CLA-2-87:OT:RR:NC:N2:206
James Wickstead
LM Brokerage & Logistics, Inc.
1390 N. Mariposa Road, #1
Nogales, AZ 85621
RE: The tariff classification and country of origin of a high-speed constant velocity joint assembly from Mexico.
Dear Mr. Wickstead:
In your letter dated November 9, 2018, you requested a tariff classification ruling on behalf of your client, Neapco Holdings, LLC. of Farmington Hills, Michigan.
The item under consideration has been identified as a High-Speed Constant Velocity Joint (CVJ) Assembly (Item Number NPFL3W-3B413-AB), used on automobile propeller shafts. The propeller shaft transfers power from the transmission or transfer case to the rear axle in a vehicle. The CVJ assembly consists of a disk sub-assembly with outer race, inner race, cage and balls, rear can cover, boot can cover, stub shaft, clamp, circular clip, grease, and sealant. You state that the components are imported into Mexico and assembled into the final product, ready for importation into the United States.
The applicable subheading for the High-Speed Constant Velocity Joint Assembly will be 8708.99.6890, which provides for “Parts and accessories of the motor vehicles of headings 8701 to 8705: Other parts and accessories: Other: Other: Other: Other parts of power trains: Other.” The general rate of duty will be 2.5% ad valorem.
In your letter, you also requested this office to make a determination on the country of origin of the CVJ assembly and the applicability of the trade remedy actions for Chinese-sourced products.
19 C.F.R. § 134.1(b) provides as follows, “Country of origin means 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 North American Free Trade Agreement (NAFTA) country, the NAFTA Marking Rules will determine the country of origin.” Since Mexico is a NAFTA country, the NAFTA Marking Rules must be applied in this case for purposes of determining the country of origin. Part 102, Customs and Border Protection Regulations (19 C.F.R. Part 102), sets forth the NAFTA Marking Rules. Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes. See 19 C.F.R. § 102.11. Applied in sequential order, the required hierarchy establishes that the country of origin of a good is the country in which: (a)(1) The good is wholly obtained or produced; (a)(2) The good is produced exclusively from domestic materials; or (a)(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.
According to the information you supplied, the CVJ assembly consists of components of Chinese and United States origins, in addition to some Mexican components. You state that the disc assembly, rear can cover, boot can cover, and the stub shaft are made in China. The clamp, circular clip, and grease are made in the United States. The Black RTV 5910 sealant is made in Mexico.
As a result, Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case, because the imported CVJ assembly is neither wholly obtained nor produced exclusively from “domestic” (Mexican, in this case) materials. Because the analysis of sections 102.11(a)(1) and 102.11(a)(2) does not yield a country of origin determination, we look to section 102.11(a)(3). “Foreign material” is defined in 19 C.F.R. § 102.1(e) as “a material whose country of origin as determined under these rules is not the same country as the country in which the good is produced.”
The applicable rule for subheading 8708.99, HTSUS, in Section 102.20(p) requires “a change to subheading 8708.99 from any other subheading, except from parts or accessories of the goods of subheading 8708.40, 8708.50, 8708.80, 8708.91, 8708.92, 8708.94, or 8708.95.”
Each component from China is correctly classified in subheading 8708.99, and components from the United States are classified in chapters 34, and 73 or/and 76, depending on the constituent material of the clamp and circular clip. Although the U.S. components undergo the tariff change, the Chinese components do not. Therefore, we find that the foreign components do not undergo the applicable change in tariff classification set out in section 102.20(d), and, as a result, section 102.11(b) of the hierarchical rules must be applied next to determine the country of origin of the CVJ assembly.
19 CFR 102.11(b), in turn, provides that: “Except for a good 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”. Noting section 102.18 (b), in the instant case, the single material or component, which imparts the essential character to the CVJ assembly is the disc assembly with an outer race, inner race, cage and balls. Accordingly, per 19 CFR 102.11(b), the country of origin of the CVJ assembly is China.
Effective July 6, 2018, the Office of the United States Trade Representative (USTR) imposed an additional tariff on certain products of China classified in the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(b), HTSUS. The USTR imposed additional tariffs, effective August 23, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(d), HTSUS. Subsequently, the USTR imposed further tariffs, effective September 24, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(f) and U.S. Note 20(g), HTSUS. For additional information, please see the relevant Federal Register notices dated June 20, 2018 (83 F.R. 28710), August 16, 2018 (83 F.R. 40823), and September 21, 2018 (83 F.R. 47974). Products of China that are provided for in subheading 9903.88.01, 9903.88.02, 9903.88.03, or 9903.88.04 and classified in one of the subheadings enumerated in U.S. Note 20(b), U.S. Note 20(d), U.S. Note 20(f) or U.S. Note 20(g) to subchapter III shall continue to be subject to antidumping, countervailing, or other duties, fees and charges that apply to such products, as well as to those imposed by the aforementioned Chapter 99 subheadings.
Products of China classified under subheading 8708.99.6890, HTSUS, unless specifically excluded, are subject to the additional 10 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.03, in addition to subheading 8708.99.6890, HTSUS, listed above.
The tariff is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Notice cited above and the applicable Chapter 99 subheading.
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.
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, please contact National Import Specialist Liana Alvarez at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division