HQ 0955699 - North American Free Trade Agreement; Window or Wall Room Air Conditioners; NAFTA; General Note 12(t); Assembly; Assemblies; 12(t)/84.32 and 12(t)/84.33(A), HTSUS - United States International Trade Commision Rulings

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HQ 955699

June 17, 1994

CLA-2 CO:R:C:M 955699 MBR

CATEGORY: CLASSIFICATION

TARIFF NO.: 8415.10.00

Mr. William H. Steere
Manager, U.S. Customs Compliance
Carrier Corporation
P.O. Box 4800
Syracuse, N.Y. 13221

RE: North American Free Trade Agreement; Window or Wall Room Air Conditioners; NAFTA; General Note 12(t); Assembly; Assemblies; 12(t)/84.32 and 12(t)/84.33(A), HTSUS

Dear Mr. Steere:

This is in reply to your letter of January 3, 1994, requesting guidance regarding the applicability of the North American Free Trade Agreement ("NAFTA") to the manufacture of window or wall room air conditioners and heat pumps.

FACTS:

You inquire as to the NAFTA eligibility for window or wall type air conditioning machines (classifiable in subheading 8415.10.00, HTSUS). You propose the manufacture of the air conditioners from entirely U.S. and Mexican origin goods, with the exception of a non-originating compressor.

You similarly inquire about NAFTA eligibility of the manufacture of goods classifiable in subheadings 8415.81 through 8415.83, HTSUS, such as heat pumps, etc.

ISSUE:

Whether certain air conditioners, assembled with non- originating compressors, qualify as originating goods for purposes of the duty preference under NAFTA?

LAW AND ANALYSIS:

To be eligible for tariff preferences under the North American Free Trade Agreement (NAFTA), goods must be "originating goods" within the rules of origin in General Note 12(b)(i), HTSUS. The air conditioners are not wholly obtained in the U.S. or Canada because they incorporate a non-originating material (compressor). However, they may be "transformed in the territory of Canada, Mexico and/or the United States" pursuant to General Note 12(b)(ii), HTSUS, which states:

(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...

(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...

You propose the manufacture of the air conditioners from entirely U.S. and Mexican origin materials, with the exception of a non-originating compressor. General Note 12(t)/84.32, HTSUS, regarding NAFTA, provides as follows:

A change to subheading 8415.10 from any other subheading, except from tariff item 8415.90.40 or from assemblies incorporating more than one of the following: compressor, condenser, evaporator, connecting tubing.

Therefore, inasmuch as the instant proposed manufacture does not result from a non-originating chassis, chassis base or outer cabinet (subheading 8415.90.40, HTSUS), and only one of the enumerated goods will be of non NAFTA origin (compressor), this manufacturing operation would qualify for NAFTA duty preference.

You similarly inquire about NAFTA eligibility of the manufacture of goods classifiable in subheadings 8415.81 through 8415.83, HTSUS. General Note 12(t)/84.33(A), HTSUS, regarding NAFTA, provides as follows:

(A) A change to subheadings 8415.81 through 8415.83 from any subheading outside that group, except from tariff item 8415.90.40 or from assemblies incorporating more than one of the following: compressor, condenser, evaporator, connecting tubing; or

Therefore, pursuant to (A), provided the instant proposed manufacture does not result from a non-originating chassis, chassis base or outer cabinet (subheading 8415.90.40, HTSUS), and any tariff changes are outside that group, and only one of the enumerated goods will be non-originating (i.e., compressor), this manufacturing operation would qualify for NAFTA duty preference.

You further inquire as to a working definition of the term "assemblies" for the purposes of General Note 12(t)/84.32 and 84.33. The Webster's New World Dictionary, 1988, page 82, defines "assembly" and "assemblies," in pertinent part, as follows: "4 a fitting together of parts to make a whole, as in manufacturing automobiles" and "5 the parts to be thus fitted together." (Emphasis added). We find these to be sufficient working definitions for these provisions.

However, it is important to note that the assemblies in General Notes 84.32 and 84.33 would necessarily have to be sub- assemblies of the air conditioners since, finished assemblies or sub-assemblies (which were non-originating) imparting the essential character (General Rule of Interpretation 2.(a)) of the finished air conditioners would not undergo the requisite tariff shift.

HOLDING:

Pursuant to General Note 12(t)/84.32, HTSUS, provided the proposed manufacture does not result from a non-originating chassis, chassis base or outer cabinet (subheading 8415.90.40, HTSUS), and only one of the enumerated goods will be non- originating (i.e., compressor), this manufacturing operation would qualify as an originating good for purposes of the duty preference under NAFTA.

Similarly, pursuant to General Note 12(t)/84.33(A), HTSUS, provided the instant proposed manufacture does not result from a non-originating chassis, chassis base or outer cabinet (subheading 8415.90.40, HTSUS), and any tariff changes are outside that group, and only one of the enumerated goods will be non-originating (i.e., the compressor), this manufacturing operation would qualify as an originating good for purposes of the duty preference under NAFTA

Sincerely,

John Durant, Director

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