CLA-2-85:OT:RR:NC:N2:220
Florey Del Rio
Rexel Canada Electrical Inc.
5600 Keaton Crescent
Mississauga, Ontario L5R 3G3
Canada
RE: The tariff classification, marking, and status under the North American Free Trade Agreement (NAFTA) of an input/output control panel from Canada
Dear Ms. Del Rio:
In your letter dated March 22, 2019 you requested a tariff classification ruling.
The merchandise under consideration is identified as the Remote Input/Output (RIO) Panel, PN RIO-009, which consists of numerous electrical apparatus installed within a NEMA floor mounted enclosure. The RIO enclosure is populated with numerous terminal blocks, circuit breakers, bus bars and connectors. Additionally, the RIO panel contains a number of programmable controller modules to include 7 relayed output modules, 12 input modules, a communication module, and power supplies. You state the function of the RIO panel is to monitor and control automation processes remotely by sending and receiving input and output signals from/to sensors and actuators in the field. Based on the provided bill of materials, we would note that the programmable controller itself is not included in the panel at the time of importation.
In your request you suggest the RIO panel is classifiable under subheading 8537.10, Harmonized Tariff Schedule of the United States, (HTSUS). We agree.
The applicable subheading for the Remote Input/Output Panel, PN RIO-009, will be 8537.10.9170, HTSUS, which provides for “Boards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of 8535 or 8536, for electric control or the distribution of electricity…: For a voltage not exceeding 1,000 V: Other: Other: Other”. The general rate of duty will be 2.7 percent ad valorem.
With regard to the country of origin marking of the RIO panel, Section 304 of the 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 container) will permit in such a manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article. The regulations implementing the requirements and exception to 19 U.S.C. § 1304 are set forth in Part 134, Customs and Border Protection Regulations (19 C.F.R. Part 134).
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 NAFTA country, the NAFTA Marking Rules will determine the country of origin.
Since Canada is a NAFTA country, the NAFTA Marking Rules must be applied in determining the country of origin for purposes of marking.
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.
Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because the assembled RIO panel is neither wholly obtained nor produced exclusively from “domestic” 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 8537.10.9170, HTSUS, in section 102.20 requires:
A change to heading 8537 from any other heading.
All of the components used in the assembly of the subject RIO panel are imported into Canada and are therefore designated as foreign material. After a thorough review of the bill of material for the RIO panel, it is noted that the 7 relayed output modules and the 120 VAC receptacle are classifiable under 8537.10.9170, HTSUS, which prevents the RIO panel from satisfying the heading change rule provided in section 102.11(a)(3). Furthermore, in our view, section 102.11(b) or (c) are not applicable as no single component(s) installed into the RIO panel imparts the essential character and the RIO panel is not classified under General Rule of Interpretation 3. Section 102.11(d) requires:
(d) Where the country of origin of a good cannot be determined under paragraph (a), (b) or (c) of this section, the country of origin of the good shall be determined as follows:
(d)(1) If the good was produced only as a result of minor processing, the country of origin of the good is the country or countries of origin of each material that merits equal consideration for determining the essential character of the good;
(d)(2) If the good was produced by simple assembly and the assembled parts that merit equal consideration for determining the essential character of the good are from the same country, the country of origin of the good is the country of origin of those parts; or
(d)(3) If the country of origin of the good cannot be determined under paragraph (d)(1) or (d)(2) of this section, the country of origin of the good is the last country in which the good underwent production.
Thus, for purposes of marking and in accordance with section 102.11(d)(3), the country of origin of the RIO panel is Canada.
Turning to your request for NAFTA status, 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:
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.
With respect to General Note 12(b)(ii)(A), the applicable tariff shift rule under General Note 12(t) Chapter 85 states:
A change to heading 8537 from any other heading, except from tariff items 8538.90.10, 8538.90.30 or 8538.90.60;
As the RIO panel contains foreign relay modules, end brackets, and end plates which are classified under subheadings 8537.10 and 8538.90.60, HTSUS, we are of the opinion that these components disqualify the RIO panel from NAFTA preferential duty treatment because the tariff shift requirements of HTSUS General Note 12(b)(ii)(A) are not met. However, 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 a copy of this letter along with 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
Valuation & Special Programs Branch
90 K St. NE
Washington, DC 20229
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 Karl Moosbrugger at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division