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HQ 560108





December 17, 1996

MAR-2-05 RR:TC:SM 560108 DEC

Category: MARKING

Mr. Gary Cooper
Horton, Whiteley & Cooper
One Kaiser Plaza, Suite 1410
Oakland, California 94612

RE: Country of origin marking of remote keyless entry; NAFTA Article 509;
19 CFR Part 102; 19 CFR Part 134; HRL 953013; 19 CFR 19 CFR 134.46

Dear Mr. Cooper:

This is in response to your letters dated September 30 and October 24, 1996, on behalf of your client, Alps Automotive, Incorporated (Alps), requesting a ruling with respect to the country of origin marking requirements for certain remote keyless entry transmitters (RKE) to be imported into the U.S.

FACTS:

The component materials that will be used to produce the RKE's will be shipped to Mexico from various countries. You state that the following components will be used to produce the RKE transmitters:
key ring battery tact switch resistors printed circuit boards keypad transistors switch seal inductor housings
SAW resonator terminals microprocessor contacts capacitors

The components will be mounted on to the printed circuit board. The keypad and the printed circuit board are then mounted together and a battery is placed in the bottom housing. The top and bottom housings, with the printed circuit board placed between them, are snapped together. The product is then tested for electronic function, heat sealed in a plastic bag, labeled, and boxed for shipment to various facilities in the U.S. and Canada. The individual transmitters will be in plastic bags marked "Made in Mexico," "Assembled in Mexico" or "Mexico." and will be shipped to various plants near Toronto, Philadelphia, New York, Tampa, and Atlanta.

Two RKE transmitters and one receiver are programmed in the U.S. or Canada by pushing a programming button through the bag without breaking the seal. The transmitters are then taped to their receiver which has been programmed specifically to receive signals from that particular transmitter. The system is then shipped to various assembly plants throughout the U.S. and Canada where the receiver is securely mounted to an automobile and the transmitters are placed in the glove box for shipment to the dealer. The process of mounting the receiver to the automobile involves the connection of the receiver to the electrical systems of various functioning units including the locking system, the radio system, the trunk system, the power window system, and mirror functioning systems. The transmitter is still sealed in the plastic labeled bag when shipped to the dealer. The dealer may remove the bag as part of the preparation of the automobile for sale to consumers.

You note that the programming process imparts each transmitter with its unique transmitter identification code and imparts that code into the receiver's memory so that only one receiver (or its duplicate) will respond to the signal. This process is performed for safety and security requirements and to insure that there will be no duplication. Each transmitter will only function with one specific vehicle which will be programmed with the appropriate code in its receiver. You state that the cost of the RKE's will represent much less than 1% of the total value of the automobile.

You state that under Canadian law a certain frequency rating or identification number must be provided on a product such as the RKE transmitter. Since automobiles manufactured in the U.S. and Canada may be sold interchangeably, Alps would like to have both the Federal Communication Commission (FCC) and the Canadian required-identification numbers on the transmitters. In the photocopy you submitted with your request, the letters FCC ID and CAN would precede the identification numbers assigned by the respective U.S. and Canadian government agencies. In a telephonic discussion with a member of my staff on December 4, 1996, you indicated that Alps does not intend to preface the frequency rating with "CANADA" as you originally presented in your initial correspondence.

ISSUE:

What are the country of origin marking requirements of the imported transmitters described above?

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), requires 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 manner as to indicate to the ultimate purchaser the English name of the country of origin of the article. The regulations implementing the requirements and exceptions to 19 U.S.C. 1304 are set forth in Part 134, Customs Regulations (19 CFR 134).

The country of origin marking requirements for goods of a NAFTA country are determined in accordance with Annex 311 of the North American Free Trade Agreement, as implemented under the North American Free Trade Agreement Implementation Act ("NAFTA") (Pub. L. 103-182, 107 Stat. 437 (December 8, 1993)). The rules used for determining whether a good is a good of a NAFTA country are contained in regulations set forth in 19 CFR Part 102. The marking requirements for these goods are set forth in various provisions of Part 134, Customs Regulations.

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 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.

Section 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) 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) 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, the RKE transmitters are produced in Mexico and imported into the U.S. or Canada so that the manufacturer may equip automobiles with the remote keyless system in the U.S. or Canadian production facility. Thus, in order to determine the appropriate marking requirements for the imported RKE transmitters when they are imported into the U.S. and after the automobiles are equipped with these devices, we must first determine their country of origin pursuant to the NAFTA Marking Rules.

Part 102 of the regulations sets forth the "NAFTA Marking Rules" hierarchy for purposes of determining whether a good is a good of a NAFTA country for marking purposes. Section 102.11(a) of the regulations provides 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."

While you do not provide the country of origin of each component, you state that the components used to produce the RKE transmitters are imported into Mexico where they are manufactured into the transmitters. Accordingly, the completed RKE transmitters are neither wholly "obtained or produced" (19 CFR 102.11(a)(1)) nor are they "produced exclusively from domestic materials" (19 CFR 102.11(a)(2)) since the components are from various countries and they are manufactured in Mexico. Therefore, we must determine if section 102.11(a)(3) results in an origin determination. Under this rule, 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 set out in section 102.20. "Foreign material" is defined in section 102.1(e) of the 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." Section 102.20 of the rules sets forth the specific tariff classification changes and/or other operations which are specifically required in order for country of origin to be determined on the basis of operations performed on the foreign materials contained in a good.

The completed RKE transmitter is classified under subheading 8526.92, HTSUS (see Headquarters Ruling Letter (HRL) 953013, dated April 15, 1993), the applicable change in tariff classification set out in section 102.20(o), Section XVI, Chapters 84 through 85, 8526.10-8526.92 of the regulations provides:

8526.10 - 8526.92 .... A change to subheading 8526.10 through 8526.92 from any other subheading, including another subheading within that group.

In this case, since none of the components of the RKE are classifiable individually in subheading 8526.92, HTSUS, the country of origin of the RKE transmitter when it is imported into the U.S. will be Mexico because all of the components of the RKE will meet the applicable tariff shift rule cited above.

We note that section 134.35(b), Customs Regulations (19 CFR 134.35(b)), states 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.

In this case, we will look to whether the RKE transmitters are processed in a manner that would result in the RKE transmitters becoming a good of the U.S. pursuant to the NAFTA Marking Rules. If the RKE transmitter that is imported into the U.S. becomes a good of the U.S., the Mexican-origin RKE transmitter itself will be excepted from marking, but the outermost container of the RKE transmitter must be marked with Mexico as its country of origin unless the imported good is processed by or on behalf of the importer.

To determine the marking requirements of the RKE transmitters that are installed in U.S.-built automobiles, we apply the NAFTA Marking Rules hierarchy contained in 19 CFR 102.11 to the completed automobile into which the RKE system is installed. In this case, the automobile in which the RKE system is installed is neither "wholly obtained or produced," or "produced exclusively from domestic (U.S.) materials." Therefore, for purposes of determining the origin of the imported good, section 102.11(a)(3) is the applicable rule that first must be applied. Under this rule, 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 set out in section 102.20. As noted, the RKE transmitters imported from Mexico are classifiable under subheading 8526.92, HTSUS. When the finished automobile, including the RKE system, is manufactured, the finished automobile will be classified under heading 8703, HTSUS. The applicable change in tariff classification set out in section 102.20(p), Section XVII, Chapters 86 through 89, 8701-8705 of the regulations provides:

8701 - 8705 .... A change to heading 8701 - 8705 from any other heading except heading 8706.

In this case, the RKE transmitter will undergo the applicable change in tariff classification in the U.S. Therefore, the RKE transmitters that will be installed in the U.S. will become goods of the U.S. and will not need to be separately marked as to country of origin.

Similarly, to determine the marking requirements of the RKE transmitters that are installed in Canadian-built automobiles, we apply the NAFTA Marking Rules hierarchy contained in 19 CFR 102.11 to the completed automobile into which the RKE system is installed. In this case, the automobile in which the RKE system is installed is neither "wholly obtained or produced," or "produced exclusively from domestic (Canadian) materials." Therefore, for purposes of determining the origin of the imported good, section 102.11(a)(3) is the applicable rule that first must be applied. Under this rule, 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 set out in section 102.20. As noted, the RKE transmitters imported from Mexico are classifiable under subheading 8526.92, HTSUS. When the finished automobile, including the RKE system, is manufactured, the finished automobile will be classified under heading 8703, HTSUS. The applicable change in tariff classification set out in section 102.20(p), Section XVII, Chapters 86 through 89, 8701-8705 of the regulations provides:

8701 - 8705 .... A change to heading 8701 - 8705 from any other heading except heading 8706.

In this case, the RKE transmitters will undergo the applicable change in tariff classification in Canada. Therefore, the RKE transmitters that will be installed in Canada will become goods of Canada and will not need to be separately identified as to the country of origin provided the automobile is properly marked when imported into the U.S.

In regard to the marking on the back of the RKE transmitter, Customs does not find that the presence of the letters "CAN" followed by a registration number amount to a foreign country or locality reference that will trigger the special marking requirements of 19 CFR 134.46. Customs has specifically ruled that "CAN" is not an acceptable abbreviation for Canada for country of origin marking purposes under 19 U.S.C. 1304 because it does not unmistakably indicate Canada as the country of origin. HRL 722566, dated September 14, 1983. Therefore, the corrective language required under the regulation will not be required.

HOLDING:

When the RKE transmitters are imported into the U.S. to be installed in U.S.-produced automobiles, they become goods of the U.S. pursuant to 19 CFR Part 102, and the transmitters are excepted from marking pursuant to 19 CFR 134.35(b). RKE transmitters that are installed in Canadian-manufactured automobiles will become a good of Canada pursuant to 19 CFR Part 102 for purposes of country of origin marking and need not be separately marked with their country of origin assuming that the automobile is properly marked. We find that the letters "CAN" on the back of the transmitter do not trigger the special marking requirements of 19 CFR 134.46.

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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