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HQ 560038





February 7, 1997

MAR-05 RR:TC:SM 560038 KKV

CATEGORY: MARKING

Mr. Rudy A. Pina
Joffroy Customs Brokers, Inc.
P.O. Box 698
Nogales, AZ 85628-0698

RE: Country of origin determination for metal tubes manufactured in the U.S. and exported to Mexico for bending, cutting and polishing

Dear Mr. Pina:

This is in response to your letter dated August 12, 1996 (received by our office on August 21, 1996), on behalf of Tri Clover, Inc., which requests a binding ruling regarding the country of origin of certain metal tubes manufactured in the U.S. and exported to Mexico for finishing operations prior to importation into the U.S. No sample has been submitted for our consideration.

FACTS:

We are informed that Tri-Clover, Inc. exports unfinished metal tubes of U.S. origin, classifiable under subheading 7307.23.00, Harmonized Tariff Schedule of the United States (HTSUS), to its maquiladora facility in Mexico, where the tubes are bent, cut and polished prior to importation into the U.S.

We are also informed that the finished metal tubes imported into the U.S. are entering as originating goods under the North American Free Trade Agreement (NAFTA) pursuant to General Note 12(b), HTSUS, having satisfied the requirement of General Note 12(b)(iii), HTSUS, that the articles are produced entirely in North America exclusively of originating materials. We are assuming for purposes of this ruling that the tubes exported to Mexico qualify as originating materials.

ISSUE:

What is the country of origin for marking and NAFTA duty rates of metal tubes originally of U.S. origin after having undergone bending, cutting and polishing operations in Mexico?

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin imported into the United States 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 United States the English name of the country of origin of the article. By enacting 19 U.S.C. 1304, Congress intended to ensure that the ultimate purchaser would be able to know by inspecting the marking on the imported goods the country of which the goods are the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will. United States v. Friedlaender & Co., 27 C.C.P.A. 297, 302 C.A.D. 104 (1940).

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.

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), Customs Regulations (19 CFR 134.1(g)), 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, set forth at 19 CFR Part 102. Section 134.45(a)(2) of the Customs regulations (19 CFR 134.45(a)(2)), provides that a "good of a NAFTA country" may be marked with the name of the country of origin in English, French or Spanish.

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.

Section 102.1(e), Customs Regulations (19 CFR 102.1(e)) defines "foreign material" as "a material whose country of origin as determined under these rules is not the same country or origin as the country in which the good is produced."

Based on the information provided, unfinished metal tubes of U.S. origin are exported to Mexico for additional processing including bending, cutting and polishing operations prior to the importation of the finished tubes into the U.S. Because the metal tubes are processed in Mexico of U.S. material, the tubes are neither wholly obtained or produced, nor produced exclusively from domestic materials. Accordingly, neither 19 CFR 102.11(a)(1) or 102.11(a)(2) may be used to determine the origin of the finished articles, and analysis must continue to 19 CFR

Your letter indicates that upon exportation to Mexico the unfinished metal tubes are classifiable under 7307.23.00, HTSUS. Subsequent to bending, cutting and polishing operations in Mexico, you indicate that the finished metal tubes are imported into the U.S. under the same subheading, which provides for tube or pipe fittings (for example, couplings, elbows, sleeves), of iron or steel: other, of stainless steel: butt welding fittings. Because no sample or other information has been submitted which would permit us to verify the validity of these classifications, we will assume they are correct for purposes of this ruling.

Pursuant to 19 CFR 102.11(a)(3), the country of origin of a good is the country in which each foreign material incorporated in that good undergoes an applicable change in tariff classification as set forth in 19 CFR 102.20, and satisfies any other applicable requirements of that section. In the case before us, because the finished metal tubes imported into the U.S. from Mexico are classified under subheading 7307.23.00, HTSUS, the change in tariff classification must be made in accordance with section 102.20(o), Section XV: Chapters 72 through 83, heading 7.01-7307, HTSUS, which requires "[a] change to heading 7301 through 7307 from any other heading, including another heading within that group."

In the case before us, the unfinished metal tubes, which are initially classified under heading 7307, HTSUS, remain classified under heading, 7307, HTSUS, subsequent to additional processing in Mexico. Thus, there is no applicable change in tariff classification within the requirements of section 102.20, and country of origin of the good may not be determined in accordance with this provision.

Because 19 CFR 102.11(a) (incorporating section 102.20), is not determinative of origin, the next step is section 102.11(b), Customs Regulations, which states, in part:

Except for a good that is specifically described in the Harmonized Tariff
Schedule as a set, or is classified as a set pursuant to General Rule of
Interpretation 2, where the country origin cannot be determined under paragraph (a), the country of origin of the good:

(1) Is the country or countries of origin of the single material that imparts the essential character of the good, ...

In the instant case, the imported finished tube is composed of a metal tube of U.S. origin which has undergone additional manipulation in the form of bending, cutting and polishing.

When determining the essential character of a good under section 102.11, Customs regulations, section 102.18(b)(2), provides that, "for purposes of applying section 102.11, only domestic and foreign materials (including self-produced materials) that are classified in a tariff provision from which a change in tariff classification is not allowed in the rule for the good set out in section 102.20 shall be taken into consideration in determining the parts or materials that determine the essential character of a good."

Because the finished metal tube consists of only one material, and because that material is classifiable in a tariff provision from which a change in tariff classification is not allowed under the applicable rule in 19 CFR 102.20(o), the U.S. origin tube is the single material which imparts the essential character to the finished good pursuant to section 102.18(b)(iii). Accordingly, for country of origin marking purposes, the country of origin of the finished metal tube after having been bent, cut and polished in Mexico is the U.S. Because the marking requirements of 19 U.S.C. 1304 are applicable only to articles of "foreign origin," the metal tubes need not be marked upon entry into the U.S.

Article 401 of the NAFTA, is incorporated into General Note 12, HTSUS. General Note 12(a) provides in pertinent part that:

(i) Goods that originate in the territory of a NAFTA party under subdivision (b) of this note and that qualify to be marked as goods of Canada under the terms of the marking rules ....and are entered under a subdivision for which a rate of duty appears in the "Special" subcolumn followed by the symbol "CA" in parentheses, are eligible for such duty rate...

(ii) Goods that originate in the territory of a NAFTA party under subdivision (b) of this note and that qualify to be marked as goods of Mexico under the terms of the marking rules....and are entered under a subheading for which a rate of duty appears in the "Special" subcolumn followed by the symbol "MX" in parentheses, are eligible for such duty rate....

Thus, by operation of General Note 12, the eligibility of a particular article for NAFTA duty preference is predicated, in part, upon an origin determination under the NAFTA Marking Rules of either Canada or Mexico. As demonstrated by the foregoing analysis, in the case before us, application of the NAFTA Marking Rules contained in 19 CFR 102.11 did not yield an origin determination of either Canada or Mexico, but the United States.

However, the NAFTA Preference Override set forth in 19 CFR 102.19 is applicable to the subject merchandise. Specifically, 19 CFR 102.19(b) states:

(b) If, under any provision of this part, the country of origin of a good which is originating ..... is determined to be the United
States and that good has been exported from, and returned to, the United States after having been advanced in value or improved in condition in another
NAFTA country, the country of origin of such good for Customs duty purposes is the last NAFTA country in which that good was advanced in value or improved in condition.

Based on the facts presented, the metal tubes at issue are an originating good under NAFTA and have been determined under section 102.11)b) to be a good of U.S. origin. Because the articles were returned to the U.S. after having been advanced in value or improved in condition in Mexico by virtue of bending, cutting and polishing operations, the country of origin of the metal tubes for Customs duty purposes is Mexico, pursuant to 19 CFR 102.19(b). Accordingly, the "MX" NAFTA rate will be applicable to the metal tubes.

HOLDING:

On the basis of the information provided, for country of origin marking purposes, the country of origin of metal tubes manufactured in the U.S. and exported to Mexico for bending, cutting and polishing prior to importation into the United States is the U.S., pursuant to 19 CFR 102.11(b)(1). Therefore, the imported tubes are not subject to the marking requirements of 19 U.S.C. 1304.

Metal tubes of U.S. origin which undergo additional processing in Mexico including bending, cutting and polishing prior to importation into the U.S. will be considered of Mexican origin for purposes of Customs duty pursuant to 19 CFR 102.19(b), provided the metal tubes qualify as an originating good pursuant to General Note 12, HTSUS, and may be assessed duties at the "MX" NAFTA rate.

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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