CLA-2-39:OT:RR:NC:N4:415
Tiago Lopes
ShadeFX Canopies, Inc.
2340 Meadowvale Boulevard
Mississauga, ON L5N 0H1
Canada
RE: The classification, country of origin, and eligibility of the United States-Mexico-Canada Trade Agreement (USMCA) of plastic shade canopies.
Dear Mr. Lopes:
In your letter dated July 29, 2024, you requested a classification, country of origin, and eligibility of the USMCA ruling.
Samples were provided and will be retained as requested.
The product under consideration is the ShadeFX Retractable Canopy. It is similar to the canopies described in New York ruling N339292, dated May 9, 2024. The item numbers will be delineated based on the model type and size, with this request applying specifically to SFX-RC-UH-1001 through SFX RC-UH-1044 and SFX-RC-UR-1001 through SFX-RC-UR-1039. There are also three fabric choices, including Soltis Ferrari, Harbor Time, and the Arcade FR materials, to be used in the construction of these canopies. You state the Soltis Ferrari and the Arcade FR materials are sourced from France, and the Harbor Time material is from the United States. The retractable canopy is imported with its hardware and installation instructions from Canada.
We note that the classification of plastics and textile combinations is essentially governed by note 1 (h) to section XI, note 3 to chapter 56, and note 2 to chapter 59. After review of the submitted samples, we find that the materials presented do not meet the above requirements to be qualify them as textile but rather they would be considered as articles of plastic of chapter 39.
As these retractable canopies, made from the Soltis Ferrari, Harbor Time, and the Arcade FR materials, would be considered articles of plastic, and as they are not more specifically provided for elsewhere, the applicable subheading will be 3926.90.9989, Harmonized Tariff Schedule of the United States (HTSUS), which provides for [o]ther articles of plastics and articles of other materials of headings 3901 to 3914: [o]ther: [o]ther: [o]ther. The column one, general rate of duty is 5.3 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.
Per your submission, these canopies consist of additional components sourced from Canada, China, Italy, Taiwan, Turkey, and the United States, with all the materials used to construct these canopies being imported directly into Canada. Further, the following procedures are performed in Canada:
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 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 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 canopies 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. As indicated above, the finished canopies are classified under heading 3926. The tariff shift requirement in part 102.20 for the articles of heading 3926 at issue states, A change to heading 3922 through 3926 from any other subheading, including another heading within that group, except for a change to heading 3926 from articles of apparel and clothing accessories, other articles of plastics, or articles of other materials of headings 3901 to 3914 of heading 9619.
As the plastic sheeting is changed into the canopies within Canada, we find they make the required tariff shift, and they would be considered Canadian in origin. These retractable canopies should be marked Made in Canada as appropriate per the applicable regulations.
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. 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, 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. The applicable rule of origin for merchandise under chapter 39 is located within GN 11 (o), HTSUS, which provides in relevant part, the following tariff shift, A change to headings 3916 through 3926 from any other heading, including another heading within that group.
Again, we find that these canopies of heading 3926 make the needed tariff shift and would remain qualified originating goods. As such, these retractable canopies, made from the Soltis Ferrari, Harbor Time, and the Arcade FR materials, are eligible for preferential treatment under the USMCA.
As these canopies contain Chinese origin components, we must consider whether they would be subject to section 301 duties. When determining the country of origin for purposes of applying current trade remedies under section 301, the substantial transformation analysis is applicable. The test for determining whether a substantial transformation will occur 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).
In order to determine whether a substantial transformation occurs when components are assembled into completed products, all factors such as the components used to create the product and manufacturing processes that these components undergo are considered in order to determine whether a product with a new name, character, and use has been produced. No one factor is decisive, and assembly/manufacturing operations that are minimal will generally not result in a substantial transformation.
This office reviewed the provided documentation, and we are of the opinion that the canopy materials would impart the essential character to the finished products. As these sheets hold the basic nature of the finished canopies, they would not be substantially transformed by the further processing performed in Canada. Thus, the canopies made from the Soltis Ferrari and the Arcade FR materials would have a country of origin of France. The canopies made with the Harbor Time material would have a country of origin of the United States. Therefore, the Chinese components would not provide the country of origin to these products and section 301 duties would not be applicable. This would not impact the country of origin for marking purposes provided above.
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 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 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