CLA-2-38:OT:RR:NC:N3:139
Sheri Lawson
Wilson International Inc.
160 Wales Avenue, Ste. 100
Tonawanda NY 14150
RE: The Tariff Classification, Status under the North American Free Trade Agreement (NAFTA), and Country-of-Origin of 35% Solution of Sodium Citrate
Dear Ms. Lawson:
In your letter dated September 6, 2019, you requested a tariff classification ruling on behalf of Korex Canada Co., for 35% solution of Sodium Citrate. This ruling request was submitted to our laboratory for review.
The product is identified as 35% solution of Sodium Citrate. Specifically, the product, is comprised of sodium citrate powder, water, methylchloroisothiazolinone, sodium benzoate and sodium metabisulfite. The product will be produced in Canada by diluting the Sodium Citrate powder of Chinese origin with water and adding a small amount of preservatives to create a 35% solution of Sodium Citrate. The Sodium Citrate solution will then be loaded into a bulk tanker and shipped to the United States. The product will be used as an ingredient in automatic dish detergent gel.
The applicable tariff provision for the 35% solution of Sodium Citrate will be 3824.99.9297, Harmonized Tariff Schedule of the United States (HTSUS), which provides for: Prepared binders for foundry molds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included: Other: Other: Other: Other: Other: Other. The rate of duty will be 5%.
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.
You also requested this office to make a determination on the country of origin of the 35% solution of sodium citrate, and whether they are eligible for the preferential treatment under the North American Free Trade Agreement (NAFTA).
The NAFTA is implemented in General Note (GN) 12 of the HTSUS. GN 12(b) 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 (emphasis added), 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.
You state in your letter that the 35% solution of sodium citrate are comprised of components made in China, the United States, Canada, and Mexico. As a result, the 35% solution of sodium citrate will not be eligible for NAFTA originating treatment as goods wholly obtained or produced entirely in a NAFTA territory pursuant to GN 12(b)(i). Therefore, the production of the parts must satisfy tariff shift rules and meet other applicable requirements as prescribed in GN 12(b)(ii).
For goods classified in subheading 3824.90, HTSUS, GN 12/38.301 requires, in pertinent part:
(B) A change to any other good of subheading 3824.90 from any other chapter, except from chapters 28 through 37.
Note, as indicated above, the 35% solution of Sodium Citrate is classified in subheading 3824.99, HTSUS. However, GN 12 of the 2019 HTSUS has not been updated to reflect the changes in classification since 2012 and does not include a tariff shift for subheading 3824.99, HTSUS. As a result, the tariff shift for the prior classification of the 35% solution of Sodium Citrate must be applied (3824.90).
Based on the facts provided, the 35% solution of Sodium Citrate, does not qualify as a NAFTA originating good, and is not eligible for preferential tariff treatment under the NAFTA, because it does not meet the requirements of HTSUS General Note 12(b)(ii)(B).
The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. § 1304(a)), provides that, unless excepted, every article of foreign origin (or its container) imported into the United States 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 within the United States the English name of the country of origin of the article. Part 134, Customs Regulations (19 CFR § 134), implements the country of origin marking requirements of and exceptions to 19 U.S.C. § 1304.
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. Section 134.1(j) provides that the NAFTA Marking Rules are promulgated for purposes of determining whether a good is a good of a NAFTA country. Section 134.1(g) 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.” The NAFTA Marking Rules are set forth in Part 102, Customs Regulations (19 CFR § 102). Section 102.11 of the regulations, sets forth the required hierarchy for determining country of origin for marking purposes. 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 imported 35% solution of sodium citrate are 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 3824.90, HTSUS, in section 102.20 requires, “A change to any other good of subheading 3824.71 through 3824.90 from any other subheading, including another subheading within that group, provided that no more than 60 percent by weight of the good classified in this subheading is attributable to one substance or compound.”
However, 19 CFR §102.17 sets forth operations which preclude a finding of origin within a NAFTA party. Specifically, section 102.17 indicates, as follows:
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;
In this case, the processing in Canada entails mere dilution of Chinese origin Sodium Citrate powder with water. Therefore, the Sodium Citrate powder from China is not considered to have undergone an applicable change in tariff classification, specified in §102.20.
Applying the NAFTA Marking Rules set forth in Part 102 of the regulations to the facts of this case, we find that the 35% solution of Sodium Citrate is Country of Origin China for marking purposes.
The merchandise in question may be subject to antidumping duties and countervailing duties (AD/CVD). Written decisions regarding the scope of AD/CVD orders are issued by the Enforcement and Compliance office in the International Trade Administration of the Department of Commerce and are separate from tariff classification and origin rulings issued by Customs and Border Protection (CBP). You can contact them at https://trade.gov/enforcement/ (click on “Contact Us”). For your information, you can view a list of current AD/CVD cases at the United States International Trade Commission website at https://www.usitc.gov (click on “Antidumping and Countervailing Duty” under “Popular Topics” at the top of the screen), and you can search AD/CVD deposit and liquidation messages using CBP’s AD/CVD Search tool at https://aceservices.cbp.dhs.gov/adcvdweb.
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 Patrick Day at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division