HQ 735257 - Country of origin marking of imported shotgun barrels to be manufactured in the U.S. into finished shotguns; Article 509; NAFTA Marking Rules; ultimate purchaser; section 134.35(b) of the interim regulations; section 102.11 of the interim regulations - United States International Trade Commision Rulings

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HQ 735257

September 16, 1994

Mar-2-05 CO:R:C:V 735257 AT

CATEGORY: MARKING

Edward B. Ackerman, Esq.
Maytee Pereira, Esq.
Siegel, Mandell & Davidson, P.C.
One Astor Plaza
1515 Broadway, 43rd Floor
New York, New York 10036-8901

RE: Country of origin marking of imported shotgun barrels to be manufactured in the U.S. into finished shotguns; Article 509; NAFTA Marking Rules; ultimate purchaser; section 134.35(b) of the interim regulations; section 102.11 of the interim regulations

Dear Mr. Ackerman and Ms. Pereira:

This is in response to your letters dated July 13, 1993 and May 12, 1994, on behalf of O.F. Mossberg & Sons, Inc. ("Mossberg"), requesting a ruling on the country of origin marking requirements for imported shotgun barrels imported from Mexico that are to be further processed and assembled with domestic components in the U.S. into finished shotguns. We regret the delay in responding.

FACTS:

You state that Mossberg exports lengths of U.S. origin steel rod to Mexico for processing into unfinished shotgun barrels (consisting of a barrel tube and a barrel extension) which are subsequently re-imported into the U.S. for further processing and assembly with domestic components into finished shotguns. Upon importation, the shotgun barrels are shipped directly to a Mossberg facility where they are subjected to additional processing operations prior to being assembled with domestic components into finished shotguns. These operations include precision straightening, drilling to permit sight attachment, attachment of the sights, soldering of takedown mount, branding, polishing and "bluing". Upon completion of these operations, the barrels are assembled with other U.S. components (i.e., stock, butt, forearm, receiver, magazine, trigger and bolt assemblies, etc.), all of U.S. manufacture, into finished shotguns. The shotguns are tested to ensure proper functioning and precision fit, and then are partially disassembled to facilitate packaging and shipping.

You assert that the imported shotgun barrels' country of origin changes to U.S. origin as a result of the U.S. processing pursuant to section 102.11 of the interim regulations, and thus Mossberg is the ultimate purchaser of the imported shotgun barrels. Accordingly, the imported shotgun barrels are exempt from country of origin marking pursuant to section 134.35(b) of the interim regulations.

ISSUE:

What are the country of origin marking requirements for imported shotgun barrels which are to be processed and used in the production of finished shotguns in the U.S. in the manner described above?

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.

The country of origin marking requirements for a "good of a NAFTA country" are also determined in accordance with Annex 311 of the North American Free Trade Agreement ("NAFTA"), as implemented by section 207 of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat 2057) (December 8, 1993) and the interim amendments to the Customs Regulations published as T.D. 94-4 (59 Fed. Reg. 109, January 3, 1994) with corrections (59 Fed. Reg. 5082, February 3, 1994) and T.D. 94-1 (59 Fed. Reg. 69460, December 30, 1993). These interim amendments took effect on January 1, 1994, to coincide with the effective date of the NAFTA. The Marking Rules used for determining whether a good is a good of a NAFTA country are contained in T.D. 94-4 (adding a new Part 102, Customs Regulations). The marking requirements of these goods are set forth in T.D. 94-1 (interim amendments to various provisions of Part 134, Customs Regulations).

Section 134.1(b) of the interim regulations, defines "country of origin" as
the country of manufacture, production, or growth of any article of foreign origin entering the U.S. 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 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) of the interim regulations, 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) of the interim regulations, defines a "good of a NAFTA country" as an article for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules. Section 134.45(a)(2) of the interim regulations, provides that a "good of a NAFTA country" may be marked with the name of the country of origin in English, French or Spanish.

In this case, U.S. origin steel rod is exported to Mexico to be processed into unfinished shotgun barrels, then re-imported into the U.S. to be processed and assembled with U.S. components into finished shotguns. Thus, in order to determine the appropriate marking requirements for the imported shotgun barrels we must first determine under the NAFTA Marking Rules the country of origin of the unfinished shotgun barrels imported from Mexico.

Part 102 of the interim regulations, sets forth the "NAFTA Marking Rules" for purposes of determining whether a good is a good of a NAFTA country for marking purposes. Section 102.11 of the interim regulations, sets forth the required hierarchy for determining country of origin for marking purposes. Section 102.11(a) of the interim regulations states that "[t]he 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 requirements of these rules are satisfied."

"Foreign Material" is defined in section 102.1(e) of the interim regulations as "a material whose country of origin as determined under these rules is not the same country as the country in which the good is produced."

Since the unfinished shotgun barrels are produced from U.S. origin steel rod (foreign as defined in section 102.1(e) of the interim regulations) the applicable rule that must be applied in determining the origin of the shotgun barrels imported from Mexico is section 102.11(a)(3) of the interim regulations.

The unfinished shotgun barrels are classified under heading 9305 HTSUS. For purposes of this ruling we will assume that the U.S. steel rod is classified in heading 7228 HTSUS. The applicable change in tariff classification set out in section 102.20(s), Section XIX, Chapter 93, 9305 of the interim regulations provides:

9305 .... A change to heading 9305 from any other heading

Because the U.S. steel rod undergoes the applicable change in tariff classification set out in section 102.20(s), the country of origin of the unfinished shotgun barrels imported from Mexico, is Mexico.

Although the unfinished shotgun barrels are of Mexican origin when imported into the U.S., the barrels may be excepted from country of origin marking due to being further processed in the U.S. Section 134.35(b) of the interim regulations, provides that
a good of a NAFTA country which is to be processed in the United States in a manner that would result in the good becoming a good of the United States under the NAFTA Marking Rules is excepted from marking. Unless the good is processed by the importer or on its behalf, the outermost container of the good shall be marked in accord with this part.Because the imported shotgun barrels are of Mexican origin (a NAFTA country), pursuant to section 134.35(b), the NAFTA Marking Rules set forth in Part 102 of the interim regulations must be applied to determine whether the imported barrels become goods of the U.S. as a result of the U.S. processing, and thus are excepted from country of origin marking. Again, section 102.11 of the interim regulations, sets forth the required hierarchy for determining country of origin for marking purposes.

The application of the hierarchial rules of section 102.11 of the interim regulations for marking purposes, requires a determination of the country of origin of the finished article, shotguns. Here, because Mexican origin barrels are used in the U.S. manufacturing of the finished shotguns, rather than U.S. origin barrels, the finished shotguns are neither wholly obtained/produced nor are produced exclusively from domestic materials and sections 102.11(a)(1) and (a)(2) cannot be used to determine the country of origin of the finished shotguns. Thus, section 102.11(a)(3) is the appropriate rule that must be applied to determine the origin of the finished shotguns.

The finished shotguns are classified under heading 9301 HTSUS. The unfinished shotgun barrels are classified in heading 9305 HTSUS. The applicable change in tariff classification set out in section 102.20(s), Section XIX, Chapter 93, 9301-9304 of the interim regulations provides:

9301-9304 .... A change to heading 9301 through 9304 from any other heading, including a heading within that group, except a change from heading 9305 when that change is pursuant to GRI 2(a).

In this case, we find that the Mexican origin shotgun barrels undergo the applicable change in tariff classification set out in section 102.20(s), and thus as a result of being further processed in the U.S. the imported barrels from Mexico become articles of U.S. origin under Part 102 of the interim regulations. The change from heading 9305 HTSUS to Heading 9301 HTSUS is not pursuant to General Rules of Interpretation ("GRI") 2(a) because the "finished" shotguns are classified in heading 9301 pursuant to GRI 1.

Accordingly, pursuant to section 134.35(b), the imported shotgun barrels which are processed in the manner described above, are excepted from marking and the outermost containers in which the barrels are imported are also excepted from marking provided Mossberg (importer) processes the barrels in the manner described above. We note that, if any of the imported shotgun barrels are to be sold individually and are not to be processed into finished shotguns in the manner described above, the barrels are required to be individually marked with their country of origin "Mexico".

HOLDING:

Unfinished shotgun barrels imported from Mexico, that are to be manufactured into finished shotguns in the manner described above, become goods of U.S. origin pursuant to section 102.11(a)(3) of the interim regulations. Accordingly, pursuant to section 134.35(b) of the interim regulations, the imported shotgun barrels are excepted from country of origin marking. Also, the outermost containers in which the barrels are imported are excepted from marking pursuant to section 134.35(b) provided Mossberg (importer) processes the imported barrels in the manner described above.

Sincerely,

John Durant, Director

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