CLA-2-67:OT:RR:NC:N4:415
Mr. Victor Mena
VM Customs Brokers, Inc.
9505 Airway Road, Suite 600
San Diego, CA 92154
RE: The classification, country of origin, marking, and eligibility of the United States-Mexico-Canada Trade Agreement (USMCA) of two artificial trees in planters.
Dear Mr. Mena:
In your letter dated March 10, 2023, you requested a classification, country of origin, marking, and eligibility of the USMCA ruling on behalf of your client, Crystal Art Gallery.
Images were provided in lieu of samples.
There are two artificial trees under consideration. The first one, model number 467737, is in the appearance of a lemon tree and measures 48 inches in height. It also features hollow, molded plastic lemons. The second, model number 467726, is in the appearance of a sorbus tree and measures 60 inches in height. Per your correspondence, both trees are made wholly of plastic components to include the trunks, branches, and leaves. They will be imported in ceramic pots and will have artificial dirt and moss around their bases to make them further resemble the natural products.
In your request, you indicate that these artificial trees would be classified under 6702.10.2000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “[a]rtificial flowers, foliage and fruit and parts thereof; articles made of artificial flowers, foliage or fruit: [o]f plastics: [a]ssembled by binding with flexible materials such as wire, paper, textile materials, or foil, or by gluing or by similar methods.” We disagree. We refer to the images submitted that showed the components are fitted together, not assembled by binding or gluing.
As these two trees, model numbers 467737 and 467726, are made from plastic and are assembled by fitting together, the applicable subheading will be 6702.10.4000, HTSUS, which provides for “[a]rtificial flowers, foliage and fruit and parts thereof; articles made of artificial flowers, foliage or fruit: [o]f plastics: [o]ther, including parts.” The column one, general rate of duty is 3.4 percent 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 at https://hts.usitc.gov/current.
Further, your request states that the artificial trees and ceramic pots are both produced in China. They will then be imported into Mexico. Once in Mexico,
The imported plastic plants will be placed into the ceramic pots. You indicate that the pots may or may not be painted according to the customer’s specifications and the paint will be of either Mexican or U.S. origin.
The pots will be filled with an expanding foam that will hold the artificial plant in place and a cardboard “round” will be placed on top. All these materials are of Mexican origin.
Artificial dirt and moss will be put on top of the cardboard “round” to simulate real soil and to make it look like a real potted plant. These materials are also of Mexican origin.
The finished plants will then be wrapped in bubble wrap and placed in a carboard box that will potentially have a brand name and a logo printed on the outside. The packing materials will be produced in Mexico.
With regard to the appropriate country of origin marking of these artificial trees, section 304, Tariff Act of 1930, as amended (19 USC 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.
As provided in 19 CFR 134.41(b), the country-of-origin marking is considered conspicuous if the ultimate purchaser in the U.S. can find the marking easily and read it without strain.
Regarding the permanency of a marking, 19 CFR 134.41(a) provides that, as a general rule, marking requirements are best met by marking worked into the article at the time of manufacture. For example, it is suggested that the country of origin on metal articles be die sunk, molded in, or etched. However, 19 CFR 134.44 generally provides that any marking that is sufficiently permanent so that it will remain on the article until it reaches the ultimate purchaser, unless deliberately removed, is acceptable.
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 or USMCA country, the marking rules set forth in part 102 of this chapter (hereinafter referred to as the part 102 Rules) will determine the country of origin.”
Pursuant to section 102.0, interim regulations, related to the marking rules, tariff-rate quotas, and other USMCA provisions, published in the Federal Register on July 6, 2021 (86 FR 35566), the rules set forth in §§ 102.1 through 102.18 and 102.20 determine the country of origin for marking purposes with respect to goods imported from Canada and Mexico. Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes, with the exception of textile goods which are subject to the provisions of 19 CFR. § 102.21. See 19 CFR § 102.11.
Applied in sequential order, 19 CFR Part 102.11(a) provides that the country of origin of a good is the country in which: (1) the good is wholly obtained or produced; (2) the good is produced exclusively from domestic materials; or (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.
These artificial trees are neither “wholly obtained or produced” nor “produced exclusively from domestic materials.” Therefore, paragraphs (a)(1) and (a)(2) cannot be used to determine the country of origin of these articles, and paragraph (a)(3) must be applied next to determine the origin of the finished articles. The artificial lemon and sorbus trees are classified under heading 6702, HTSUS. The tariff shift requirement in part 102.20 for the artificial plants at issue states, “[a] change to heading 6702 through 6704 from any other heading, including another heading within that group.” As these two artificial trees of Chinese origin are classified within heading 6702 and remain classified in heading 6702 after combined with the Chinese origin pot and minor components from Mexico, the tariff shift requirement of section 102.11(a)(3) is not met.
Since an analysis of section 102.11(a)(3) has not produced a country-of-origin determination, we turn to section 102.11(b) of the regulations. Section 102.11(b) states, in relevant part:
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 …
When determining the essential character of a good under 19 CFR § 102.11, 19 CFR § 102.18(b)(1) provides that “the only materials that shall be taken into consideration are those domestic or foreign materials that are classified in a tariff provision from which a change in tariff classification is not allowed under the §102.20 specific rule or other requirements applicable to the good.” In this instance, the artificial trees of heading 6702 are the only component not allowed under the tariff shift rule, and therefore, would impart the essential character.
The USMCA was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018. The USMCA was approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act, Pub. L. 116-113, 134 Stat. 11, 14 (19 USC § 4511(a)). General Note (GN) 11, HTSUS, implements the USMCA. GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA. GN 11(b) states, in relevant part:
For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, is eligible for the preferential tariff treatment provided for in the applicable subheading and quantitative limitations set forth in the tariff schedule as a “good originating in the territory of a USMCA country” only if - (i) the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries; (ii) the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials; (iii) the good is a good produced entirely in the territory of one or more USMCA countries using nonoriginating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o)) …
We next turn to subdivision (o) which provides for change in tariff classification rules. Under chapter 67, rule 2, it states “[a] change to headings 6702 through 6704 from any other heading, including another heading within that group.” Again, the two artificial trees of heading 6702 do not make the needed tariff shift and remain unqualified as originating goods.
Accordingly, as these articles do not meet the necessary rules to qualify as originating, they also would not qualify for preferential treatment under the USMCA. In addition, because the Chinese origin artificial trees impart the essential character to the finished articles, under 19 CFR 102, the country of origin of these items for the 19 USC 1304 marking requirements is China. Your correspondence indicates these will be imported and sold to the consumer in a cardboard box, and as such, we note that the outermost container in which these articles ordinarily reach the ultimate purchaser is required to be marked to indicate that the country of origin of these artificial trees is China in accordance with the applicable regulations.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 CFR 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 Kristopher Burton at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division