CLA-2-72:OT:RR:NC:N5:117
Ivan Miranda
Miranda Brokerage
3020 TRAWOOD SUITE D EL PASO, TX 79936
RE: The country of origin of galvanized angular steel sheets
Dear Mr. Miranda:
In your letter dated October 31, 2024, submitted on behalf of your client, Metal Decking Solutions, you requested a tariff classification, a country of origin ruling, and a marking ruling for what is described as metal roofing. Also, you inquire whether the product is eligible for duty free treatment under the United States-Mexico-Canada (USMCA) Trade Agreement and if Section 232 duties are applicable.
The products to be imported are nonalloy steel angular sheets to be used in roofing. The product is made of nonalloy steel coils from Brazil. The steel is melted and poured in Brazil and manufactured into flat-rolled coils, which are hot-dipped galvanized and coated with a plastic paint. The nonalloy steel coils are shipped to Mexico where the coil is fed into a roll type machine and formed into angular profile sheets. The sheets are cut into various lengths as indicated by the purchaser’s requirements.
In your request, you suggest that the steel sheets are properly classified under subheading 7308.90.9590, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Structures (excluding prefabricated buildings of heading 9406) and parts of structures (for example, bridges and bridge sections, lock gates, towers, lattice masts, roofs, roofing frameworks, doors and windows and their frames and thresholds for doors, shutters, balustrades, pillars and columns) of iron or steel; plates, rods, angles, shapes, sections, tubes and the like, prepared for use in structures, of iron or steel: Other: Other: Other: Other: Other. We disagree with this classification and turn to the Explanatory Notes (ENs) to the HTSUS for guidance as to the proper classification of the merchandise concerned.
When interpreting and implementing the HTSUS, the ENs of the Harmonized Commodity Description and Coding System may be utilized. The ENs, while neither legally binding nor dispositive, provide a guiding commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUS. CBP believes the ENs should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
EN 72.16 provides, in pertinent part, as follows:
Angles, shapes and sections are defined in Note 1 (n) to this Chapter. The heading includes goods which have been cold-formed or cold finished (by cold-drawing, etc.) and also covers angles, shapes and sections made by forming on a roll type machine or by forming sheets, plates or strip on a press. So-called “ribbed sheets and plates” having an angular profile are also classified here.
The products of this heading may have been subjected to working such as drilling, punching or twisting or to surface treatment such as coating, plating or cladding - see Part IV (C) of the General Explanatory Note to this Chapter, provided they do not thereby assume the character of articles or of products falling in other headings.
The sheets under consideration have been formed into an angular shape by means of a roll forming machine as described in the EN to heading 7216 and have not been prepared for use in a structure. Therefore, it is the opinion of this office that the steel sheets are classified in heading 7216, HTSUS. (See New York Ruling N039662 dated October 17, 2008).
The applicable subheading for the steel sheets will be 7216.91.0090, HTSUS, which provides for Angles, shapes and sections of iron or nonalloy steel: Other: Cold-formed or cold-finished from flat-rolled products, Other. The rate of duty will be free.
You inquire whether the steel sheets are eligible for preferential treatment under the USMCA. 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, 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 … 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)); ….
The subject steel sheets are comprised of non-originating material. Therefore, the steel sheets are not considered goods wholly obtained or produced entirely in a USMCA country under GN 11(b)(i) and (ii). We must next determine whether the sheets qualify under GN 11(b)(iii). The imported steel sheets are classified in heading 7216, HTSUS. The applicable rule of origin for merchandise classified in heading 7216, HTSUS, is in GN 11(o), HTSUS, which provides, in relevant part:
Chapter 72 (7) “A change to headings 7208 through 7216 from any heading outside that group.” Nonalloy steel coils classified in heading 7210, HTSUS, are sent to Mexico where they are manufactured into steel sheets classified in heading 7216, HTSUS. As such, the tariff shift requirement is not met. Therefore, the steel sheets are not eligible for preferential treatment under the USMCA.
In addition to USMCA eligibility, you are requesting a country of origin determination for the subject steel sheets for marking purposes. 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 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. See 19 C.F.R. § 102.11. Applied in sequential order, the required hierarchy establishes that the country of origin of a 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 § 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in the cases described above because the imported steel sheets are neither wholly obtained or produced or produced exclusively from “domestic” materials. Because the analysis of sections 102.11(a)(1) and 102.11(a)(2) does not yield a country of origin determination, we look to section 102.11(a)(3). Pursuant to 19 C.F.R. §102.11(a)(3), the country of origin of a good is the country in which each foreign material incorporated in that good undergoes an applicable change in tariff classification as set forth in 19 C.F.R. §102.20 and satisfies any other applicable requirements of that section.
Based on the facts presented, because the steel sheets imported into the U.S. from Mexico are classified in heading 7216, HTSUS, the change in tariff classification must be made in accordance with section 102.20(n), Section XV: Chapters 72 through 83, heading 7216, HTSUS, which requires “A change to heading 7216 from any other heading, except from heading 7208 through 7215.” The nonalloy steel coils that are shipped to Mexico are classified in heading 7210, HTSUS. In Mexico, the coils are manufactured into steel sheets classified in heading 7216, HTSUS. As such, the tariff shift requirement of section 102.11(a)(3) is not met. The country of origin of the steel sheets for marking purposes is Brazil.
With regard to your request for the appropriate country of origin of the sheets for purposes of applying trade remedies, 19 C.F.R. § 134.1(b) provides in pertinent part as follows: Country of origin means 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.
Please be advised when determining the country of origin for purposes of applying trade remedies under Section 301, Section 232 and Section 201, 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). To determine whether a substantial transformation has occurred, CBP considers the totality of the circumstances and makes such determinations on a case-by-case basis. See National Hand Tool Corp. v. United States, 16 C.I.T. 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993). CBP has stated that a new and different article of commerce is an article that has undergone a change in commercial designation or identity, fundamental character, or commercial use.
Regarding the finished steel sheets, we find that pressing and cutting the coils into ribbed angular sheets are basically finishing operations of the nonalloy steel coil and do not constitute a substantial transformation in Mexico. Therefore, the country of origin of the steel sheets will be Brazil. Please note that subheading 7216.91.0090, HTSUS, is precluded from Section 232 duties.
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 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, please contact National Import Specialist Denise Hopkins at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division