CLA-2-94:OT:RR:NC:N4:433
Brian Kavanaugh
Trade Advisor
Deringer Logistics Consulting Group
1 Lincoln Blvd., Suite 225
Rouses Point, NY 12979
RE: The tariff classification, NAFTA eligibility and country of origin of wood drying rack from Canada.
Dear Mr. Kavanaugh:
In your letter dated April 13, 2010, on behalf of Accent Fairchild, you requested a tariff classification ruling.
The item is described as a six piece wood drying rack. The item is composed of Polyvinyl chloride (PVC) coated wooden dowels, of which both ends are worked; wooden frame that incorporates leg supports; and wooden bar hooks which lock the unit together. All of the wooden parts, the dowels, bar hooks, and two and three hole leg frames are of Chinese origin, while the metal crown staples are of Canadian origin. Upon assembly in Canada, of mostly Chinese origin parts, a floor standing textile and wearing apparel drying rack is formed. Six racks will be individually plastic tie wrapped and placed within one master carton. A photograph indicates that after importation, the master carton will be cut along the diagonal and used to display and sell the six racks within its carton. Reported foreign cost for materials is 1.77 U.S. dollars and the cost of assembly in Canada is 1.15 Canadian dollars.
Merchandise is classifiable under the Harmonized Tariff Schedule of the United States (HTSUS) in accordance with the General Rules of Interpretation (GRIs). The systematic detail of the HTSUS is such that most goods are classified by application of GRI 1, that is, according to the terms of the headings of the tariff schedule and any relative Section or Chapter Notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order.
Further provided, the Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System. While not legally binding on the contracting parties, and therefore not dispositive, the EN’s provide a commentary on the scope of each heading of the Harmonized System and are thus useful in ascertaining the classification of merchandise under the system. CBP believes the EN’s should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).
The ENs for Chapter 94, General, to the HTSUS, provides in pertinent part, the following [definition for the term furniture]: (A) Any “ movable ” articles (not included under other more specific headings of the Nomenclature), which have the essential characteristic that they are constructed for placing on the floor or ground, and which are used, mainly with a utilitarian purpose, to equip private dwellings, hotels, theatres, cinemas, offices, churches, schools, cafés, restaurants, laboratories, hospitals, dentists’ surgeries, etc., or ships, aircraft, railway coaches, motor vehicles, caravan trailers or similar means of transport. (It should be noted that, for the purposes of this Chapter, articles are considered to be “ movable ” furniture even if they are designed for bolting, etc., to the floor, e.g., chairs for use on ships). Upon examination of the photos and review of the item, we find that the floor standing PVC coated wood drying rack, used for hang drying kitchen and bath towels, clothes, headgear, and other articles falls within the meaning of furniture of Chapter 94, Heading 9403, HTSUS.
The applicable subheading for the PVC coated wood drying rack, will be 9403.60.8080, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Other furniture and parts thereof: Other wood furniture: Other; Other. 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/.
Within your ruling request, you specifically ask three questions: (1) Are the wooden components of Chinese origin imported in bulk considered to be other articles of wood and entered under Subheading 4421.90, HTSUS, or would they be considered to be unassembled wood furniture parts classified under Subheading 9403.90.7000, HTSUS? (2) Do the components of Chinese origin assembled in Canada into a drying rack qualify for preferential duty treatment under NAFTA? and (3) What is the correct country of origin marking of the drying rack?
The ENs to the HTSUS, Chapter 94, state: [furniture parts] covers parts whether or not in the rough, of the goods of heading 9401 to 9403, when identifiable by their shape or other specific features as parts designed solely or principally for an article of those headings; parts of furniture are classified in Chapter 94 when not more specifically covered elsewhere.
Taking into account that Heading 4409, HTSUS, provides for wood dowel rods, whether or not planned, sanded or end-jointed, we find that the PVC coated dowels of Chinese origin are further worked than permitted by the terms of the heading, resulting in classification outside of Heading 4409.
The ENs to the Chapter 44, Heading 4409, HTSUS, generally directs us to Heading 4421, HTSUS, the provision for other articles of wood, when wood which has been surface worked beyond planning and sanding, other than painted, stained or varnished, has taken place under manufacture. However, with emphasis added, the Legal Notes to Chapter 44, Note 1(o), excludes articles of furniture of Chapter 94, HTSUS, and the ENs for 4409, HTSUS, state: wooden strips of a kind clearly identifiable for incorporation in an article of furniture, such as notched strips for cupboard and bookcases shelves, etc, (heading 9403).
Upon examination of the photos that illustrate the process description and the written process description, we find that the dowels are of size and shape and construction common to many similar and identical wood drying racks available for sale, and are somewhat akin “in use” to the notched strips found to be parts of furniture – ENs 4409. Accordingly the PVC coated dowels are classifiable, as parts of furniture, Heading 9403, HTSUS.
The applicable subheading for the PVC coated dowels, will be 9403.90.7000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Other furniture and parts thereof: Parts: Other: Of wood.” The rate of duty will be free.
The applicable subheading for the bar hooks, and two and three hole leg frames, will be 9403.90.7000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Other furniture and parts thereof: Parts: Other: Of wood.” 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/.
To be eligible for tariff preferences under the North American Free Trade Agreement (NAFTA), goods must be "originating goods" within the rules of origin in General Note 12(b), HTSUS. In this case, to be an "originating good" the PVC coated drying rack must be transformed in the territory of Canada pursuant to General Note 12 (b) (ii) (A) and (B), HTSUS, which states: (A) except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein, and (B) the goods otherwise satisfy the applicable requirements of (r), (s) and (t) where no change in tariff classification is required, and the goods satisfy all other requirements of this note.
In examining whether or not the PVC coated drying rack is transformed in the territory of Canada, the NAFTA tariff shift rules of origin, as provided in General Note 12(t), Chapter 94, Note 4 to the HTSUS, are applicable. The rules read: (A) A change to subheadings 9403.10 through 9403.89 from any other chapter; or (B) A change to subheadings 9403.10 through 9403.89 from subheading 9403.90, whether or not there is also a change from any other chapter, provided there is a regional value content of not less than: (1) 60 percent where the transaction value method is used, or (2) 50 percent where the net cost is used.
An examination of the Bill of Materials for the PVC coated drying rack indicates that the foreign materials of Chinese origin fail to meet the required tariff shift rule of origin, in that the wooden parts are classified in the same chapter as the finished drying rack – both the good and its parts are classified within Chapter 94, HTSUS. Further review of the Bill of Materials appears to indicate that the drying rack does not meet the 50% regional value requirement under the net cost method of calculation. A lack of support documentation was furnished to establish use of the transaction value method and its 60% regional value requirement. Based upon the provided documentation, the PVC coated drying rack is not eligible for NAFTA preferential duty treatment.
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, 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 for the good are set forth in Part 134, Customs Regulations.
19 CFR, Part 102, sets forth the "NAFTA Rules of Origin" for purposes of determining country-of-origin. Section 102.11 sets forth the required hierarchy for determining country of origin. Section 102.11(a) of the regulations states that the 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.
Section 102.20, specific rule by tariff classification, states: for 9403.10-9403.89 – A change to subheading 9403.10 through 9403.89 from any other subheading outside that group, except from subheading 9401.10 through 9403.89, and except from subheading 9401.90 or 9403.90, when that change is pursuant to General Rules of Interpretation 2(a). As both the photos that illustrate the process description and the written process description indicate complete assembly of the wood drying rack in Canada, and the parts of the wood drying rack fall in Subheading 9403.90, HTSUS, which is outside of the range of 9401.10 through 9403.89, the good qualifies for country of origin Canada.
19 CFR, Part 134, in pertinent part, sets forth the “Country of Origin Marking” requirements and exceptions of Section 304 of the Tariff Act of 1930, as amended by 19 U.S. C. 1304, as well as codified in 19 CFR, Part 134. Specific marking requirements for the assembled wood drying rack of Canadian origin are found in 19 CFR 134.43 (e) which states [Where an article is produced as a result of an assembly operation and the country of origin of such article is determined under this chapter to be the county in which the article was finally assembled, such article may be marked, as appropriate, in a manner such as the following: (1) Assembled in (country of final assembly; (2) Assembled in (country of final assembly) from components of (name of country or countries of origin of all components); or (3) Made in, or product of, (country of final assembly)]. Based on this set of requirements: Assembled in Canada; Assembled in Canada from Chinese and Canadian components; and Made in or Product of Canada, all satisfy the marking requirements of 19 CFR, Part 134, for the wood drying rack of Canadian origin.
Each rack within the master box needs to be marked to indicate to the ultimate purchaser in the United States the English name of the country of origin of the article at time of importation into the United States. This marking will be in a conspicuous place as legibly, indelibly, and permanently as the nature of the article will permit – see 19 CFR 134.11.
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 Neil H. Levy at (646) 733-3036.
Sincerely,
Robert B. Swierupski
Director
National Commodity Specialist Division