HQ 0089366 - Modification of Headquarters Ruling 088745 ("HQ 088745"), dated May 7, 1991; toy water pistol; United States-Canada Free Trade Agreement ("CFTA"); General Note 3(c)(vii); other toys, not having a spring mechanism - United States International Trade Commision Rulings

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HQ 089366

May 22, 1991

CLA-2 CO:R:C:M 089366 JMH

CATEGORY: CLASSIFICATION

TARIFF NO.: 9503.90.60

Mr. Richard Whelan
Alton Industries Ltd.
7296 Wilson Avenue
Delta, B.C.
Canada V4G 1H3

RE: Modification of Headquarters Ruling 088745 ("HQ 088745"), dated May 7, 1991; toy water pistol; United States-Canada Free Trade Agreement ("CFTA"); General Note 3(c)(vii); other toys, not having a spring mechanism

Dear Mr. Whelan:

This is a modification of Headquarters Ruling 088745 ("HQ 088745"), dated May 7, 1991, concerning toy water pistols imported from Canada. It has been brought to the attention of this office that the eight digit subheading assigned to the toy water pistols was incorrect. Below is the identical ruling with the appopriate classification. This change will not effect the rate of duty to which the toy water pistols are subject.

FACTS:

The articles in question are toy water pistols. The pistols are made primarily from molded plastic parts. The plastic is exported from the United States to Canada and then molded in Canada into parts. The parts are then manufactured into pistols in Canada. The molded plastic parts include the following: a gun body; a transfer tube; a bulkhead; a check valve and "O" ring assembly; a fill port; a tap adapter assembly; a trigger, "O" ring and spring; a trigger retainer plate; a trigger valve body and butt plate; a tube fitting and "O" ring; a tube plug; tube retaining rings; and a tube. In addition to the raw plastic, the colour concentrate, "O" rings and the tubing are from the United States.

ISSUE:

What is the appropriate classification for the toy water pistols to be imported from Canada?

LAW AND ANALYSIS:

The classification of merchandise under the HTSUSA is governed by the General Rules of Interpretation (GRI's). GRI 1 states in part that "for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes..."

The appropriate heading in this instance is heading 9503, HTSUSA. Heading 9503 describes "Other toys..." The water pistol is properly classified in subheading 9503.90.60, HTSUSA, as "Other toys...Other...Other toys, not having a spring mechanism..." The applicable rate of duty is 6.8% ad valorem. However, the "Special" subcolumn which corresponds to this classification includes "CA". "CA" indicates that the United States-Canada Free Trade Agreement ("CFTA") applies to this classification. Thus, if the water pistols meet the requirements of the CFTA, the pistols will be eligible for tariff preferences.

To be eligible for tariff preferences under the CFTA, goods must be "originating goods" within the rule of origin in General Note 3(c)(vii)(B), HTSUSA. There are two primary means in General Note 3(c)(vii)(B) by which articles imported into the United States may be "goods originating in the territory of Canada." The first method is if the goods are "wholly obtained or produced in the territory of Canada and/or the United States." General Note 3(c)(vii)(B)(1). The second method is if the goods are "transformed in the territory of Canada and/or the United States." General Note 3(c)(vii)(B)(2).

A product which is "wholly obtained or produced in the territory of Canada and/or United States" is one which is grown, mined, harvested, born and raised in Canada and/or the United States, or otherwise intimately connected to the two countries and their land, air and sea territories as defined in General Note 3(c)(vii)(L), HTSUSA. Sufficient information has not been presented to make this determination regarding the water pistols. However, generally a manufacturing operation will involve some third country elements so that the manufactured goods are not "wholly obtained or produced."

The second method to become an originating good for CFTA purposes is for an article made of foreign materials to be transformed in Canada and/or the United States in accordance with General Note 3(c)(vii)(B)(2). A transformation is evident when a change in tariff classification occurs that is authorized by General Note 3(c)(vii)(R), HTSUSA.

In this instance, plastic, colouring concentrate, "O" rings and tubing are being exported from the United States to Canada. Since information has not been presented to determine if these
articles are originating goods under the CFTA when they enter Canada, this office assumes for this analysis that the items are not originating goods.

First, the classifications of the exported items must be examined. Plastics and articles thereof are classified in Chapter 39, HTSUSA. Dyes and other coloring matter are classified in Chapter 32, HTSUSA. The "O" rings and the tubing are presumably classified in Chapter 39 as articles of plastic since at the time of importation it is unlikely if they are clearly for use in toy water pistols. The finished toy water pistol is classified in Chapter 95, heading 9503. General Note 3(c)(vii)(R)(20)(aa), HTSUSA, states that a change to a heading in chapter 95 from any other chapter is an authorized classification change under the CFTA. Thus, the water pistol has been transformed in accordance with General Note 3(c)(vii)(B)(2) and the water pistol is a good originating in the territory of Canada under General Note 3(c)(vii)(B)(2). As an originating good under the CFTA, the water pistol is eligible for CFTA tariff preferences.

HOLDING:

The water pistol is properly classified in subheading 9503.90.70, HTSUSA, as "Other toys...Other...Other..." The pistol affects an authorized classification transformation under General Note 3(c)(vii)(R) so to be an originating good under General Note 3(c)(vii)(B)(2) and the CFTA. As an originating good the toy water pistol is eligible for the CFTA tariff preferences.

Sincerely,

John Durant, Director
Commercial Rulings Division

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