CLA-2-44:OT:RR:NC:1:230
Mr. Lou Vanoyen
Birchland Plywood-Veneer Ltd.
12564 HWY 17
Thessalon, ON P0R 1L0
CANADA
RE: The country of origin and classification of plywood blanks
Dear Mr. Vanoyen:
In your letter, dated May 15, 2017, you requested a binding ruling for classification, country of origin for marking purposes, and applicability of the North American Free Trade Agreement (NAFTA). The ruling was requested on “plywood blanks”. Product and manufacturing information, as well as samples, were submitted for our review.
The product in question is a seven layer panel consisting of five plies of poplar wood and two outer plies of medium density fiberboard (MDF). The panel measures approximately 17mm in thickness, and no ply exceeds 6mm in thickness. The grain of each of the five poplar plies runs at an angle to that of the subsequent plies. The face and back of the panel are each overlaid with a layer of MDF measuring 1mm-2mm in thickness. The MDF obscures the grain of the face and back plies.
The Explanatory Notes (ENs) to the Harmonized System for heading 4412 specifically define “plywood” as panels “consisting of three or more sheets of wood glued and pressed one on the other and generally disposed so that the grains of successive layers are at an angle.” The instant panels, with their core five plies so glued and oriented, meet this definition. The MDF outer plies meet the definition of “surface covering” as defined in Additional U.S. Note 1(c) to Chapter 44 of the Harmonized Tariff Schedule of the United States (HTSUS):
The term "surface covered," as applied to the articles of headings 4411 and 4412, means that one or more exterior surfaces of a product have been treated with creosote or other wood preservatives, or with fillers, sealers, waxes, oils, stains, varnishes, paints or enamels, or have been overlaid with paper, fabric, plastics, base metal, or other material.
The MDF is a surface covering which obscures the grain of the front and back of the panel.
You suggest that the plywood blanks are classifiable in subheading 4412.31.51, HTSUS (4412.31.52, 2017 HTSUS). We disagree. This subheading provides for plywood, with no ply exceeding 6mm in thickness, with at least one outer ply of tropical wood, and which is not surface covered, or is surface covered with a clear or transparent material that does not obscure the grain of the wood. The instant plywood consists of five plies of poplar wood, which is not a tropical wood. The panels are surface covered, but they are not covered with a clear or transparent material.
The applicable subheading for the plywood blanks will be 4412.32.5700, HTSUS, which provides for Plywood, veneered panels and similar laminated wood: Other plywood consisting solely of sheets of wood (other than bamboo), each ply not exceeding 6 mm in thickness: Other, with at least one outer ply of nonconiferous wood: Not surface covered, or surface covered with a
clear or transparent material which does not obscure the grain, texture or markings of the face
ply: Other. The rate of duty will be 8 percent ad valorem.
You present a set of circumstances wherein the plywood blanks will be manufactured in China and will be shipped to Canada where veneers of various species of wood will be applied to the front and back of each panel. You state that the completed panels will be shipped to the United States or elsewhere in North America. We note that the plywood blanks and the finished panels will both be classified in heading 4412, HTSUS. The manufacturing in Canada does not effect a change of heading. Because there is manufacturing completed in Canada, we consider North American Free Trade Agreement (NAFTA) rules.
General Note 12, HTSUS, incorporates Article 401 of the NAFTA into the HTSUS. General Note 12(a)(i) provides, in pertinent part:
(a) Goods originating in the territory of a party to the North American Free Trade Agreement (NAFTA) are subject to duty as provided herein. For the purposes of this note--
(i) Goods that originate in the territory of a NAFTA party under the terms of subdivision (b) of this note and that qualify to be marked as goods of Canada under the terms of the marking rules set forth in regulations issued by the Secretary of the Treasury (without regard to whether the goods are marked), and goods enumerated in subdivision (u) of this note, when such goods are imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appears in the "Special" subcolumn followed by the symbol "CA" in parentheses, are eligible for such duty rate, in accordance with section 201 of the North American Free Trade Agreement Implementation Act.
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—
(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;
Subdivision (t) states that, in order to be subject to NAFTA, the manufacturing in a NAFTA country must result in a change as follows: A change to headings 4401 through 4421 from any other heading, including another heading within that group. Because the plywood blanks from China are classifiable in heading 4412, HTSUS, and after manufacturing in Canada, are still classifiable in heading 4412, HTSUS, the rule is not met; the panels therefore do not qualify for NAFTA preferential treatment. The country of origin for duty purposes in China.
With regard to country of origin for marking of the plywood blanks, 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, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Pursuant to 19 CFR Section 134.1(b), the country of origin is the country of manufacture, production or growth of any article of foreign origin entering the U.S. Further work or material added to a foreign article in the United States must effect a substantial transformation in order to render the final product a good of the U.S. No operations take place in the U.S. However, the panels are manufactured in part in a NAFTA country, and thus, the NAFTA Rules of Origin (set forth in 19 CFR Part 102) will determine the country of origin for marking purposes.
Section 102.20 provides that, for goods of heading 4412, HTSUS, the manufacturing in a NAFTA country must result in a change to surface-covered plywood of heading 4412 from any other plywood that is not surface-covered or is surface-covered only with a clear or transparent material which does not obscure the grain, texture, or markings of the face ply. The plywood blanks are surface-covered upon entry into Canada and are manufactured into a product that is not surface- covered. This is the opposite of the origin rule, and therefore the rule is not met. Therefore, the country of origin of the plywood blanks, for marking purposes, is China.
In summary, the country of origin for duty purposes is China. Therefore, the duty rate for the goods entered from Canada into the United States will be the rate for goods imported from China. The country of origin for marking purposes is also China. The plywood blanks shall be marked with China as the country of origin.
The instant product may be subject to antidumping duties or countervailing duties for imports of hardwood plywood from the People’s Republic of China. Written decisions regarding the scope of AD/CVD orders are issued by the Import Administration in the Department of Commerce and are separate from tariff classification and origin rulings issued by Customs and Border Protection. You can contact them at http://www.trade.gov/ia/ (see Contact Information in the lower left corner). For your information, you can view a list of current AD/CVD cases at the United States International Trade Commission website at http://www.usitc.gov (click on “Antidumping and countervailing duty investigations”), and you can search AD/CVD deposit and liquidation messages using the AD/CVD Search tool at http://addcvd.cbp.gov/. 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 the World Wide Web at https://hts.usitc.gov/current.
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 Laurel Duvall at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division