CLA-2-44:OT:RR:NC:N5:130
Mr. Martin Giroux
Lauzon Distinctive Hardwood Flooring
2101 Cte des Casades
Papineauville, J0V 1R0
CANADA
RE: The country of origin of wood flooring manufactured in multiple countries
Dear Mr. Giroux:
In your letter, dated May 1, 2024, you requested a binding country of origin ruling. The ruling was requested on multilayer wood flooring panels. Product information was submitted for our review.
The products under consideration are multilayer wood floor panels consisting of a 3mm-thick face ply bonded to an 8mm-thick plywood substrate. The plywood substrate consists of 5, 7, or 9 plies, none of which exceeds 6mm in thickness. The plywood substrate is classifiable in subheading 4412.31 and the final flooring product is also classifiable in subheading 4412.31, Harmonized Tariff Schedule of the United States (HTSUS). In your letter, you outline a scenario in which 8mm-thick hevea (a tropical wood) plywood is manufactured in Indonesia and shipped to Canada. In Canada, a U.S. or Canadian sawn hardwood face ply is bonded to the plywood substrate. The panels are then profiled with tongue and groove joinery, and a clear UV coating is applied.
The United States-Mexico-Canada Agreement (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 U.S.C. 4511(a)). General Note (GN) 11 of the 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:
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
the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries;
the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials;
the good is a good produced entirely in the territory of one or more USMCA countries using non-originating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o));
As the flooring is not wholly produced or obtained in a USMCA country, we progress to subdivision (o). Subdivision (o) states that, in order to be subject to USMCA, the manufacturing in a USMCA country must result in A change to headings 4401 through 4421 from any other heading, including another heading within that group. Since the substrate plywood is classifiable in heading 4412 and the finished flooring, after manufacturing in Canada, is also classifiable in heading 4412, this rule is not met. Therefore, the flooring does not qualify for USMCA preferential tariff treatment.
Notwithstanding, in your letter, you argue that the flooring is an originating good as value of the Indonesian substrate plywood (non-originating goods) constitutes a de minimis quantity of the finished good. General Note 11(e)(i)(A)(1) sets forth the de minimis provision whereby a good may be considered originating if the value of all non-originating materials does not exceed 10 percent of the transaction value of the good, adjusted to exclude any costs incurred in the international shipment of the good. However, we note that the information you submitted was the value of the substrate plywood as a percentage of the value of the lowest selling price or U.S. minimum selling price. It is unclear to what level of sale this refers, as the figure, $3.99/square foot, may reasonably be a retail price. If this is the retail price of the flooring, then the calculations presented are not reflective of portion of transaction value. The de minimis claim, as presented, cannot be verified.
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that unless excepted, every article of foreign origin imported into the United States 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 "country of origin" is defined in Title 19, Code of Federal Regulations (CFR), Section 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 C.F.R. 102.21.
19 CFR Part 102.11(a) provides that the country of origin of a good for marking purposes 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 Part 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
The flooring is 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 the flooring and paragraph (a)(3) must be applied next to determine the origin of the finished article.
Section 102.20 (19 CFR 102.20) sets forth the applicable tariff change rules that address the current scenario. Goods classified in heading 4412 must undergo: A change to surface-covered plywood of heading 4412 from any other plywood that is not surface covered or is surface-covered only with a clear or transparent material which does not obscure the grain, texture, or markings of the face ply. In Canada, a clear, UV-cured coating is applied to the flooring panels. Therefore, the tariff-shift rule has been met. The country of origin is Canada.
If you wish to have your de minimis claim reviewed further, you may submit it to Regulations and Rulings, Office of Trade, Customs Headquarters, for consideration. You must submit value data for all of the product components (not just the substrate plywood) and operations, as well as the sale price to the U.S. importer. Please include documentation supporting the values claimed. You may submit your request to Regulations and Rulings, Office of Trade, U.S. Customs and Border Protection, 90K Street NE, 10th Fl., Washington, DC 20229-1177.
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.
The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in Title 19, Code of Federal Regulations (CFR), Section 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, whether directly, by reference, or by implication, is accurate and complete in every material respect. In the event that the facts are modified in any way, or if the goods do not conform to these facts at time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and submit a request for a new ruling in accordance with 19 CFR 177.2. You should also be aware that the material facts described in the foregoing ruling may be subject to periodic verification by CBP.
This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection 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 Laurel Duvall at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division