NY 0852176 - The tariff classification of plastic key tags and stadium cushions from Mexico. - United States International Trade Commision Rulings

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NY 852176

May 25, 1990

CLA-2-39:S:N:N3D:221 852176

CATEGORY: CLASSIFICATION

TARIFF NO.: 3926.90.9050

Mr. Earl A. Roberts
Richard L. Jones, Customhouse Brokers, Inc. 475 Railroad Blvd., P.O. Box 472
Calexico, CA 92231-0472

RE: The tariff classification of plastic key tags and stadium cushions from Mexico.

Dear Mr. Roberts:

In your letter dated April 25, 1990, on behalf of Coventry Manufacturing Company, Inc., you requested a tariff classification ruling.

You requested information on two products. The key tag is a plastic fob which, after importation, will be attached to a key ring. It comes in various sizes and shapes, including hearts, ovals, circles, dollar signs, numerals and grips. Each shape has a hole punched in where it will be fitted with a key ring. The cushion is rectangular, with rounded edges and a cut out handle. It measures approximately 16 inches by 9 1/2 inches, with a thickness of 13/16 inch.

Both are produced using similar processes. Foamed ethyl vinyl acetate plastic sheets, made in the United States, are shipped to Mexico. The foamed plastic is die cut to size and shape. Then, the cut shapes are dipped into a liquid vinyl coating mixture. The ingredients of the coating mix are also made in the United States and shipped to Mexico. Each shape is dipped in the liquid at least 3 times. Between each dipping process, the shapes are placed in a drying tunnel and heated. After the vinyl coating is thick enough, each shape is then dipped into a clear coating which gives it a shiny surface.

The applicable subheading for the key tags and stadium cushions will be 3926.90.9050, Harmonized Tariff Schedule of the United States (HTS), which provides for other articles of plastics, other. The rate of duty will be 5.3 percent ad valorem.

Articles classifiable under subheading 3926.90.9050, HTS, which are products of Mexico, are entitled to duty free treatment under the Generalized System of Preferences (GSP) upon compliance with all applicable regulations.

You also request a ruling as to whether the foam sheets undergo a double substantial transformation which would make them eligible to be considered substantially transformed constituent materials.

Under the Generalized System of Preferences (GSP), eligible products of a designated beneficiary country (BDC) which are imported directly into the United States qualify for duty-free treatment if the sum of the cost or value of the constituent materials produced in the BDC plus the direct costs involved in processing the eligible article in the BDC is at least 35 percent of the article's appraised value at the time of its entry into the United States. The cost or value of materials which are imported into the BDC to be used in the production of the article may be included in the 35 percent value-content computation only if the imported materials undergo a double substantial transformation in the BDC. That is, the material imported into Mexico from the United States to produce the key tags and stadium cushions must first be substantially transformed into a new and different intermediate article of commerce, which is then used in Mexico in the production of the final imported article.

The test for determining whether a substantial transformation has occurred is whether an article emerges from a process with a new name, character or use, different from that possessed by the article prior to the processing. The die cutting of the foam shapes constitutes a substantial transformation of the United States sheeting material. However, the coating of the foam shapes with plastic liquid is merely a finishing operation and does not result in a change in name, character or use. Since the foam shapes do not undergo a second substantial transformation, the cost or value of the foam sheets may not be counted for the purposes of satisfying the 35 percent requirement.

This ruling is being issued under the provisions of Section 177 of the Customs Regulations (19 C.F.R. 177).

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is imported. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.

Sincerely,

Jean F. Maguire
Area Director

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