CLA-2-94:OT:RR:NC:N4:463
Victor Gonzalez
Victor Gonzalez LLC
510 Enterprise St., Suite 1
Laredo, TX 78045
RE: The tariff classification, country of origin, USMCA eligibility, and Section 301 applicability of a wall-mounted metal tool cabinet
Dear Mr. Gonzalez:
This ruling is being issued in reply to your letter dated July 23, 2024, requesting the tariff classification, country of origin, United States-Mexico-Canada Agreement (USMCA) eligibility, and Section 301 applicability of a wall-mounted metal tool cabinet on behalf of your client, Cena Electromex, S.A. de C.V. In lieu of samples, illustrative literature was provided that included product descriptions, drawings with measurements, a costed and classified bill of materials, as well as an explanation of the manufacturing process.
The subject article is identified as a wall-mounted tool cabinet, part number 822420W80001034, model number 922420W8, and is described as an empty rectangular metal cabinet that measures 23.94" (W) x 12.12" (D) x 18.03" (H), with two lockable doors in front that open outward in opposite directions. The requester states that the article is intended to be hung on the wall to store tools in household garages and workshops but that it may also be used in commercial settings. See image below:
/
MATERIALS:
Virtually all of the materials (over 90% by value), which include the steel coils, a lock, door magnets, locking rods, etc., are of Chinese origin and classified in Harmonized Tariff Schedule of the United States (HTSUS) chapters 85, 83, 73, 72, 39 and 32. However, some steel coil of Mexican origin is also incorporated into the subject cabinet.
PROCESSING OPERATIONS:
In Mexico, the steel coils and pre-cut steel sheets are received and inspected prior to undergoing the following processing operations: Steel plates are cut from coils on a CTL machine and then the individual steel sheets are laser cut to size, including all shapes and holes. The pieces are then shaped by bending and stamping and assembled by welding and riveting. The pieces are then washed, and powder coated (cabinet black, doors grey). The doors are then assembled with handles, hinges, locks, etc. The cabinet is then packaged partially assembled and with accessories that include the user manuals, packing materials, rub protectors, etc.
CLASSIFICATION:
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. If the goods cannot be classified solely based on GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order. In understanding the language of the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and coding System, which constitutes the official interpretation of the Harmonized System at the international level, may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading and are generally indicative of the proper interpretation of the HTSUS. The ENs to Chapter 94 of the HTSUS state, in relevant part, that the term “furniture” means: “(A): Any “movable” articles (not included under other more specific headings of the Nomenclature), which have the essential characteristic that they are constructed for placing on the floor or ground, and which are used, mainly with a utilitarian purpose, to equip private dwellings, hotels…. Similar articles (seats, chairs, etc.) for use in gardens, squares, promenades, etc., are included in this category.”
Additionally, the ENs to Chapter 94 of the HTSUS state, in relevant part, that the term “furniture” means: “Cupboards, bookcases, other shelved furniture…, designed to be hung, to be fixed to the wall….”
The subject cabinet meet this definition of furniture and therefore will be classified as furniture in heading 9403.
Additional U.S. Rule of Interpretation 1(a), HTSUS, provides, in relevant part, that: “In the absence of special language or context which otherwise requires: (a) a tariff classification controlled by use (other than actual use) is to be determined in accordance with the use in the United States at, or immediately prior to, the date of importation, of goods of that class or kind to which the imported goods belong, and the controlling use is the principal use.”
You state that the subject article is intended to be hung on the wall to store tools in household garages and workshops but that it may also be used in a commercial setting. You also stated that they will be sold online through Amazon as well as through big-box and DIY stores such as Wal-Mart and Home Depot. Considering the physical characteristic of the article, the channels of trade, etc., we agree that the principal use for the subject article will be in home garages. (See HQRL H313152.)
The applicable classification for the wall-mounted tool cabinet, part number 822420W80001034, model number 922420W8, will be subheading 9403.20.0050, HTSUS, which provides for “Other furniture and parts thereof: Other metal furniture: Household: Other: Other”. The general rate of duty will be free.
COUNTRY OF ORIGIN:
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 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. When applied in sequential order, 19 CFR 102.11 establishes that the country of origin of a non-textile 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 19 CFR 102.20 and satisfies any other applicable requirements of that section.
Since the cabinet is not wholly obtained or produced (19 CFR 102.11(a)(1)), nor made exclusively from domestic materials (102.102.11(a)(2)), we proceed to 102.11(a)(3) which directs us to the 19 CFR 102.20, Specific Rules by Tariff Classification.
Since the cabinet is classified in subheading 9403.20, HTSUS, the applicable 19 CFR 102.20, Specific Rules by Tariff Classification, rule is as follows:
9403.10–9403.89
A change to subheading 9403.10 through 9403.89 from any other subheading outside that group, except from subheading 9401.10 through 9403.89, and except from subheading 9401.91 through 9401.99 or 9403.91 through 9403.99, when that change is pursuant to General Rule of Interpretation 2(a)
Since all of the foreign materials used to produce the subject cabinet in Mexico are classified in HTSUS chapters other than chapter 94, they make a permissible tariff shift under 19 CFR 102.20, rule 9403.10 - 9403.89 when manufactured into a cabinet in Mexico. Since the specified change in tariff classification is met in Mexico, the origin of the cabinet for country of origin marking purposes under 19 U.S.C. 1304 will be “Mexico.”
USMCA ELIGIBILITY:
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 U.S.C. § 4511(a)). General Note ("GN") 11 of the HTSUS implements the USMCA. GN 11(a)(i) provides that: (a) Goods originating in the territory of a country named herein, pursuant to the United States-Mexico-Canada Agreement (USMCA), are subject to duty as provided herein, including any treatment set forth in subchapter XXIII of chapter 98 and subchapter XXII of chapter 99 of the tariff schedule. For the purposes of this note, as provided in the tariff schedule: (i) Goods that originate in the territory of Mexico, Canada or the United States (hereinafter referred to as “USMCA country” or “USMCA countries” as further defined in subdivision (l)(xxiv) of this note) under the terms of subdivision (b) of this note and regulations issued by the Secretary of the Treasury (including Uniform Regulations provided for in the USMCA), and goods enumerated in subdivision (p) of this note, when such goods are imported into the customs territory of [sic] the United States and are entered under a subheading for which a rate of duty appears in the “Special” sub-column, followed by the symbol “S” in parentheses, are eligible for such duty rate, in accordance with section 202 of the United States-Mexico-Canada Agreement Implementation Act; and…. 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: (b) 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 non-originating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o)); As stated under “PROCESSING OPERATIONS,” above, the cabinet will be produced in Mexico using mostly non-originating materials. Therefore, it is not considered wholly obtained or produced entirely in a USMCA country under GN 11(b)(i), nor are the articles produced exclusively from originating materials per GN 11(b)(ii). Thus, we must determine whether the product qualifies under GN 11(b)(iii). As previously noted, the cabinet is classified under subheading 9403.20, HTSUS. The applicable rule of origin for goods classified under subheading 9403.20, HTSUS, is in GN 11(o)/94.04, which reads:
(A) A change to subheadings 9403.10 through 9403.89 from any other chapter; or
(B) A change to subheadings 9403.10 through 9403.89 from subheading 9403.90, whether or not there is also a change from any other chapter, provided there is a regional value content of not less than:
(1) 60 percent where the transaction value method is used; or
(2) 50 percent where the net cost method is used.
Since all of the foreign materials used to produce the subject cabinet in Mexico are classified in HTSUS chapters other than chapter 94, they make a permissible tariff shift under GN 11(o), Rule 4(A) to Chapter 94 when manufactured into a cabinet in Mexico. The subject cabinet originates under the USMCA using preference criterion “B”. The USMCA preferential rate of duty for articles in 9403.20.0050, HTSUS, is free.
CHINA SECTION 301: When determining the country of origin for purposes of applying trade remedies under Section 301, the substantial transformation analysis is applicable. The test for determining whether a substantial transformation occurs is whether an article emerges from a process with a new name, character or use, different from that possessed by the article prior to processing. See Texas Instruments Inc. v. United States, 69 C.C.P.A. 151 (1982). This determination is based on the totality of the evidence. See National Hand Tool Corp. v. United States, 16 C.I.T. 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993). Since the processing in Mexico causes the sheet steel, lock, etc. to take on a new name, character or use in Mexico—that of a wall-mounted tool cabinet—the country of origin under the substantial transformation test is Mexico and not China, so the Section 301 trade remedy duties do not apply in this case.
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 internet at https://hts.usitc.gov/current.
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. Additionally, we note 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 Title 19 of the Code of Federal Regulations (19 CFR Part 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 Seth Mazze at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division