CLA-2-73:OT:RR:NC:1:117
Mr. Craig M. Schau
International Trade Compliance Manager
6035 Parkland Blvd.
Cleveland, OH 44124
RE: The tariff classification of steel tube fitting body blanks and finished fittings from China and Canada
Dear Mr. Schau:
In your letter dated July 28, 2010 you requested a tariff classification ruling.
The items you intend to import are described as alloy steel tube fitting body blanks from China at initial importation. You state that some of these forgings are exported to Canada from the U.S. for further working. In Canada they will be drilled, machined, cut, turned, threaded, plated or coated. The remainder of the forgings will be processed in the same manner but in the U.S. rather than in Canada. Pictures were provided of the fitting blanks as imported from China and the finished fittings after processing in Canada.
The fitting blanks as imported from China are L shaped items, roughly equal in length on both arms of the L which are circular with a solid cross section. It has the shape of a pipe fitting and appears to be made for that purpose. The joint of the L is curved and flat. After machining in Canada the item is no longer of a solid cross section. It appears to have been drilled, tapered, threaded and surface finished so that it becomes a finished pipe or tube fitting. The fittings are manufactured to a high end market for very high pressure applications in hydraulics, aerospace and related uses requiring interior processing of the flow path to a mirror finish and threading that requires a lower level of torque for assembly and tightening.
In addition to classification of the imported fitting blanks from China, you also inquire as to whether the machining in Canada changes the country of origin of the steel fitting blanks from China to Canada, as well as the country of origin determination for marking purposes. You further inquired as to whether the finished goods as imported from Canada would be considered originating goods for NAFTA purposes. You also specified that you were not requesting information regarding special provisions under heading 9802, Harmonized Tariff Schedule of the United States (HTSUS).
Classification under the HTSUS is governed by the General Rules of Interpretation (GRI's). GRI 1 provides, in part, that "classification shall be determined according to the terms of the headings and any relative section or chapter notes." GRI 2(a) provides that any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also include a reference to that article complete or finished (or failing to be classified as complete or finished by virtue of this rule), entered unassembled or disassembled. Explanatory Note (EN) II under GRI 2(a) in the Harmonized Commodity Description and Coding System provides guidance on the application of GRI 2(a), stating that the provisions of this rule also apply to blanks unless these are specified in a particular heading. The term “blanks” means an article, not ready for direct use, having the approximate shape or outline of the finished article or part, and which can only be used, other than in exceptional cases, for completion into the finished article or part.
Therefore, as imported from China it is the opinion of this office that the fitting blanks are classifiable in 7307.99.3000, HTSUS, which provides for tube or pipe fittings (for example, couplings, elbows, sleeves), of iron or steel: other: other: not machined, not tooled and not otherwise processed after forging: of alloy steel (except stainless steel). The rate of duty is 3.2 percent ad valorem.
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; or
(ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that--
(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, or
(B) the goods otherwise satisfy the applicable requirements of subdivisions (r), (s) and (t) where no change in tariff classification is required, and the goods satisfy all other requirements of this note; or
(iii) they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials; or
(iv) they are produced entirely in the territory of Canada, Mexico and/or the United States but one or more of the nonoriginating materials falling under provisions for “parts” and used in the production of such goods does not undergo a change in tariff classification because--
(A) the goods were imported into the territory of Canada, Mexico and/or the United States in unassembled or disassembled form but were classified as assembled goods pursuant to general rule of interpretation 2(a), or
(B) the tariff headings for such goods provide for and specifically describe both the goods themselves and their parts and is not further divided into subheadings, or the subheadings for such goods provide for and specifically describe both the goods themselves and their parts, provided that such goods do not fall under chapters 61 through 63, inclusive, of the tariff schedule, and provided further that the regional value content of such goods, determined in accordance with subdivision (c) of this note, is not less than 60 percent where the transaction value method is used, or is not less than 50 percent where the net cost method is used, and such goods satisfy all other applicable provisions of this note.
Based on submitted information the merchandise does not qualify for preferential treatment under the NAFTA as an originating good because none of the above requirements are met.
The NAFTA Marking Rules will determine the country of origin for NAFTA purposes.
Section 134.1(j), CBP Regulations (19 CFR 134.1(j)), provides that the "NAFTA Marking Rules" are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. A "good of a NAFTA country" is defined in 19 CFR 134.1(g) as an article for which the country of origin is Canada, Mexico, or the U.S. as determined under the NAFTA Marking Rules set out at 19 CFR Part 102.
Section 102.11, CBP Regulations (19 CFR 102.11), sets forth the required hierarchy for determining whether a good is a good of a NAFTA country for marking purposes. The following provisions must be applied sequentially, beginning with part (a)(1): The following rules shall apply for purposes of determining the country of origin of imported goods other than textile and apparel products covered by §102.21: (a) 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 applicable requirements of these rules are satisfied. Sections 102.11(a)(1) and 102.11(a)(2) do not apply because the steel fittings are neither wholly obtained, nor produced exclusively from domestic materials. It is therefore necessary to apply §102.11(a)(3). The relevant §102.20 rules for this heading requires under HTSUS and Tariff shift and/or other requirements: A change to heading 7301 through 7307 from any other heading, including another heading within that group.
As stated above, the applicable heading for the forging blanks imported from China is heading 7307, HTSUS. The finished fittings are also classified in heading 7307, HTSUS. Therefore, the Chinese forging finished into the fitting as imported from Canada has not undergone the required tariff shift for NAFTA eligibility because it remains classifiable within heading 7307.
Since the country of origin cannot be determined under paragraph (a) of section 102.11, section 102.11(b) must be looked to under the marking rules of origin hierarchy. Under (b), the country of origin of the good is the: (1) country or countries of origin of the single material that imparts the essential character of the good. In our opinion the fitting forging made in China imparts the essential character to the good. The issue of fungibility under 102.11 (b) (2) is also inapplicable. Since the fitting is neither a mixture, set nor a composite good, Section 102.11 (c) is also inapplicable.
Therefore the analysis of the NAFTA eligibility and marking need not proceed to the remaining hierarchial bases for NAFTA rules of origin. The fittings after processing in Canada remain as a product of China with China as country of origin and marking required to be stated as made in China.
It is the opinion of this office that the finished fittings are classifiable in 7307.92.9000, HTSUS, which provides for tube or pipe fittings (for example, couplings, elbows, sleeves), of iron or steel: threaded elbows, bends and sleeves: other. The rate of duty is 6.2 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 Mary Ellen Laker at (646) 733-3020.
Sincerely,
Robert B. Swierupski
Director
National Commodity Specialist Division