CLA-2-82:OT:RR:NC:1:104
Ms. Misty Gibbins
Pacific Customs Brokers Inc.
P.O. Box 59
Blaine, WA 98231-0059
RE: The tariff classification, country of origin and status under the North American Free Trade Agreement (NAFTA), of an accessory kit for woodworking jigs from Canada; Article 509
Dear Ms. Gibbins:
In your letter dated June 26, 2012, you requested a tariff classification ruling on the status of an accessory kit for woodworking jigs from Canada. You also requested a country of origin and North American Free Trade Agreement (NAFTA) eligibility status determination for this good.
Item ACD24/Accessory Kit is designed for use with the Leigh D4R and all 24” D Series Jigs. It consists of the following articles:
1 – VRSD24 Vacuum Router Support
1 – Bit Set containing:
Through dovetail bits 50-8(1/4”), 60-8(5/16”), 70-8(3/8”), 75-8(7/16”)
Straight router bits 90(11/16”), 100(13/13”), 150(7/16”), 160(1/2”)
Half-blind bits 101-8(10 degrees), 112-8(12 degrees), 128-8(18 degrees)
1 – 8mm collet reducer
1 - Wooden bit storage box
The VRS is designed for use with a hand held router power tool. It cannot be used with a machine tool. The VRS supports the router and collects the dust/chips created by the cutting action of the router bits and hand held router. The article is manufactured in Canada from components of Canadian, US, Chinese and Taiwanese origin. Manufacturing steps performed in Canada include (1) sawing an aluminum extrusion of US origin to the desired specifications, (2) assembling magnets (Chinese and Canadian) to Canadian end caps and (3) assembling end caps and Canadian washers to the extrusion. Accompanying hardware is of US (brackets), Taiwanese (brackets) and Canadian origin (washers, screws, allen key). Included with the VRS are router follower rails of Taiwanese origin and ABS hose adaptors and collector of Canadian origin.
The cutting blades of the bits are made from tungsten carbide. The function of the collet reducer is to reduce the working diameter of the 1/2” collet supplied with the router to either 8mm (Part #172-8) or 3/8” (Part #172-375) to accommodate the router bits in the set. The collet reducer is made from mild steel/C12 L14. The router bits and router bit box are manufactured in Taiwan and exported directly to Canada. In Canada, they are packaged together with the VRS as a kit ready for retail sale directly to users without repacking. You state that the label on the retail box “predominantly features the VRS with the router bits featured as secondary”. However, submitted pictures of the labels show that the phrase “Two Great Accessories” is repeated several times on the retail box along with pictures of both the VRS and router bits. There is no indication that the router bits are considered secondary in the marketing information.
In your original submission dated April 27, 2012, you suggested that the kit be classified in subheading 8466.92.5010, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Parts and accessories suitable for use solely or principally with the machines of headings 8456 to 8465, including work or tool holders, self-opening dieheads, dividing heads and other special attachments for machine tools; tool holders for any type of tool for working in the hand: Other: For machines of heading 8465: Other …Of woodworking machines”. The language of this subheading specifically limits the provision to articles designed for machines of heading 8465. Heading 8465 provides for machine tools. You indicated that the accessory kit in question is designed for use with a hand held router power tool. Power tools of that type are classified in heading 8467, HTSUS, which provides for “Tools for working in the hand, pneumatic, hydraulic or with self-contained electric or nonelectric motor, and parts thereof”. As the power tool with which the accessory kit is used is not classifiable in heading 8465, HTSUS, classification of the accessory kit itself in subheading 8466.92.5010, HTSUS, would not be appropriate. In addition, classification in heading 8467, HTSUS, would not be appropriate as the heading does not encompass accessories.
General Rule of Interpretation (GRI) 1, Harmonized Tariff Schedule of the United States (HTSUS),
states in part that for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes. Goods that are, prima facie, classifiable under
two or more headings, are classifiable in accordance with GRI 3, HTSUS. GRI 3(a) states in part
that when two or more headings each refer to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific, even if one heading gives a more precise description
of the good.
The instant kit consists of at least two different articles that are, prima facie, classifiable in
different subheadings. It consists of articles put up together to carry out a specific activity
(i.e., woodworking). Finally, the articles are put up in a manner suitable for sale directly to users
without repacking. Therefore, the good in question is within the term "goods put up in sets for
retail sale." GRI 3(b) states in part that goods put up in sets for retail sale, which cannot be classified
by reference to 3(a), are to be classified as if they consisted of the component which gives them their essential character.
However, it is the opinion of this office since the VRS and the bits are of equal importance, neither lends the product its essential character. Therefore, the classification of the accessory kit is based on the applicable heading which appears last in the HTSUS, in accordance with GRI 3(c).
The applicable tariff provision for Item ACD24/Accessory Kit as described above will be 8207.70.3040, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Interchangeable tools for handtools, whether or not power-operated, or for machine-tools (for example, for pressing, stamping, punching, tapping, threading, drilling, boring, broaching, milling, turning or screwdriving), including dies for drawing or extruding metal, and rock drilling or earth boring tools; base metal parts thereof: Tools for milling, and parts thereof: With cutting part containing by weight over 0.2 percent of chromium, molybdenum, or tungsten or over 0.1 percent of vanadium … Router bits for wood working. The general rate of duty will be 5 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/.
In your submission you have asked for a country of origin and NAFTA eligibility determination. 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.
In your letter you have stated that the router bits and the router box are manufactured in Taiwan and the VRS is manufactured in Canada from materials from various countries. The individual components for each kit are then packaged together in Canada in one box for retail sale. Customs Federal Regulations (CFR) 102.17(c) states, in part:
“A foreign material shall not be considered to have undergone an applicable change in tariff classification specified in CFR 102.20 or CFR 102.21 or to have met any other applicable requirement of those sections merely by reason of one or more of the following:
…
(c) Simple packing, repacking or retail packaging without more than minor processing.”
This office acknowledges the fact that the VRS itself is manufactured in Canada from Canadian and non-originating components. However, the procedure of packaging the Taiwanese router bits/box with the VRS together in Canada is considered simple packing which prepares the kits ready for retail sale. As such, all the individual components of the kit do not undergo the applicable change in tariff classification that is required to make the kits eligible for NAFTA preferential treatment. As such, Item ACD24/Accessory Kit does not qualify for preferential treatment under the NAFTA.
Regarding your request for a country of origin determination, 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 this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin.
Section 134.1(j), C.F.R., 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) C.F.R., 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. Section 134.45(a)(2) C.F.R., provides that a "good of a NAFTA country" may be marked with the name of the country of origin in English, French or Spanish.
Part 102, CBP Regulations (19 C.F.R. Part 102), sets forth the NAFTA Marking Rules. Section 102.11 (19 C.F.R. §102.11) provides a required hierarchy for determining the country of origin of a good for marking purposes. The required hierarchy must be applied in sequential order. Sections 102.11(a) and (b) do not apply to the facts presented in this case because the components of the kit are neither wholly obtained or produced exclusively from “domestic” (Canadian, in this case) materials nor is there a single material that imparts the essential character of the kit.
As stated in Section 102.11(c), “Where the country of origin cannot be determined under paragraph (a) or (b) of this section and the good is specifically described in the Harmonized System as a set or mixture, or classified as a set, mixture or composite good pursuant to General Rule of Interpretation 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.” In this case, the good is being classified as a set pursuant to GRI 3(c). The materials that merit equal consideration for determining the essential character of the good are the VRS and the router bits. Applying the NAFTA Marking Rules set forth in Part 102, CFR, to the facts of this case, we find that Item ACD24/Accessory Kit is of Canadian and Taiwanese origin.
This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 C.F.R. 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 Patricia O’Donnell at (646) 733-3011.
Sincerely,
Thomas J. Russo
Director
National Commodity Specialist Division