HQ 0955989 - Protest 0901-93-100562; Northern Telecom, Inc.; Telephone Sets; United States - Canada Free Trade Agreement; CFTA; HQs 000413 and 000298 - United States International Trade Commision Rulings

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HQ 955989

June 8, 1994

CLA-2 CO:R:C:M 955989 MBR

CATEGORY: CLASSIFICATION

TARIFF NO.: 8517.10.00

District Director
U.S. Customs Service
111 West Huron Street
Buffalo, New York 14202

RE: Protest 0901-93-100562; Northern Telecom, Inc.; Telephone Sets; United States - Canada Free Trade Agreement; CFTA; HQs 000413 and 000298

Dear District Director:

This is our response to Protest 0901-93-100562, regarding the manufacturing and importation of telephone sets under the U.S. - Canada Free Trade Agreement ("CFTA"). The subject merchandise was entered in multiple entries between January 3, 1989, and March 1, 1989, and the entries were liquidated between December 24, 1992, and February 19, 1993. The protest was timely filed on March 11, 1992.

FACTS:

The protestant, Northern Telecom, Inc., manufactures telephone sets which consist of a console, a handset, a line cord, a handset cord, and in some models, a transformer. The console (selector or base) is manufactured in Canada. Some of the handsets are manufactured in Canada, while others are manufactured in China. The line cord, handset cord and transformer are all imported from third countries. These goods are packaged together in Canada to comprise a complete telephone set, and then are imported into the United States.

ISSUE:

Are the instant Telephone Sets eligible for CFTA preferential duty status?

LAW AND ANALYSIS:

In HQ 000413, issued to your office on June 3, 1994, we addressed this issue in detail, regarding the same importer and fact pattern. See also the attached copy of HQ 000298, dated June 3, 1994, for a similar ruling.

In HQ 000413, we held that the telephone sets satisfy the CFTA rule that all the non-originating materials change classification as required by the specific rules in General Note 3(c)(vii)(R)(16)(bb). We also held that although the packaging or combining of the cords, transformers, and, in some cases, the handsets with the consoles is, when taken by itself, a "simple" packaging or combining process, it must be considered in connection with the other processing performed on the goods. In this case, the telephone sets have been subject to other manufacturing processes in Canada. Each console, which is a highly significant component of the complete article, was produced in Canada by substantial processing other than "simple packaging or combining" and, therefore, is sufficient to make the prohibition in General Note 3(c)(vii)(C)(1) inapplicable to the facts in issue.

HOLDING:

The Northern Telecom, Inc., telephone sets, produced from consoles which are manufactured in Canada and which are subsequently combined with non-originating handsets, line cords, handset cords, and, in some cases, transformers, satisfy the change in tariff classification requirement set out in General Note 3(c)(vii)(B)(2) of the 1993 Harmonized Tariff Schedule of the United States ("HTSUS"), and are eligible to qualify as originating goods under the CFTA.

For the reasons stated above, this protest should be allowed in full. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision, together with the Customs Form 19, should be mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with this decision must be accomplished prior to the mailing of this decision. Sixty days from the date of this decision the Office of Regulations and Rulings will take steps to make this decision available to Customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription

Service, Lexis, Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director

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