CLA-2-33:OT:RR:NC:1:140
RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of Himalayan Bath Salts from Canada; Article 509
Ms. Jennifer Benjamin
Royal Customs Brokers, Inc., DBA Speed Global Services 2299 Kenmore Ave Buffalo, NY 14207
Dear Ms. Benjamin:
In your letter dated September, 27, 2017, you requested a ruling on the status of Himalayan Bath Salts from Canada under the NAFTA on behalf of Buhbli Organics Inc.
In your request letter you indicated the following pertinent facts:
Buhbli Organics is an organic bath and body product company in Ontario, Canada. They import Himalayan Crystal Salt Granules in rough form in 1 ton totes from Pakistan. The product is entered into Canada under tariff # 2501.00.90.00 as other salt granules. The salt is sorted, cleaned and re-worked to remove metallic substances. It is brought to standard and packaged for retail sale specifically as Bath Salts. All processes and packaging are performed in Canada exclusively.
The finished product is made ready for retail sale in 3.3lb bags and entered into the United States as Bath Salts.
You suggest classification will be under sub-heading 3307.30. We agree. Our determination is based in part on Section VI Note 2 which specifies that:
“Subject to note 1 above, goods classifiable in heading 3004, 3005, 3006, 3212, 3303, 3304, 3305, 3306, 3307, 3506, 3707 or 3808 by reason of being put up in measured doses or for retail sale are to be classified in those headings and in no other heading of the tariff schedule.”
The applicable tariff provision for the Himalayan Bath Salts will be 3307.30.1000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Perfumed bath salts and other bath preparations: Bath salts, whether or not perfumed. The general rate of duty will be 5.8 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 https://hts.usitc.gov/current.
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 non-originating 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.
You indicate your opinion that: “the Himalayan Bath Salts are eligible for NAFTA preference per it meeting the originating criteria of General Note 12 and NAFTA Marking Rules 19 CFR 102.20.” We disagree.
You base your reasoning on your interpretation that the Himalayan Bath Salts, under 3307.30 GN 12(t), require a regional value content of not less than 60 percent where transaction value method is used or 50 percent where the net cost method is used.
You specify that the “non-originating material is brought in under 2501.00 therefore meeting
the shift requirement to chapter 3307.30.” Additionally you provide a calculation for regional value content using transaction value method to justify your determination that the subject merchandise is eligible for the preferential duty rate and marking. However, it is our opinion that you are misreading the intent and the language of the Tariff shift rule that you cite above. Specifically the actual Tariff shift rules in General Note 12(t) which pertains to the instant product indicate:
(A) A change to subheadings 3307.10 through 3307.90 from any other heading, except from headings 3304 through 3306; or
(B) A change to subheadings 3307.10 through 3307.90 from headings 3304 through 3306, (italic emphasis added) whether or not there is also a change from any other heading, provided there is a regional value content of not less than:
(1) 60 percent where the transaction value method is used, or
(2) 50 percent where the net cost method is used.
The RVC content rule that you cite above is triggered when there is a change from Headings 3304 through 3306, to Heading 3307. The instant product represents a change from Heading 2501 to Heading 3307. None of the ingredient material is classifiable in Headings 3304 through 3306. Therefore, it is our opinion that the RVC requirement does not pertain to the instant merchandise, and cannot be used as a basis to determine the Tariff Shift requirement.
In addition 19 CFR 102.1 provides in pertinent part the definition of minor processing as:
(m) Minor processing. “Minor processing” means the following:
(1) Mere dilution with water or another substance that does not materially alter the characteristics of the good;
(2) Cleaning, including removal of rust, grease, paint, or other coatings;
(3) Application of preservative or decorative coatings, including lubricants, protective encapsulation, preservative or decorative paint, or metallic coatings;
(4) Trimming, filing or cutting off small amounts of excess materials;
(5) Unloading, reloading or any other operation necessary to maintain the good in good condition;
(6) Putting up in measured doses, packing, repacking, packaging, repackaging;
(7) Testing, marking, sorting, or grading;
(8) Ornamental or finishing operations incidental to textile good production designed to enhance the marketing appeal or the ease of care of the product, such as dyeing and printing, embroidery and appliques, pleating, hemstitching, stone or acid washing, permanent pressing, or the attachment of accessories notions, findings and trimmings; or
(9) Repairs and alterations, washing, laundering, or sterilizing.
19 CFR 102.11 requires (in pertinent part) that:
(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in §102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
Additionally 19 CFR §102.17 specifies certain “Non-qualifying operations.” Specifically the rule indicates:
A foreign material shall not be considered to have undergone an applicable change in tariff classification specified in §102.20 or §102.21 or to have met any other applicable requirements of those sections merely by reason of one or more of the following:
(a) A change in end-use;
(b) Dismantling or disassembly;
(c) Simple packing, repacking or retail packaging without more than minor processing;
(d) Mere dilution with water or another substance that does not materially alter the characteristics of the material;
It is our opinion that the processing performed on the salts imported from Pakistan do constitute more than minor processing and retail packaging in Canada. Based on the facts provided, the goods described above will not qualify for NAFTA preferential treatment, because they will not meet the requirements of 19 CFR Section 102.20.
The marking statute, 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.
The country of origin marking requirements for a “good of a NAFTA country” are also determined in accordance with Annex 311 of the North American Free Trade Agreement (“NAFTA”), as implemented by section 207 of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat 2057) (December 8, 1993) and the appropriate Customs Regulations.
The Marking Rules used for determining whether a good is a good of a NAFTA country are contained in Part 102, Customs Regulations. The marking requirements of these goods are set forth in Part 134, Customs Regulations. Section 134.1(b) of the regulations, defines “country of origin” as the country of manufacture, production, or growth of any article of foreign origin entering the U.S. 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. (Emphasis added).
Section 134.1(j) of the regulations, 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) of the regulations, 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) of the regulations, 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 of the regulations, sets forth the “NAFTA Marking Rules” for purposes of determining whether a good is a good of a NAFTA country for marking purposes. Section 102.11 of the regulations, sets forth the required hierarchy for determining country of origin for marking purposes.
Applying the NAFTA Marking Rules set forth in Part 102 of the regulations to the facts of this case, we find that the Himalayan Bath Salts, are Country of Origin Pakistan for marking purposes.
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, 799 9th Street N.W. - 7th floor, Washington, DC 20229-1177, along with a copy of this letter.
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 Paul Hodgkiss at [email protected].
Should you wish to request an administrative review of this ruling, submit a copy of this ruling and all relevant facts and arguments within 30 days of the date of this letter, to the Director, Commercial Rulings Division, Headquarters, U.S. Customs and Border Protection, Regulations & Rulings, 90 K Street, N.E. – 10th floor, Washington, DC 20229-1177.
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division