CLA-2-90:OT:RR:NC:N4:405
Melissa Gervais
Luna Fertility Indicator, Inc.
1411 Wellington Crescent
Richmond, British Columbia V7B 1G6
Canada
RE: The tariff classification and country of origin of a fertility kit exported from Canada
Dear Ms. Gervais:
In your letters dated May 17, 2011 and August 20, 2011, you requested a tariff classification and country of origin ruling. A sample was provided.
The Luna Fertility Kit – Baby Steps is a kit specially designed to help women determine the best time to conceive. The kit contains a small handheld magnifier that you refer to as the Luna Saliva Tester, a digital basal thermometer, 5 LH urine ovulation test strips, 2 pregnancy test strips, a cleaning cloth, a pencil, sample charts and an instruction booklet. The contents of the kit are transported in a plastic purple travel case with the Luna logo embossed on front. Included with your submission was a copy of Tariff Classification Advance Ruling TRS 241996, dated March 18, 2010, from the Canada Border Services Agency, which addressed the classification of the Luna Fertility Kit. The letter determined that the kit was classified in Heading 3822, with the view that the essential character of the kit was imparted by the LH urine ovulation test strips. It is the position of this office that Heading 3822 does not apply to the Luna Fertility Kit. First, you indicate that the test strips contain monoclonal antibodies, which would cause them to be classified in Heading 3002. Second, we do not find that the essential character of the kit is imparted by the test strips. There are only 5 ovulation test strips and 2 pregnancy test strips, and they represent a relatively small portion of the total value of the kit per the cost breakdown which you submitted at our request. Once the test strips are used up, the kit would not be disposed of, as the other components can still be used to determine the best time to conceive. A basal thermometer is routinely more accurate than an ordinary fever thermometer. The basal thermometer, which alone represents nearly 20% of the value of the kit, can be used to determine base body temperature to assist in determining when a user is ovulating due to the effect of progesterone on temperature. We find that the basal thermometer equally merits consideration in providing the fertility kit’s essential character in terms of HTSUS General Rule of Interpretation 3(c), compared to the components classified in any other heading that appears earlier in the HTSUS.
The applicable subheading for the Luna Fertility Kit will be 9025.19.8040, Harmonized Tariff Schedule of the United States (HTSUS), which provides for "other" Clinical thermometers, not liquid filled. The rate of duty will be 1.8% ad valorem. In your submission you also inquire about the proper country of origin of the Luna Fertility Kit. The individual components of the kit are made in different countries. The test strips and instruction manuals are products of Canada, the Luna Saliva Tester is a product of the United States, and the thermometer, cleaning cloth, pencil, and travel case are products of China. The components are combined together and assembled into kits in Canada.
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, CBP Regulations (19 C.F.R. 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.1(b), CBP Regulations (19 C.F.R. 134.1(b)), defines "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 this part; however, for a good of a NAFTA country, the NAFTA Marking Rules determine the country of origin.
Section 134.1(j), CBP Regulations (19 C.F.R. 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. (Section 134.1(g), CBP Regulations (19 C.F.R. 134.1(g)), defines a "good of a NAFTA country" as an article for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules, set forth at 19 C.F.R. Part 102.
Section 102.11(a), CBP Regulations (19 C.F.R. 102.11(a)), sets forth the required hierarchy under the NAFTA Marking Rules for determining country of origin for marking purposes. This section states that the country of origin of a good is the country in which: The good is wholly obtained or produced; The good is produced exclusively from domestic materials; or 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. Section 102.1(g), CBP Regulations (19 C.F.R. 102.1(g)), defines a good wholly obtained or produced as including "A good produced in that country exclusively from goods referred to in paragraphs (g)(1) through (g)(10) of this section or from their derivatives, at any stage of production." Because the components of the fertility kits are manufactured in Canada, the United States, and China, the Luna Fertility Kit would not qualify as "a good wholly obtained or produced" in a country. Therefore, the country of origin of the fertility kits may not be determined under section 102.11(a)(1). The next step under the hierarchy is to consider whether the country of origin may be determined according to section 102.11(a)(2). Under this section, the origin of the good may be based on the origin of the materials used to produce the good, provided the good is produced exclusively from domestic materials. Section 102.1(d), CBP Regulations (19 C.F.R. 102.1(d)), defines domestic material as "a material whose country of origin as determined under these rules is the same country as the country in which the good is produced." Because the Luna Fertility Kits are not produced exclusively from domestic materials (i.e., Canadian), the country of origin cannot be determined under section 102.11(a)(2). Analysis must continue to 19 C.F.R. 102.11(a)(3) to determine the country of origin of the fertility kits under the NAFTA Marking Rules. Section 102.11(a)(3) requires that all foreign materials incorporated into the good undergo an applicable change in tariff classification set out in Section 102.20. In the case of the Luna Fertility Kit this does not occur. Not every component of the kit undergoes a change of tariff classification within the requirements of Section 102.20 (specifically the thermometer fails to undergo a tariff shift), thus the country of origin of the good cannot be determined in accordance with this provision. Section 102.11(c) indicates that when the country of origin cannot be determined under the abovementioned methods, and the good is specifically described as a set pursuant to GRI 3, the country of origin of the good is the country or countries of origin of all materials that merit equal consideration for determining the essential character of the good. Following Headquarters Ruling Letter H015361, dated November 2, 2007, we do not consider either Section 102.18(b), which states that, for an essential character determination under Section 102.11, only the material(s) which fail(s) to undergo a tariff shift under Section 120.20 can be considered, or Section 102.19(a), which concerns goods with more than NAFTA country origin under certain circumstances.
Of the components in the Luna Fertility Kit, three merit equal consideration in imparting the essential character of the set. The three in question are the Luna Saliva Tester, the test strips, and the basal thermometer. As such, the countries of origin of the Luna Fertility Kit are the United States, Canada, and China.
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 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 J. Sheridan at (646) 733-3012.
Sincerely,
Robert B. Swierupski
Director
National Commodity Specialist Division