the thermostats will be in its completed form. In some cases, the subject of this ruling request, the thermostats are exported to Canada for alterations to be performed to personalize the thermostats for specific U.S. clients. In these cases, the thermostats will be subject to the following alterations:
The name plate is changed to read the U.S. client’s name.
The packaging and instruction manual are changed to reflect the U.S. client’s name.
Canadian software is upgraded so that the screen, once it is activated, reads the U.S. client’s company name.
Additionally, in some cases, software is upgraded to accommodate the U.S. client request for the temperature to be displayed in Celsius rather than Fahrenheit. “
You also state:
“The duty will be based upon the value of the repairs or alterations performed in Canada. The duty rate would be that which applies to the electronic thermostats, 9032.10.0090, HTSUS, which provides for ; Automatic regulating or controlling instruments and apparatus; parts and accessories thereof: Thermostats; Other; 1.7% ad valorem.”
Regarding the HTSUS Chapters 1-97 classification, since the packaging states that it is for use with furnaces, central air conditioning, etc. and since the Instruction Manual provides instructions for Mounting TotalTouch to the Wall, HTSUS 9032.10.0030 applies, not 9032.10.0090 as “other” thermostats.
We agree that the processing in Canada will qualify as alterations within the meaning of subheading 9802.00.50, HTSUS, provided that the documentary requirements of 19 C.F.R. § 181.64 are satisfied.
However, as stated in Headquarters Ruling Letter 562672 KKV, 5-27-03:
“Goods entitled to subheading 9802.00.50 treatment after having been repaired or altered in Canada are subject to duty upon the value of the repairs or alterations using the applicable NAFTA ‘CA’ rate set forth in the applicable HTSUS tariff provision describing the good.”
HTSUS Chapter 98, Subchapter II, U.S. Note 3-d states:
“For the purposes of subheadings 9802.00.40 and 9802.00.50, the rates of duty in the ‘Special’ subcolumn of column 1 followed by the symbol ‘CA’ or ‘MX’ in parentheses shall apply to any goods which are returned to the United States after having been repaired or altered in Canada or in Mexico, respectively, whether or not such goods are goods of Canada or goods of Mexico under the terms of general note 12 to the tariff schedule.”
Since there is a CA after the Free in the Special subcolumn for HTSUS 9032.10.00, there will be no duty on the cost (or value) of the alterations in Canada instead of duty of 1.7% as you indicated.
The applicable Chapter 98 subheading for the thermostats altered in Canada will be 9802.00.5060, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Other” Repairs or alterations, not made pursuant to a warranty. The rate of duty will be free.
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/.
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 J. Sheridan at 646-733-3012.
Sincerely,
Robert B. Swierupski
Director,
National Commodity
Specialist Division