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HQ 951466




JUNE 19, 1992

CLA-2:CO:R:C:M 951466 JAS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8502.13.00, HTSUS

Mr. Mark D. Johnson
McClary, Swift & Co., Inc.
P.O. Box 370
Blaine, WA 98230

RE: Electric Generating Set; Electric Generator of Japanese Origin Assembled in Canada With Diesel Engine of Canadian or U.S. Origin; Eligibility for the Partial Duty Exemption Under the United States-Canada Free-Trade Agreement (CFTA)

Dear Mr. Johnson:

In your letter of March 13, 1992, on behalf of Simpson Power Products, Ltd., you inquire as to the tariff status under the CFTA of a water cooled electric generating set assembled in Canada in part with a component of third country origin. Our ruling follows.

FACTS:

Under the facts presented, an electric generator of Japanese origin is imported into Canada under heading HTS heading 8501. It is assembled in Canada with a prime mover described as a compression-ignition internal combustion turbocharged diesel engine of either U.S. or Canadian origin into an electric generating set (genset). Other minor components may be of U.S. or Canadian origin.

You propose to enter the genset into the Customs territory of the United States under the provision for other generating sets, in subheading 8502.30.00, Harmonized Tariff Schedule of the United States (HTSUS). You ask whether the genset would be eligible for a reduced rate under the CFTA.

ISSUE:

Whether the described assembly operation in Canada results in one of the changes in tariff classification in Canada required by General Note 3(c)(vii)(R). - 2 -

LAW AND ANALYSIS:

Initially, the genset imported into the Customs territory from Canada is properly classifiable in subheading 8502.13.00, HTSUS, generating sets with compression-ignition internal combustion piston engines of an output exceeding 375 kVA.

As to its status under the CFTA, General Note 3(c)(vii)(B), HTSUS, states in part that goods imported into the Customs territory of the United States are eligible for treatment as "goods originating in the territory of Canada" if they have been transformed in either Canada or the United States so as to be subject to a change in tariff classification as described in subdivision (c)(vii)(R) of note 3.

General Note 3(c)(vii)(F), HTSUS, states in part that whenever the processing or assembly of goods in the territory of Canada and/or the United States results in one of the changes in tariff classification in Canada described in subdivision (c)(vii)(R) of [this] note, such goods shall be considered to have been transformed in the territory of Canada and shall be treated as goods originating in the territory of Canada.

One of the changes in classification in Canada with respect to Chapters 84 and 85 is authorized by General Note 3(c)(vii) (R)(16)(bb). This is a change from one heading (other than a parts heading) to another heading, other than heading 8528 or 8529. In the described facts, an electric generator of heading 8501 is assembled in Canada with an internal combustion diesel engine of heading 8408, plus other minor components of either U.S. or Canadian origin, to make an electric generating set of heading 8502. This is an authorized change in classification so as to qualify the genset entering the Customs territory as an originating good under the CFTA.

HOLDING:

Under General Rule of Interpretation (GRI) 1, HTSUS, the electric generating set assembled in Canada is provided for in heading 8502. Actual classification is in subheading 8502.13.00, HTSUS, as indicated.

As an originating good under the CFTA, the genset is eligible for the reduced rate of duty of 0.6 percent ad valorem.

Sincerely,

John Durant, Director
Commercial Rulings Division

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