CLA-2-85:OT:RR:NC:N2:220
William Braier
Radix Group International
6120 Ace Industrial Drive
Cudahy, WI 53110
RE: The classification and country of origin of hard disk drives
Dear Mr. Braier:
In your letter dated November 14, 2019 you requested a classification and country of origin ruling on behalf of your client, IQor of Texas LP.
The merchandise under consideration is described as hard magnetic disk drives (HDDs) that you state are used and/or defective. There are numerous models of HDDs provided for our review where you identify the original country of origin as China or Thailand. Each of the HDDs are said to be collected from used cable television set top boxes that are sent to Mexico for testing and refurbishment. In Mexico, you state that the set top boxes are tested for functionality, and when a defective HDD is identified, it is removed from the set top box, packaged according to electrostatic discharge protection methods, and subsequently exported to the United States.
In your request, you suggest the HDDs should be imported into the United States as waste and scrap with a new origin of Mexico. We disagree. Under the North American Free Trade Agreement (NAFTA), a good can be considered to be "wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States," when it consists of "waste and scrap derived from ... used goods collected in the territory of one or more of the NAFTA parties, provided such goods are fit only for the recovery of raw materials." See General Note 12(n)(ix)(B).
Based on the information provided, at the time of importation the subject HDDs are used goods that are non-functional and/or in need of reformatting. However, you state that they are imported in a condition where they are capable of being formatted and used once again to store data. Furthermore, the packing method described indicates the intent to reuse the HDDs as storage units and not merely to subject them to the recovery of raw materials post-importation. As such, the HDDs are not considered waste and scrap for tariff purposes because they are not fit solely for the recovery of raw materials.
The applicable subheading for the Hard Disk Drives will be 8471.70.5065, Harmonized Tariff Schedule of the United States (HTSUS), which provides for "Automatic data processing machines and units thereof…Storage units: Magnetic disk drive units: Other: Other: Hard magnetic disk drive units." The general rate of duty will be Free.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8471.70.5065, HTSUS, unless specifically excluded, are subject to an additional 25 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 8471.70.5065, HTSUS, listed above.
The HTSUS is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Note cited above and the applicable Chapter 99 subheading. For background information regarding the trade remedy initiated pursuant to Section 301 of the Trade Act of 1974, you may refer to the relevant parts of the USTR and CBP websites, which are available at:
https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions https://www.cbp.gov/trade/remedies/301-certain-products-china
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.
With regard to the origin(s) of the subject HDDs, the marking statute, section 304, 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 its container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article.
The “country of origin” is defined in 19 CFR 134.1(b) as “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.”
As you describe the process in Mexico, once the defective HDDs are identified they are sent to the United States and either formatted for reuse, or in some instances, they are shredded and the raw metals are reclaimed. The HDDs, other than being tested and removed from the set top box, remain unchanged in Mexico prior to importation into the United States. As such, the country of origin is the country where the HDDs were manufactured, which is either China or Thailand, as appropriate, and they are to be marked with their respective country origins at time of importation into the United States.
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