CLA-2-85:OT:RR:NC:N1:109
Ms. Mika M. McLafferty
Grunfeld, Desiderio, Lebowitz, Silverman, Klestadt LLP
Counselors at Law
399 Park Avenue
25th Floor
New York, NY 1022-4877
RE: The tariff classification of a magnetic soft pocket frame and the country of origin marking of magnetic soft pocket frame from China
Dear Ms. McLafferty:
In your letter dated July 2, 2008, you requested a tariff classification ruling and country of origin marking on behalf of your client MCS Industries, Inc. (“MCS”).
The merchandise subject to this ruling is a magnetic soft pocket frame. The conclusion reached in this ruling, our file number N032495, was determined based on the facts provided and is binding with respect only to the complete set of facts described in this ruling letter with regard to the origination of and subsequent processing that occurs in China on the magnetic soft pocket frame, as stated in and obtained from your submission. Samples, labeled Exhibit A1, A2, B1, B2, B3, and C, demonstrating the manufacturing process in the United States and the subsequent processing in China were furnished with your submission.
The facts provided within your letter are that MCS intends to purchase rolls and/or sheets of American made flexible magnets. Its magnetic properties are set enabling the product to adhere to metal objects. The sheets or rolls of American made flexible magnets are laminated to American made vinyl sheeting via heat treatment before being sent to China for further processing. Upon exportation to China, the future of the rolls/sheets of American made flexible magnets is committed to a single use as magnets.
After purchasing the rolls or sheets of laminated flexible magnets manufactured in the United States MCS will ship them to China where the laminated flexible magnetic rolls/sheets will be cut to various sizes to accommodate pictures and documents of that size. The factory in China will also cut rolls of foreign made clear polyvinyl chloride (PVC) into various sizes so the PVC plastic sheets can be affixed to the laminated flexible magnets to form the “pocket” for holding a picture/document. Once the laminated American made flexible magnets and PVC plastic sheets are cut to size, the two are placed together in a machine that attaches the PVC plastic sheet to the laminated American made flexible magnets on three sides via heat treatment. Next, where two magnetic soft pocket frames can be obtained from one strip of flexible magnet attached to a PVC plastic sheet, the two frames are pulled apart. Any excess material remaining on the magnetic soft pocket frame is then scraped off before the magnetic soft pocket frame is stuffed with a marketing insert and packed for resale.
Your letter states that you do not believe that the work and material added in China to the American made flexible magnets effects a substantial transformation as to render China the “country of origin.” You further state that the country of origin of the magnetic soft pocket frame is the United States and, as such, the product is not subject to country of origin marking requirements.
With respect to the issue of country of origin marking applicability, 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.
We first must determine the country of origin of the merchandise. Section 134.1(b) of the Customs Regulations defines the term “country of origin” 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 the marking laws and regulations.
A substantial transformation occurs when an article loses its identity through processing and emerges as a new article having a new name, character, or use. In general, Customs has held that cutting or shaping materials to defined shapes or patterns suitable for use in making finished articles, as opposed to mere cutting to length or width, constitutes a substantial transformation.
On the basis of the information submitted, it is our opinion that the rolls/sheets of laminated flexible magnets exported from the United States merely undertake a cutting process with PVC sheeting attached via a heat treatment in China. This process does not yield a new article having a new name, character, or use nor do we find that the rolls/sheets are cut into shapes or patterns suitable for use in making finished articles. Prior to exportation from the United States, the rolls/sheets of American made laminated flexible magnets have already been processed to an advanced stage of manufacture and finished to the point where its future is committed to a single use as a magnet. As such, a substantial transformation does not take place in China. The merchandise re-imported into the United States is a flexible magnet and the country of origin remains the United States. As 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 with its country of origin, the magnetic soft pocket frames are not subject to country of the origin marking requirements because they are not of foreign origin. Their country of origin is the United States.
In your letter, you suggested that the classification of the magnetic soft pocket frame should be under Harmonized Tariff Schedule of the United States (HTSUS) subheading 8505.19.20, which provides for “Permanent magnets and articles intended to become permanent magnets after magnetization: Other: Composite good containing flexible magnets.” However, while the magnetic soft pocket frame is a flexible magnet, it is not a composite good containing a flexible magnet because the process in China did not effect a substantial transformation, there has been no change in the classification of the merchandise from 8505.19.10, as a flexible magnet, prior to its exportation from the United States. As such, the most appropriate classification for the magnetic soft pocket frame is 8505.19.10, as a flexible magnet.
The applicable subheading for the magnetic soft pocket frame will be 8505.19.1000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for "Permanent magnets and articles intended to become permanent magnets after magnetization: Other: Flexible magnets.” The rate of duty will be 4.9 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/.
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 Linda M. Hackett at 646-733-3015.
Sincerely,
Robert B. Swierupski
Director,
National Commodity
Specialist Division