CLA-2-87:OT:RR:NC:N2:206
Steve Clyde
Atty-In-Fact
Axxess International Inc.
3041 Commerce Drive, Suite A-1
Fort Gratiot, MI 48059
RE: The tariff classification of a Brake Kit from Canada.
Dear Mr. Clyde,
In your letter dated January 5, 2018, you requested a tariff classification ruling, NAFTA eligibility, and Country of Origin and Marking determination on behalf of your client, Macpek Inc.
The item under consideration has been identified as a Brake Kit, containing components that comprise a mounted brake lining. You state in your request that the kit will be used for motor vehicles of heading 8704, Harmonized Tariff Schedule of the United States (HTSUS), and describe each component as follows:
Drum Brake Lining (part number L7335), which is a principal part that presses/expands against the inside of the brake “shoe”. The country of origin of the lining is the United States.
Drum Brake “Shoe” Core (part number DS73) holds the drum brake lining, and is made in Canada.
Drum Brake Hardware (part number HK341) consists of return springs, hold down pins and clips. The country of origin is China.
Drum Brake Rivets (part number R109), which are affixed to the lining, are made in Canada.
Box (part number BB3) is the packaging holding the entire assembly and made in Canada.
You also provided values for each of the above-mentioned goods and the total value of the kit.
The applicable subheading for the Brake Kit will be 8708.30.5040, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Parts and accessories of the motor vehicles of headings 8701 to 8705: Brakes and servo-brakes; parts thereof: For other vehicles: Mounted brake linings.” The general duty rate will be 2.5% ad valorem.
General Note 12, HTSUS, incorporates Article 401 of NAFTA into the HTSUS. General Note 12(a)(i) provides, in pertinent part: (ii) 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), 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 NAFTA Implementation Act. Accordingly, the imported product will be eligible for the “Special” “CA” rate of duty provided it is a NAFTA “originating” good under General Note 12(b), HTSUS, and qualifies to be marked as a product of Canada under the NAFTA Marking Rules. General Note 12(b), HTSUS, provides, in pertinent part: 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.
The parts in the kits were not produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials because it includes Chinese-origin parts. The de minimis rule set forth in GN 12(f), HTSUS, provides that if the non-originating materials used in the production of the good that do not undergo an applicable change in tariff classification set out in GN12(t), or the regional content requirement is not satisfied, and the non-originating materials are not more than 7 percent of the transaction value of the good, adjusted to an F.O.B. basis or if transaction value is not acceptable, no more than 7 percent of the total cost of the good, the good shall be considered originating. In this case, the non-originating materials are less than 6% percent of the transaction value of the good. Therefore, the bake kits would be originating goods pursuant to the de minimis rule set forth in GN 12(f), HTSUS.
In your submission you inquire about the country of origin marking of the Brake Kits. Per the information provided, the components of the kits are produced in a variety of countries, such as the United States, Canada and China. The myriad components are combined with one another in Canada, and packaged together to form the complete mounted brake linings.
The kit is processed in Canada prior to being imported into the United States. Since Canada is defined under 19 CFR 134.1(g) as a NAFTA country, we must apply the NAFTA Marking Rules in order to determine if the goods are subject to the NAFTA marking requirements. Part 102 of the regulations sets forth the NAFTA Marking Rules. Section 102.11 of the regulations sets forth the required hierarchy for determining country of origin for marking purposes. Section 102.11(a) 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 as set out in section 102.20 and satisfies any other applicable requirements of that section. 19 CFR 102.11(b) provides, “Except for a set that is specifically described in the Harmonized system as a set, or is classified as a set pursuant to General Rule of Interpretation 3, where the country of origin cannot be determined under paragraph (a) of this section: (1) The country of origin of the good is the country or countries of origin of the single material that imparts the essential character to the good…” Sections 102.11(a)(1), 102.11(a)(2), 102.11(a)(3), and 102.11(b)(1) do not apply to the Brake Kit. Since the country of origin of the kit cannot be determined pursuant to 19 CFR 102.11(a) or (b), the NAFTA preference override set forth in 19 CFR 102.19 is triggered. The provision set forth in 19 CFR 102.19(a) provides that if a good is originating under the NAFTA as in this case, and not determined under 19 CFR 102.11(a),102.11(b), or 19 CFR 102.21 to be a good of a single NAFTA country, the country of origin is the last NAFTA country in which that good underwent production other than minor processing, provided that a Certificate of origin has been completed and signed for the good. In this case, the brake “shoe”, rivets and the box are produced in Canada, and the kit is packaged together in Canada. The total Canadian processing constitutes more than minor processing. Since production last occurs in Canada, the brake kits qualify to be marked as goods of Canada and the “CA” rate of duty is applicable. The imported Brake Kit described in this case is an originating good under the NAFTA pursuant to the de minimis rule set forth in GN 12(f), HTSUS. Pursuant to 19 CFR 102.19(a), the country of origin for marking purposes is Canada, provided a certificate of origin is completed and signed for the good, and the Center Director is satisfied with documentary requirements for each individual component set forth in Section 102.
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, please contact National Import Specialist Liana Alvarez at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division