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HQ 953079

July 8, 1993
CLA-2 CO:R:C:M 953079 KCC

CATEGORY: CLASSIFICATION

TARIFF NO.: 7210.49.00; 8708.29.00

Sandra Liss Friedman, Esq.
Barnes, Richardson & Colburn
475 Park Avenue South
New York, New York 10016

RE: Motor vehicle side panel steel blanks; GRI 2(a); unfinished articles; EN to Rule 2(a); blanks; EN 87.08; parts and accessories of motor vehicle bodies; General EN (III) PARTS AND ACCESSORIES; Note 1(k), Chapter 72; CFTA; General Note change in tariff classification

Dear Ms. Friedman:

This is in response to your letter dated December 9, 1992, on behalf of Mitsubishi International Corporation, regarding the tariff classification under the Harmonized Tariff Schedule of the United States (HTSUS) and applicability of the United States-Canada Free Trade Agreement (CFTA), to motor vehicle side panel steel blanks. Specifications and photographs of the panel blanks were submitted on May 21, 1993, for examination.

FACTS:

Flat-rolled galvanized steel in coil form measuring 0.033 inch in thickness and 60 inches in width is produced in Japan and imported into Canada where it undergoes certain processing operations. In Canada, the steel is uncoiled, cleaned, flattened and blanked, using a special die shape, into automobile outer side panel blanks (panel blanks). The panel blanks will then be imported into the U.S. where they will be further processed into finished auto parts.

ISSUE:

I. What is the classification of the panel blanks under the HTSUS?

II. Are the panel blanks eligible for preferential tariff treatment under the CFTA?

LAW AND ANALYSIS:

I. Tariff Classification

The classification of merchandise under the HTSUS is governed by the General Rules of Interpretation (GRI's). GRI 1, HTSUS, 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...." GRI 2(a), HTSUS, states:

Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article.

The Harmonized Commodity Description and Coding System (HCDCS) Explanatory Notes (ENs), although not dispositive, are to be looked to for the proper interpretation of the HTSUS. 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989). EN to Rule 2(a) states:

(II) The provisions of this Rule also apply to blanks unless these are specified in a particular heading. The term "blank" means an article, not ready for direct use, having the approximate shape or outline of the finished article or part, and which can only be used, other than in exceptional cases, for completion into the finished article or part.

The panel blanks have the approximate shape or outline of the finished article; motor vehicle side panels. When exported to the U.S., the panel blanks can only be used for completion into a finished side panel. Therefore, pursuant to GRI 2(a), HTSUS, the panel blanks are unfinished articles and are classified under the tariff provision for the finished article.

We are of the opinion that the panel blanks imported into the U.S. are classified under subheading 8708.29.00, HTSUS, which provides for "Parts and accessories of the motor vehicles of headings 8701 to 8705...Other parts and accessories of bodies (including cabs)...Other...." EN 87.08 (pg. 1432) states that:

This heading covers parts and accessories of the motor vehicles of headings 87.01 or 87.05, provided the parts and accessories fulfil both the following conditions:

(i) They must be identifiable as being suitable for use solely or principally with the above-mentioned vehicles;
and (ii) They must not be excluded by the provisions of the Notes to Section XVII (see the corresponding General Explanatory Note).

General EN (III) PARTS AND ACCESSORIES (pgs. 1410-1412) states that:

It should, however, be noted that these headings apply only to those parts or accessories which comply with all three of the following conditions:

(i) They must not be excluded by the terms of Note 2 to this Section....
and (ii) They must be suitable for use solely or principally with the articles of Chapters 86 to 88....
and (iii)They must not be more specifically included elsewhere in the Nomenclature....

The panel blanks are not excluded by Note 2, Section XVII, HTSUS, because they are not among the listed products. Furthermore, the panel blanks are not parts and accessories covered more specifically by another heading in the Nomenclature. The panel blanks are excluded from classification in Chapter 72, HTSUS, by Note 1(k), Chapter 72, HTSUS. This note states, in part, that "[f]lat-rolled products of a shape other than rectangular or square, of any size, are to be classified as products of a width of 600 mm or more, provided that they do not assume the character of articles or products of other headings." As stated previously, the panel blanks are nonrectangular flat-rolled products that have assumed the character of an article in another heading.

The information submitted indicates that the panel blanks are manufactured according to Chrysler Motors specifications for use solely for the manufacture of a motor vehicle side panel. The panel blanks meet both requirement of EN 87.08 and all three requirements of General EN (III) PARTS AND ACCESSORIES to Section XVII, HTSUS. Therefore, the panel blanks are classified as other parts and accessories of bodies of motor vehicles under subheading 8708.29.00, HTSUS. This tariff provision is eligible for preferential tariff treatment under the CFTA.

II. The United States-Canada Free Trade Agreement

To be eligible for tariff preference under the CFTA, goods must be "originating goods" within the rule of origin in General Note 3(c)(vii)(B), HTSUS. There are two primary means in General Note 3(c)(vii)(B), HTSUS, by which articles imported into the U.S. 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), HTSUS. The panel blanks are manufactured from Japanese galvanized steel, so they are not "wholly obtained or produced in the territory of Canada."

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), HTSUS. A transformation is evident when a change in tariff classification occurs that is authorized by General Note 3(c)(vii)(R), HTSUS. General Note 3(c)(vii)(R)(17)(aa), HTSUS, states that for chapters 86 through 89 "[a] change from one chapter to another" is acceptable.

In this case, pursuant to General Note 3(c)(vii)(R)(aa), HTSUS, a transformation does occur. As imported into Canada, the flat- rolled galvanized steel measuring 0.033 inch in thickness and 60 inches in width is classified under subheading 7210.49.00, HTSUS, which provides for "Flat-rolled products of iron or nonalloy steel, of a width of 600 mm or more, clad, plated or coated...Otherwise plated or coated with zinc...Other...." As previously stated, the panel blanks imported into the U.S. are classified under subheading 8708.29.00, HTSUS, as other parts and accessories of bodies of motor vehicles. A change in classification from Chapter 72, HTSUS, to Chapter 87, HTSUS, is authorized by General Note 3(c)(vii)(R)(aa), HTSUS. Therefore, the panel blanks are entitled to preferential tariff treatment under the CFTA.

HOLDING:

The Japanese steel when imported into Canada is classified under subheading 7210.49.00, HTSUS, which provides for flat-rolled galvanized steel. The panel blanks manufactured from the Japanese steel are classified under subheading 8708.29.00, HTSUS, as other parts and accessories of bodies of motor vehicles. The change in classification which occurs is a change authorized by General Note 3(c)(vii)(R)(17)(aa), HTSUS. Therefore, the panel blanks are entitled to preferential tariff treatment under the CFTA. Under the CFTA, the panel blanks are dutiable at the rate of 1.5 percent ad valorem.

Sincerely,

John Durant, Director

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