CLA-2-39:OT:RR:NC:N4:421
Ms. Danielle Adair
Universal Logistics Inc.
125 Commerce Valley Drive West, Suite 750
Thornhill, Ontario, Canada L3T 7W4
RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA) of pleated window shade material from Canada; Article 509
Dear Ms. Adair:
In your letter dated February 25, 2013, on behalf of MW Canada Ltd., you requested a ruling on the status of a window shade component from Canada under the NAFTA.
The product is described as pleated window shade material. It is produced from polypropylene plastic sheeting imported from the United States. The sheeting as imported into Canada measures 72.9 inches in width by 500 yards in length. In Canada the sheeting is cut and run through a machine that pleats the film using heat and pressure. No hardware is attached to it. Once it is pleated it is packaged and shipped back to the United States as pleated window shade material. After it is imported into the United States, the material is further worked in a variety of ways, e.g., it may be attached to a wood or metal head rail and foot rail and put behind a woven fabric to form a window treatment.
You state that you believe the polypropylene sheeting as shipped from the United States into Canada is classifiable in subheading 3921.90 of the Harmonized Tariff Schedule of the United States (HTSUS). Tariff classification under the HTSUS is governed by the principles set forth in the General Rules of Interpretation. GRI 1 provides that classification shall be determined according to the terms of the headings and any relative section or chapter notes. The Explanatory Notes to the Harmonized Commodity Description and Coding System constitute the official interpretation of the HTSUS at the international level.
Heading 3921 provides for plastic sheeting that is either of cellular construction or combined with materials other than plastics. Heading 3920 provides for plastic sheeting that is noncellular and not reinforced, laminated, supported or similarly combined with materials other than plastics. Cellular construction is defined in the Explanatory Notes as plastics having many cells, either open, closed or both, dispersed throughout their mass. They include foam plastics, expanded plastics and mircoporous plastics. They are produced by a variety of methods, generally by incorporating a gas into plastics. The polypropylene sheeting is of noncellular construction and is not combined with other materials, so classification falls in heading 3920 rather than heading 3921 of the tariff.
You suggest classification of the pleated sheet as imported into the United States in subheading 3925.30 of the HTSUS, which provides for builders’ ware of plastics, not elsewhere specified or included: shutters, blinds (including venetian blinds) and similar articles and parts thereof. Subheading 3925.30 applies only to articles not provided for in earlier headings of chapter 39. Legal note 10 to chapter 39 directs that “In headings 3920 and 3921, the expression ‘plates, sheets, film, foil and strip’ applies only to plates, sheets, film, foil and strip (other than those of chapter 54) and to blocks of regular geometric shape, whether or not printed or otherwise surface-worked, uncut or cut into rectangles (including squares) but not further worked (even if when so cut they become articles ready for use).” Customs Headquarters ruled, in HQ 087993, dated December 20, 1990, that multiple folding does not alter the character of sheet and does not constitute “further working” that would preclude classification of the folded sheet in heading 3920.
The applicable tariff provision for the pleated polypropylene sheet will be 3920.20.0050, HTSUS, which provides for other plates, sheets, film, foil and strip, of plastics, noncellular and not reinforced, laminated, supported or similarly combined with other materials: of polymers of propylene…other. The general rate of duty will be 4.2 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/.
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.
General Note 12(t)/39.1, which is applicable to the polypropylene sheeting, requires a change to headings 3901 through 3920 from any other heading, including another heading within that group, 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.
Based on the facts provided, the goods described above qualify for NAFTA preferential treatment, because they will meet the requirements of HTSUS General Note 12(b)(ii). No tariff shift is required of the polypropylene sheeting manufactured in the United States and pleated in Canada, and any non-originating resin pellets or other components used in the manufacture of the polypropylene sheeting in the United States have undergone the tariff shift specified in General Note 12(t)/39.1. The goods will therefore be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements, including the Regional Value Content requirements specified in General Note 12(t)/39.1.
This ruling letter has not addressed the Regional Value Content (RVC) of the subject goods. If you desire a ruling regarding the RVC of your goods and their eligibility for NAFTA preferential treatment, provide the information noted in Section 181.93(b) of the Customs Regulations (19 CFR 181.93(b)), to U.S. Customs and Border Protection, Regulations & Rulings, 90 K Street, NE, Washington, DC 20229-1177, along with a copy of this letter. That information should include all of the cost figures used to determine the percentages of originating and non-originating components. Note that for any resin said to originate in the United States, you must also indicate the country of origin of all precursor materials and provide the costs of each processing step in converting those materials into resin pellets.
You ask whether the country of origin of the pleated material is Canada. Section 134.1(b), Customs Regulations (19 CFR 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 will determine the country of origin.
Section 134.1(j), Customs 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. Section 134.1(g), Customs Regulations (19 CFR 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 CFR Part 102. 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 marking purposes. This section states that 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.
Section 102.1(e), Customs Regulations (19 CFR 102.1(e)), defines "foreign material" as "a material whose country of origin as determined under these rules is not the same country or origin as the country in which the good is produced." Because the pleated material is processed in Canada of U.S. material, the pleated material is neither wholly obtained or produced, nor produced exclusively from domestic materials. Accordingly, neither 19 CFR 102.11(a)(1) or 102.11(a)(2) may be used to determine the origin of the finished articles, and analysis must continue to 19 CFR 102.11(a)(3).
Pursuant to 19 CFR 102.11(a)(3), the country of origin of a good 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, and satisfies any other applicable requirements of that section. In the case before us, because the pleated material imported into the U.S. from Canada is classified in heading 3920, the change in tariff classification must be made in accordance with section 102.20(g), Section VII: Chapters 39 through 40, heading 3920.10-3921.90, HTSUS, which requires a change to any other good of subheading 3920.10 through 3921.90 from any other subheading, including another subheading within that group.
In the case before us, there is no applicable change in tariff classification within the requirements of section 102.20, and the country of origin of the good may not be determined in accordance with this provision. Because 19 CFR 102.11(a) (incorporating section 102.20), is not determinative of origin, the next step is section 102.11(b), Customs Regulations, which states, in part, that except for a good that is specifically described in the Harmonized Tariff Schedule as a set, or is classified as a set pursuant to General Rule of Interpretation 2, where the country of origin cannot be determined under paragraph (a), the country of origin of the good is the country of origin of the single material that imparts the essential character of the good. The U.S. origin sheeting is the single material which imparts the essential character to the finished good pursuant to section 102.18(b)(iii). Accordingly, for country of origin marking purposes, the country of origin of the pleated material is the United States.
However, the NAFTA Preference Override set forth in 19 CFR 102.19 is applicable to the subject merchandise. Specifically, 19 CFR 102.19(b) states that if the country of origin of a good which is originating is determined to be the United States and that good has been exported from, and returned to, the United States after having been advanced in value or improved in condition in another NAFTA country, the country of origin of such good for Customs duty purposes is the last NAFTA country in which that good was advanced in value or improved in condition.
Based on the facts presented, the pleated material is an originating good under NAFTA as long as the RVC is met. It has been determined under section 102.11(b) to be a good of U.S. origin. Because the articles were returned to the U.S. after having been advanced in value or improved in condition in Canada by the cutting and pleating operations, the country of origin of the pleated material for Customs duty purposes is Canada, pursuant to 19 CFR 102.19(b).
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 Joan Mazzola at (646) 733-3023.
Sincerely,
Thomas J. Russo
Director
National Commodity Specialist Division