CLA-2-79:RR:NC:N1:113 G86125
Mr. Karl F. Krueger
Danzas AEI Customs Brokerage Services
29200 Northwestern Highway
Southfield, MI 48034
RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of zinc fascia panels from Canada; Article 509
Dear Mr. Krueger:
In your letter dated December 20, 2000, on behalf of Diamond Metal, Ltd., you requested a ruling on the status of zinc fascia panels from Canada under the NAFTA.
The panels are architectural metal panels for wall and roof systems. They are manufactured from high-grade zinc alloyed with titanium and copper with a pre-weathered finish. The material for making the panels is imported from Germany in coils of 20 tons. Diamond Metal, a custom fabricator of architectural products, purchases the sheets from the Canadian supplier to manufacture the panels. The panels are engineered, and the sheets are cut to size and bent to create the custom shapes.
The applicable tariff provision for the panels will be 7907.00.6000, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for other articles of zinc, other. The general rate of duty will be 3 percent ad valorem.
General Note 12 specifies that:
(a) Goods originating in the territory of a party to the North American Free Trade Agreement (NAFTA) are subject to duty as provided herein. For the purposes of this note--
(i) Goods that originate in the territory of a NAFTA party under the terms of subdivision (b) of this note and that qualify to be marked as goods of Canada under the terms of the marking rules set forth in regulations issued by the Secretary of the Treasury (without regard to whether the goods are marked), when such goods are imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appears in the "Special" subcolumn followed by the symbol "CA" in parentheses, are eligible for such duty rate, in accordance with section 201 of the North American Free Trade Agreement Implementation Act. . ..
(b) For the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as "goods originating in the territory of a NAFTA party" only if--
(i) they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; or
(ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that--
(A) except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein, or
(B) the goods otherwise satisfy the applicable requirements of subdivisions (r), (s) and (t) where no change in tariff classification is required, and the goods satisfy all other requirements of this note . . .
The country of origin marking requirements for a "good of a NAFTA country" are also determined in accordance with Annex 311 of the North American Free Trade Agreement ("NAFTA"), as implemented by section 207 of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat 2057) (December 8, 1993) and the appropriate Customs Regulations. The Marking Rules used for determining whether a good is a good of a NAFTA country are contained in Part 102, Customs Regulations. The marking requirements of these goods are set forth in Part 134, Customs Regulations.
Section 134.1(b) of the regulations, defines "country of origin" as
the country of manufacture, production, or growth of any article of foreign origin entering the U.S. 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 this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin. (Emphasis added).
Section 134.1(j) of the regulations, provides that the "NAFTA Marking Rules" are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. Section 134.1(g) of the regulations, defines a "good of a NAFTA country" as an article for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules. Section 134.45(a)(2) of the regulations, provides that a "good of a NAFTA country" may be marked with the name of the country of origin in English, French or Spanish.
You state that the imported panels are processed in a NAFTA country, Canada, prior to being imported into the U.S. Since Canada is defined under 19 CFR 134.1(g), as a NAFTA country, we must first apply the NAFTA Marking Rules in order to determine whether the imported panels are a "good of a NAFTA country", and thus subject to the NAFTA marking requirements.
Part 102 of the regulations, sets forth the "NAFTA Marking Rules" for purposes of determining whether a good is a good of a NAFTA country for marking purposes. Section 102.11 of the regulations, sets forth the required hierarchy for determining country of origin for marking purposes.
Applying the NAFTA Marking Rules set forth in Part 102 of the regulations to the facts of this case, we find that the imported panels are a good of Canada for marking purposes.
The zinc sheet as imported from Germany into Canada is classifiable in heading 7905, HTS. The panels as imported into the United States from Canada are classifiable in heading 7907, HTS. For the purposes of duty preference under NAFTA, General Note 12(t)/79 requires:
1. A change to headings 7901 through 7903 from any other chapter.
2. (A) A change to headings 7904 through 7907 from any other chapter; or
(B) A change to headings 7904 through 7907 from any other heading within chapter 79, including another heading within that group, 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.
Each of the non-originating materials used to make the panels has satisfied the changes in tariff classification required under the HTSUSA General Note 12(t)/79.2(B). The panels will also be subject to a Regional Value Content (RVC) requirement of 60% under the Transaction Value Method or 50% under the Net Cost Method as required under the rule applicable to the heading. Assuming the goods are eligible for preferential treatment under the NAFTA, the merchandise will be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.
This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 C.F.R. 181).
This ruling letter is binding only as to the party to whom it is issued and may be relied on only by that party.
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 James Smyth at 212-637-7008.
Sincerely,
Robert B. Swierupski
Director
National Commodity
Specialist Division