CLA-2-90:OT:RR:NC:N1:105
Gilberto Arias
Arias International, Inc., for Epi de Mexico
543 S Americas Ave
El Paso, TX 79907
RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of voltage regulators from Mexico; Article 509
Dear Mr. Arias:
In your letter dated April 11, 2018, on behalf of Epic Technologies, you requested a ruling on the status of voltage regulators from Mexico under the NAFTA.
The product at issue is described as a voltage regulator, identified as the EcoWise model EW30U (Epic product number 9000 0364). Per the information provided with your submission, the EcoWise is intended for use in residential or commercial locations, and serves to manage the voltage an establishment receives from its electricity provider. The EcoWise operates by receiving electricity from the provider and maintaining a set output voltage to the consumer (the residential or commercial establishment). The EcoWise is designed to maintain this set output voltage, even when the incoming voltage levels from the electricity provider may fluctuate, thus stabilizing the voltage output against such disturbances.
The applicable tariff provision for the EcoWise model EW30U will be 9032.89.4000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Automatic regulating or controlling instruments and apparatus; parts and accessories thereof: Automatic voltage and voltage-current regulators: Other. The general rate of duty will be 1.7% 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 the World Wide Web at https://hts.usitc.gov/current.
In your submission you inquire about the voltage regulator’s eligibility to qualify for preferential duty treatment under NAFTA. The voltage regulator is produced from components that hail from a host of countries, including the Japan, China, Taiwan, Israel, Mexico, and the United States. The components are imported into Mexico, where they are manufactured into the finished voltage regulators that are subsequently exported to the United States.
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.
While the voltage regulator is manufactured in Mexico, it contains non-originating components (i.e., those that were produced in countries other than Canada, Mexico, or the United States). As a result, in order to qualify for NAFTA treatment under the terms of General Note 12(b)(ii)(a), each non-originating material must undergo the change in tariff classification set forth in General Note 12(t). The relevant change in tariff classification rule for subheading 9032.89, where the voltage regulator at issue is classified, states the following:
A change to subheadings 9032.20 through 9032.89 from any other heading; or
A change to subheadings 9032.20 through 9032.89 from subheading 9032.90, whether or not there is also a change from any other heading, provided there is a regional value content of not less than:
45 percent where the transaction value method is used, or
35 percent where the net cost method is used.
Based on the facts provided, the goods described above qualify for NAFTA preferential treatment as long as the Regional Value Content requirements are met, because they will meet the requirements of HTSUS General Note 12(b)(ii)(a). 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 Regional Value Content requirements specified in General Note 12(t)/90.78A.
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 Evan Conceicao at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division