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HQ 560297




March 28, 1997

RR:TC:SM 560297 JML

CATEGORY: MARKING

Mr. James M. Shepard Jr.
Statcorp, Inc.
7037 Commonwealth Avenue
Suite 8B
Jacksonville, FL 32220

RE: Country of origin marking of an infusion device; 19 U.S.C. CFR 134.35(b); subassemblies.

Dear Mr. Shepard:

This is in response to your letter dated January 31, 1997, concerning the country of origin marking requirements for an infusion device subassembly to be made in Mexico from United States ("U.S.")-origin materials and imported into the U.S. for assembly into the complete product. You have submitted a sample of the infusion device and the subassembly for our examination, as well as additional cost information by facsimile dated March 6, 1997.

FACTS:

Statcorp, Inc., intends to produce infusion devices for use in the medical industry. In general, the infusion device consists of a nylon bag container which holds fluids ("subassembly"), plastic tubing, and a hand-bulb pump and gauge ("pump apparatus"). The pump apparatus removes fluid from the subassembly and propels it to the patient. You state that all materials incorporated into the product are of U.S.-origin.

Through its manufacturer, Pacific Device Inc., Statcorp, Inc. intends to send certain U.S.-origin materials to Mexico for use in the production of the subassembly. The component materials of the subassembly are laminated nylon fabric, a polyvinyl chloride ("PVC") hose loop, a PVC tube out, and a styrene hook. In Mexico, the nylon fabric is cut to size, the various components placed in their respective positions, and the product is bonded together by radio-welding. Upon importation of the subassembly into the U.S., it is assembled, along with the pump apparatus, to make the complete infusion device. You state that the subassembly is custom made in Mexico to Statcorp, Inc.'s specifications and cannot be reasonably used for anything other than its intended use. That is, without the pump apparatus, the subassembly has little if any use. Further, the subassembly will not be subject to any further processing beyond assembly with the pump apparatus.

You request a binding ruling on the marking requirements for the subassembly produced in Mexico. Specifically, you contend that directly marking the subassembly a product of Mexico is misleading since the finished infusion device is assembled in the U.S. exclusively of U.S.-origin materials.

ISSUE:

Whether or not the subassembly has to be marked a product of Mexico.

LAW AND ANALYSIS:

COUNTRY OF ORIGIN

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 ?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).

The country of origin marking requirements for a "good of a NAFTA country" are 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). 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 U.S. as determined under the NAFTA Marking Rules set out at Part 102, Customs Regulations (19 CFR Part 102).

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. That 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.

"Foreign material" is defined in section 102.1(e), Customs Regulations (19 CFR 102.1(e)), 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 subassemblies are made in Mexico with materials of U.S.-origin, they are neither wholly obtained or produced, nor produced exclusively from domestic materials as those terms are defined under section 102.1, Customs Regulations (19 CFR 102.1). Accordingly, section 102.11(a)(3), Customs Regulations (19 CFR 102.11(a)(3)), is the applicable rule that must be applied to determine the origin of the subassemblies. Pursuant to section 102.11(a)(3), the country of origin of a good is the country in which each foreign material incorporated in that good under goes an applicable change in tariff classification set out in section 102.20, Customs Regulations (19 CFR 102.20). Section 102.20 sets forth the specific tariff classification changes and/or other operations which are specifically required for the country of origin to be determined on the basis of operations performed on the foreign materials contained in a good.

In the instant case, Customs notes that the completed infusion device is classifiable under subheading 9018.90.80, Harmonized Tariff Schedule of the United States ("HTSUS"), as "Instruments and appliances used in medical, surgical, dental or veterinary sciences...Other instruments and appliances and parts and accessories thereof...Other..." See Headquarters Ruling Letter ("HRL") 956785, dated Dec. 6, 1996; HRL 088469, Feb. 26 1991; HRL 955820, dated Dec. 7, 1995.

Note 2(b), Chapter 90, HTSUS, states that parts and accessories of articles classifiable under that chapter, if suitable for use solely or principally with a particular kind of machine, instrument or apparatus of the same heading are to be classified with the machines, instruments or apparatus of that kind. Based upon the fact that the subassembly's intended use is as part of the infusion device, and has little or no value apart from that intended use, Customs is of the opinion that the subassembly is classifiable as a part or accessory of the infusion device within the same subheading, 9018.90.80, HTSUS. See also HRL 088469, dated Feb. 26, 1991; HRL 953545, dated May 10, 1993.

Therefore, the change in tariff classification for the subassembly must be made in accordance with section 102.20(q), Customs Regulations (19 CFR 102.20(q)), Section XVIII: Chapters 90 through 92, subheading 9018.90, HTSUS, which states the applicable change as:

A change to subheading 9018.90 from any other subheading, except from subheading 9001.90 or synthetic rubber classified in heading 4002 when resulting from a simple assembly; or [A] change to defibirillators from printed circuit assemblies, except when resulting from a simple assembly.

Each U.S.-origin material imported into Mexico and incorporated into the subassembly must undergo a change in tariff classification from any other subheading than 9018.90, HTSUS, subject, however, to the other terms of section 102.20(q) for subheading 9018.90. The constituent materials of the subassembly are nylon fabric, a PVC hose loop, a PVC tube out, and a styrene hook. Customs notes that generally, the hose loop and tube out are classifiable under heading 3917, HTSUS (tubes, pipes and hoses of plastics), the styrene hook in heading 3924, HTSUS (tableware, kitchenware, other household articles of plastics), and the nylon fabric in heading 5407, HTSUS (woven fabrics of synthetic filament yarn). As each of the constituent materials is classifiable in a tariff provision other than subheading 9018.90, the applicable change in tariff classification has been met. Accordingly, for marking purposes, the country of origin of the subassembly is Mexico.

EXCEPTION FROM MARKING

Pursuant to section 134.35(b), Customs Regulations (19 CFR 134.35(b)), goods of a NAFTA country are excepted from marking if they are to be processed in the U.S. in a manner that would result in the good becoming a good of the U.S. under the NAFTA Marking Rules. That is, if the subassembly undergoes processing after its importation so as to become a good of the U.S., it will not have to be marked. Furthermore, if such a good is processed by the importer or on its behalf, its outermost container is excepted from marking as well. Id.

The processing in the U.S. consists of assembling the infusion device by attaching the pump apparatus' tubing to the subassembly's tube out. Applying the section 102.11 hierarchical rules in this regard, Customs notes that neither section 102.11(a)(1) or (a)(2) are applicable. Because the subassembly is of Mexican- origin, the infusion device is neither wholly obtained or produced in the U.S., or produced exclusively from domestic materials as those terms are defined under section 102.1.

Applying section 102.11(a)(3), country of origin can be found in the country where each foreign material incorporated in the good undergoes an applicable change in tariff classification or other operation specified in section 102.20 for the good. As stated earlier, the finished infusion device is classified in subheading 9018.90.80, HTSUS. Therefore, the applicable rule is set forth in section 102.20(q) which states:

A change to subheading 9018.90 from any other subheading, except from subheading 9001.90 or synthetic rubber classified in heading 4002 when resulting from a simple assembly; or [A] change to defibirillators from printed circuit assemblies, except when resulting from a simple assembly.

Since both the subassembly and the infusion device are classified in subheading 9018.90, HTSUS, a change in tariff classification does not occur and the section 102.20(q) rule cannot be met.

As section 102.11(a) is not applicable, the next step in the NAFTA Marking Rules hierarchy is section 102.11(b), Customs Regulations (19 CFR 102.11(b)). That section states:

Except for a good that is specifically described in the
Harmonized System as a set, or is classified as a set pursuant to General Rule of Interpretation 3, where the country of origin cannot be determined under paragraph (a) of this section:

(1) The country of origin of the good is the country or countries of origin of the single material that imparts the essential character to the good....

"Material" is defined in section 102.1(l), Customs Regulations (19 CFR 102.1(l)), as "a good that is incorporated into another good as a result of production with respect to that other good, and includes parts, ingredients, subassemblies, and components." Further, pursuant to section 102.18(b)(2), Customs Regulations (19 CFR 102.18(b)(2)), "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 the good."

As there are only two (2) materials incorporated in the infusion device -- the pump apparatus and the subassembly -- they alone are considered in determining whether there is a single material that imparts the essential character to the infusion device.

Taking into account the important function each article serves to the intended use of the infusion device, Customs is of the opinion that neither the pump apparatus nor subassembly, alone, imparts the infusion device's essential character. The pump apparatus removes fluid from the subassembly and propels it outward. Alternatively, the subassembly container holds the fluid to be propelled. Each article carries out a critical, if not essential function to the overall operation of the infusion device. One component cannot function independent of the other.

In circumstances where the essential character of the product cannot be determined using section 102.11(a) or (b), and the good is not, as in the present case, classifiable as a set, mixture, or composite good as specifically described in General Rule of Interpretation 3, HTSUS, as required by section 102.11(c), Customs Regulations (19 CFR 102.11(c)), the country of origin of the good is determined pursuant to section 102.11(d), Customs Regulations (19 CFR 102.11(d)). Under section 102.11(d)(3), if the good is not produced as a result of minor processing or simple assembly, the country of origin of the good is the last country in which the good under went production.

"Minor processing" and "simple assembly" are terms specifically defined under section 102.1, Customs Regulations. The definition of "minor processing" in section 102.1(m) sets forth the exclusive list of operations included within the scope of that term. See 19 CFR 102.1(m) "Simple assembly" means the fitting together of five or fewer parts (excluding fasteners), all of which are foreign, by bolting, gluing, soldering or other means. 19 CFR 102.1(o) As such, Customs notes that in the present case, the finished goods are not produced as a result of either minor processing or simple assembly. The materials employed in production of the infusion devices are the Mexican-origin subassembly, and the U.S.-origin pump apparatus. Accordingly, the infusion devices are not produced as a result of simple assembly. Further, Customs notes that the infusion devices are not produced as a result of minor processing as the operations performed to produce the infusion devices far exceed those identified under section 102.1(m).

On the other hand, the term "production," as illustrated under section 102.1(n), Customs Regulations (19 CFR 102.1(n)), expressly includes "growing, mining, harvesting, fishing, trapping, hunting manufacturing, processing or assembling a good." Accordingly, the country of origin of the infusion device is the U.S., the last country in which it under went production. 19 CFR 102.11(d)(3)

As the country of origin of the infusion device has been determined to be the U.S., the subassembly is excepted from country of origin marking pursuant to the terms of section 134.35(b), Customs Regulations. That is, the subassembly, as it is processed in the U.S. so as to become a good of the U.S.-- the infusion device-- under the NAFTA Marking Rules, is excepted from country of origin marking. Furthermore, if the processing in the U.S. is done on behalf of the importer, the outermost container of the imported subassembly is excepted from marking as well.

HOLDING:

On the basis of the information provided, Customs is of the opinion that, pursuant to section 134.35(b), Customs Regulations, the subassembly is processed so as to become a good of the U.S., and is thereby excepted from country of origin marking. Furthermore, if the good is processed in the U.S. on behalf of the importer, the outermost container of the good is excepted from marking as well.

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is 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,

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