CLA-2-87:OT:RR:NC:N1:101
Jason M. Waite
Alston & Bird LLP
The Atlantic Building
950 F Street, NW
Washington, DC 20004-1404
RE: The tariff classification, country of origin and NAFTA eligibility of automotive bumpers from Canada and the United States
Dear Mr. Waite,
In your letter dated July 25, 2008, you requested a tariff classification, country of origin and NAFTA eligibility ruling on behalf of Keystone Automotive de Mexico S de RL de CV of Linares Nuevo Leon, Mexico.
The items concerned are automotive bumpers. You state in your Ruling Request of July 25, 2008, that “The subject automotive bumpers are recovered by Keystone through disassembly operations performed by various automotive body shops in the United States and Canada. The shops remove the bumpers from various different models of automobiles and light trucks and contact Keystone regarding the availability of repaired bumpers to replace the disassembled bumpers. A Keystone representative delivers a truckload of repaired replacement bumpers to the shops and collects the disassembled bumpers for delivery to Keystone. The initial country of origin of the bumpers as well as the origin of the automobiles and light trucks from which the bumpers are removed is unknown.”. “Following disassembly, Keystone exports the bumpers to Mexico for repair. … they are imported back into the United States.”. You had previously stated in a prior submission dated June 24, 2008, that “The shops … contact Keystone regarding the availability of new or refurbished bumpers … ” and that “A Keystone representative delivers a truckload of new or refurbished replacement bumpers to the shops … .”.
The applicable classification subheading for the Bumpers will be 8708.10.3050, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Parts and accessories of … motor vehicles … : Bumpers: Other”. The rate of duty will be 2.5%.
General Note 12(b), HTSUS, sets forth the criteria for determining whether a good is originating under the NAFTA. General Note 12(b), HTSUS, (19 U.S.C. § 1202) states, in pertinent part, that
“For the purposes of this note, goods imported into the customs territory of the United
States are eligible for the tariff treatment and quantitative 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 … ”.
Part 181 (North American Free Trade Agreement) of Title 19 (Customs Duties) C.F.R. (Code of Federal Regulations), Subpart L (Rules of Origin), Section 181.132 (Disassembly), (a) states “ … except as provided in paragraph (b) of this section, disassembly is considered to be production, and a component recovered from a good disassembled in the territory of a Party [Canada, United States, Mexico] will be considered to be originating … provided that the component satisfies all applicable requirements of Annex 401 [to the North American Free Trade Agreement] and this part [Part 181 of the C.F.R.].”. Section 181.132 (b) of Subpart L of Part 181 of 19 C.F.R. states “Disassembly … will not be considered production in the case of components that are recovered from new goods. … a “new good” means a good which is in the same condition as it was when it was manufactured and which meets the commercial standards for new goods in the relevant industry.”.
Per Title 19 C.F.R., the concerned bumpers that are not “new goods” as defined in 19 C.F.R. 181.132(b) have a country of origin of either Canada or the United States depending upon which country they were disassembled in. Any bumpers that meet the definition of “new goods” as stated in 19 C.F.R. 181.132(b) have a country of origin of the country they were either originally manufactured in or the country in which they underwent a “substantial transformation” into a classifiable automotive bumper.
Based on the facts provided, the goods described above that do not meet the definition of “new goods” specified in 19 C.F.R. 181.132(b) qualify for NAFTA preferential treatment, because they will meet the requirements of HTSUS General Note 12(b)(i). The goods will therefore be entitled to a Free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.
You also state in your Ruling Request of July 25, 2008, that “Once in Mexico, the bumpers undergo thermal reforming to soften the plastic material using special high temperature tanks and chemically clean each bumper cover. The bumper covers are mechanically etched or stripped of the bright paint finish to prepare them for optimum adhesion of a new coat of paint. Keystone then repairs the damaged bumpers, subjecting the bumpers to manual hot straightening and then welding together the broken parts of the bumper using double-sided airless or air-charged plastic welding, a process which involves grinding the damaged areas to allow for deeper penetration of special plastic welding rods. For added strength and structural integrity, the plastic welding is performed on both sides of the bumper covers. After welding, the bumpers are sanded and flexible fillers are applied to smooth out any surface irregularities. Precision sanding with progressively finer grits results in a smooth scratch-free surface for the bumpers. A primer coat is then applied, after which the bumpers are given another intensive inspection to catch even the smallest flaw. When Keystone is satisfied that all the flaws have been removed, a final black coat of primer paint is applied. At this point, the bumpers are ready for a Keystone designed packaging that will protect the bumpers as they are imported back into the United States.”
Goods re-entered [into the United States] after repair or alteration in Mexico are subject to the regulations specified in 19 C.F.R. 181.64 regarding whether they are eligible for duty-free or reduced-duty treatment. The concerned bumpers will only be allowed duty-free or reduced-duty treatment if the repairs or alterations in Mexico do not “exceed the scope of [repairs or] alteration[s] because they are manufacturing processes which create commercially different products with distinct new characteristics.” (19 C.F.R. 181.64(a)) and if the bumpers, as exported, “are [not] incomplete for their intended use and for which the processing operation performed in … Mexico [does not] constitute (sic) an operation that is performed as a matter of course in the preparation or manufacture of finished goods.” (19 C.F.R. 181.64(b)).
Examples given in 19 C.F.R. 181.64 of goods that do not qualify for duty-free or reduced-duty treatment upon re-importation into the United States are goods that have undergone etching and tempering as well as goods that need to be strengthened or have components attached to them to fulfill their intended functions or to comply with usage laws or operational specifications.
Duty rates are provided for your convenience and are subject to change. The text of the most recent Harmonized Tariff Schedule of the United States and the accompanying duty rates are provided on the World Wide Web at http://ww.usitc.gov /tata/hts/.
This ruling is being issued under the provisions of Parts 177 and 181 of the Customs Regulations (19 C.F.R. 177, 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 Richard Laman at 646-733-3017.
Sincerely,
Robert B. Swierupski
Director
National Commodity Specialist Division