CLA-2-85:OT:RR:NC:N1:109
Ms. Carolyn Leski
Post Entry Supervisor
BCB International, Inc.
1010 Niagara Street
Buffalo, NY 14213
RE: The tariff classification, country of origin, and status under the North American Free Trade Agreement (NAFTA) of a GET Green System from Canada
Dear Ms. Leski:
In your letter dated September 15, you requested a tariff classification, country of origin ruling, and the application of a Trade Program or Agreement (NAFTA) on behalf of your client, Allanson International, Inc.,
The article in question is a GET Green System. The GET Green System is a magnetic hydrocarbon treatment device, which is placed on gas pipes to detect any metal fragments in the fuel that runs through the pipes and attracts the metal fragments to the walls of the pipes, allowing the fuel to flow cleaner and lower the carbon monoxide in any gas burning appliance.
You indicate that the GET Green System will be manufactured in Canada, which is a NAFTA country, from magnetic blocks from China and other components from Canada. The magnetic blocks are ceramic (ferrite) magnetic blocks composed of strontium carbonate and iron oxide. They are anisotropic in nature and mounted on 20 gauge steel plates with an adhesive tape. They are then dipped in a plastisol coating or placed in a plastic housing.
You suggested Harmonized Tariff Schedule of the United States (HTSUS) subheading 8505.90.800 which provides for “Permanent magnets and articles intended to become permanent magnets after magnetization: Other, including parts: Other” as the classification of the GET Green System. However, the GET Green System is not a part of a permanent magnet, but rather it is a complete magnetic hydrocarbon treatment device, which not only contains a permanent magnet, but also executes the function of a permanent magnet, in that it detects metal fragments from fuel and attracts it to the walls of the pipes that carry the fuel. As such, it more specifically provided for under HTSUS subheading 8505.19.30 as a “Permanent magnet: Other: Other.
The applicable subheading for the GET Green System will be 8505.19.3000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Permanent magnets and articles intended to become permanent magnets after magnetization: Other: Other.” The general rate of duty will be 4.9 percent ad valorem.
With regard to the country of origin of the GET Green System, Section 102.11, Customs Regulations (19 CFR 102.11), sets forth the required hierarchy for determining whether a good is a good of a NAFTA country for the purposes of country of origin marking of imported goods. Paragraph (a) of this section provides that the country of origin of a good is the country in which (1) the good is wholly obtained or produced, or (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 of the regulations.
"Foreign material" is defined in 19 CFR 102.1(e) as a material whose country of origin as determined under these rules is not the same country as the country in which the good is produced. Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because the GET Green System is manufactured from Chinese and Canadian materials and therefore is neither wholly obtained or produced, nor produced exclusively from domestic materials. Since an analysis of sections 102.11(a)(1) and 102.11(a)(2) will not yield a country of origin determination, we look to section 102.11(a)(3). Section 102.11(a)(3) provides that the country of origin is the country in which each foreign material incorporated in that good undergoes an applicable change in tariff classification as set forth in 19 CFR 102.20. Section 102.11(a)(3) sets forth that in order for foreign material to undergo a change in tariff classification there would have to be a change in tariff classification of the foreign material to subheading 8505.11 through 8505.20 from any other subheading, including another subheading within that group. The foreign material is the ceramic (ferrite) magnetic blocks from China. These magnetic blocks themselves are classified in subheading 8505.19.3000. As such, they do not make the applicable change in tariff classification as set forth in Section 102.11(a)(3) because they are classified within the same subheading as the GET Green System. Next, we advance to Section 102.11(b)(1) to assist in determining the country of origin of the Get Green System. Section 102.11(b)(1) states that the country of origin of the good is the country or countries of origin of the single material that imparts the essential character to the good. The ceramic (ferrite) magnetic blocks impart the essential character of the GET Green System because it is the magnetic properties of the magnetic blocks that enable the system to detect metal fragments within the fuel and to attract the metal fragments to the walls of the pipes that the fuel runs through, thus allowing the fuel to flow cleaner and lower carbon monoxide on any gas burning appliance. Therefore, the country of origin of the GET Green System is China, which is the country of manufacture of the ceramic (ferrite) magnetic blocks.
In determining whether the GET Green System is eligible for NAFTA preferential treatment we refer to subdivision (r), (s), and (t) of General Note 12 (b) (ii) (A), [specifically GN 12 (b) (ii) (A) (t) Chapter 85, Chapter rule 5, 9. (A) & B)], which states that the non-originating goods must undergo (A) a classification change to subheadings 8505.11 through 8505.20 from any other heading or (B) a change in subheadings 8505.11 through 8505.20 from subheadings 8505.90, whether or not there is also a change from any other heading, provided there is a regional value content of not less than 60 percent where the transaction value method is used, or 50 percent where the net cost method is used. The ceramic (ferrite) magnetic blocks do not meet either of these two rules because the ceramic (ferrite) magnetic blocks themselves are classified in 8505.19.3000 and therefore do not make the required shift in tariff classification because they are not from a heading other than heading 8505 nor have they changed from classification within 8505.90 to a classification within subheadings 8505.11 through 8505.20, as a result there is no need to examine regional value content. Based on the results of this analysis, the GET Green System is not eligible for preferential duty treatment under NAFTA.
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