CLA-2-73:OT:RR:NC:1:117
Craig Schau
International Trade Compliance Manager
Parker Hannifin Corporation
6035 Parkland Blvd.
Cleveland, OH 44124
RE: The tariff classification and NAFTA eligibility of steel tube fitting forgings from Mexico
Dear Mr. Schau:
In your letter dated May 16, 2012 you requested a tariff classification ruling.
The products you intend to import are described as forgings to be finished into steel tube fittings in the U.S. after importation from Mexico. The original forging was manufactured in China and exported to Mexico where you state it underwent finishing operations which included: beveling the ends, cutting threads (thread rolling), center boring the forging, step boring, machining faces, gasket and end faces, shot blasting, heat treating, and plating.
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 Mexico the item is no longer of a solid cross section. It appears to have been drilled, tapered, beveled, threaded and surface finished so that it becomes a finished pipe or tube fitting.
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.
It is the opinion of this office that the finished fittings as imported from Mexico 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.
In addition to classification of the imported fitting blanks from China, you also inquire as to whether the machining in Mexico changes the country of origin of the finished goods for NAFTA purposes to originating NAFTA goods from Mexico. Your latter question is asked with particular reference to the notice of modifications for country of origin determinations for pipe fittings and flanges within Heading 7307 of the Harmonized Tariff Schedule of the United States described in the September 2, 2011 Federal Register publication for 19CFR Part 102 Rules of Origin for Imported Merchandise.
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.
Part 134.1 of 19 CFR regarding country of origin marking directs to Part 102 for NAFTA marking issues. The Federal Register notice referenced pertains only to rules of origin for purposes of 19CFR part 102 which determines NAFTA country of origin for marking purposes. The marking rules do not determine NAFTA eligibility.
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 Mexico has not undergone the required tariff shift for NAFTA eligibility because it remains classifiable within heading 7307. General Note 12, HTSUS, requires a change to heading 7301 through 7307 from any other heading, including another heading within that group. In this case both the blank as imported into Mexico and the fitting as imported into the U.S. remain in the same heading, 7307, and there is not a tariff shift.
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,
Thomas J. Russo
Director
National Commodity Specialist Division