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HQ 559811




July 12, 1996

CLA-2 RR:TC:SM 559811 MLR

CATEGORY: MARKING

Mark Sandstrom, Esq.
Thompson Hine & Flory P.L.L.
1920 N. Street, N.W.
Washington, D.C. 20036-1601

RE: Country of origin marking for student day planner; Mexico; NAFTA; Article 509

Dear Mr. Sandstrom:

This is in reference to your letter of April 5, 1996, requesting a ruling on behalf of the School and Office Products Division of Mead Corporation ("Mead"), concerning the country of origin marking requirements for Five Star First Gear Student Day Planners ("day planner"). A sample was submitted with your request.

FACTS:

The good at issue is a day planner, consisting of a metal six-ring binder mechanism riveted to a plastic board that is inserted into a pocket inside a bifold cover made of nylon textile fabric. The binder holds paper inserts designed to accommodate various kinds of written entries for personal record-keeping. A plastic ruler and a pad of graph paper are also held in the folder.

The metal ring binder mechanism, plastic board and nylon cover are made in China and sent to Mexico. In Mexico, the binder mechanism is riveted to the board and is slipped into the nylon cover. Paper in large sheets is printed in the U.S. and shipped to Mexico where it is cut to specific size and punched with holes. Graph paper sheets, printed in the U.S., is also shipped to Mexico where it is cut to specific size and glued at the top of each cut sheet to form a pad which is slipped into the nylon cover. Divider sheets, already cut to size and of U.S. origin, are also shipped to Mexico and arranged with the various paper pages in the order of the sections of the planner (calendar, assignments, notes, and telephone/addresses). The ruler of Taiwanese-origin, stated to be 1.8 percent of the value of the finished day planner, is clear flexible plastic with holes and is slipped over the binder rings. A paper label, referred to as a "sell band," cut from a large sheet imported into Mexico from the U.S., is placed around the cover.

Headquarters Ruling Letter (HRL) 957701 dated July 7, 1995, classified the day planner under subheading 4820.10.20, Harmonized Tariff Schedule of the United States (HTSUS), and modified New York Ruling Letter (NYRL) 806292 dated February 7, 1995, holding that the day planner was eligible for preferential tariff treatment under the NAFTA, as NYRL 806292 erroneously applied the non-qualifying operations of 19 CFR 102.17(c), interim regulations, for NAFTA preference purposes. It is stated that the day planner described in HRL 957701 and this ruling request is essentially identical.

The "sell band" on the day planners imported from Mexico is marked:

C 1994 The Mead Corporation, Dayton,
Ohio, 45463 U.S.A. Nylon cover made in China. Assembled in Mexico of components of China and U.S.A.
U.S. Pat. No. 343,862 and 5,219,437

These words appear on the lower front portion of the band, and are visible on the exterior of the day planner as offered at retail. The interior of the nylon folder also has a sewn-in textile label bearing Mead's name and Ohio address, followed by the item number and the words "Made in China." You ask whether the day planner may be marked "Made in Mexico" on the sell band, without any reference to the country of origin of the components, either on the sell band or on any of the components themselves.

ISSUE:

Whether the "sell band" on the day planner may be marked "Made in Mexico," and whether the sewn-in label on the interior of the nylon folder may be eliminated.

LAW AND ANALYSIS:

The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. Part 134, Customs Regulations (19 CFR Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.

Section 134.1(b), Customs Regulations (19 CFR 134.1(b)), defines "country of origin" as:

The country of manufacture, production, or growth of any article of foreign origin entering the United States. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the "country of origin" within the meaning of this part; however for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin. (Emphasis added).

Section 134.1(j), Customs Regulations (19 CFR 134.1(j)), provides that the "NAFTA Marking Rules" are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. Section 134.1(g), interim regulations, defines a "good of a NAFTA country" as an article for which the country of origin is Canada, Mexico, or the U.S. as determined under the NAFTA Marking Rules set out at 19 CFR Part 102, interim regulations.

Section 102.11, Customs Regulations (19 CFR 102.11), sets forth the required hierarchy for determining whether a good is a good of a NAFTA country for marking purposes. This section states that the country of origin of a good is the country in which:

(1) The good is wholly obtained or produced; (2) The good is produced exclusively from domestic materials; or
(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.

Since the day planners are finished in Mexico with goods of U.S., Chinese, and Taiwanese origin, the day planners are neither wholly obtained or produced, nor produced exclusively from domestic materials. Accordingly, 19 CFR 102.11(a)(3) is the applicable rule that next must be applied to determine the origin of the day planners.

The day planners are classified under heading 4820, HTSUS, according to HRL 957701. The applicable change in tariff classification for heading 4820 set out in 19 CFR 102.20(j), Section X, Chapters 47 through 49, provides:

4817-4822 ... A change to headings 4817 through 4822 from any other heading, including another heading within that group.

As found in HRL 957701, the materials exported from China and Taiwan, i.e., the binder mechanism, plastic board, nylon cover, and ruler, are not classifiable within headings 4817 through 4822. The large paper and graph sheets, and the cut-to-size divider sheets, printed in the U.S., are also not classifiable within heading 4817 through 4822. Accordingly, all of these components undergo the requisite shift in tariff classification.

In regard to the application of 19 CFR 102.17, it states that "[a] foreign material shall not be considered to have undergone the applicable change in tariff classification set out in 102.20, or satisfy the other applicable requirements of that Section by reason of: (c) simple packing, repacking or retail packaging without more than minor processing...." It is our opinion that the ruler only undergoes a packaging operation so that it will not undergo the applicable tariff shift by virtue of 19 CFR 102.17.

However, certain foreign materials that do not undergo the applicable change in tariff classification set out in 19 CFR 102.20 shall be disregarded in determining the country of origin of the good, as provided in 19 CFR 102.13, if the value of those materials is no more than 7 percent of the value of the good. It is stated that the value of the ruler is 1.8 percent of the value of the day planner. Since the value of the ruler is no more than 7 percent of the value of the day planner, it may be disregarded in determining the country of origin of the day planner.

Therefore, since all of the foreign materials incorporated into the day planner undergo the requisite tariff shift in Mexico, the country of origin of the day planner will be Mexico. Accordingly, it will be appropriate to only mark the "sell band" on the day planner "Made in Mexico." Additionally, the sewn-in label on the interior of the nylon cover may be eliminated or the "sell band" must note that only the origin of the nylon cover is China.

HOLDING:

Based upon the information provided, pursuant to 19 CFR 102.11(a)(3) and 19 CFR 102.13, the country of origin of the finished day planner will be Mexico. The marking "Made in Mexico" on the "sell band" will be acceptable, and the sewn-in label on the nylon cover may be eliminated.

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. 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,

John Durant, Director

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