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NY B82004




June 3, 1997

CLA-2-84:RR:NC:1:103 B82004

CATEGORY: CLASSIFICATION

TARIFF NO.: 8477.90.8010; 8483.40.9000

Mr. Thomas Penksa
PBB Group
434 Delaware Avenue
Buffalo, NY 14202

RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of plastic injection molding machine castings; Article 509

Dear Mr. Penksa:

In your letters dated February 6, 1997 and April 17, 1997 on behalf of Husky Injection Molding Systems Ltd. you requested a tariff classification ruling.

Your client intends to import castings from China into Canada. Once in Canada the castings will undergo further machining in order to finish them into components of the clamp section of a plastic injection molding machine. You have requested a ruling as to the tariff classification and NAFTA eligibility of these castings under the following two scenarios:

A) The machined and finished castings are assembled, along with other components of Canadian origin, to produce complete plastic injection molding machines which are exported from Canada to the United States.

B) The machined and finished castings are exported from Canada to the United States as replacement parts for plastic injection molding machines.

The articles which will be imported from China into Canada consist of castings of an ejector plate, ring gear, and shutter housing. In their condition as received from China, the raw castings will be made of ductile iron and will be prime painted.

In Canada the ejector plate casting will undergo the following operations:

1. Rough and finish mill all machined surfaces. 2. Drill and counterbore all holes.
3. Inspect and finish paint.

The finished ejector plate will be used as a back plate in the clamp section of a plastic injection molding machine to push or eject parts from the mold.

In Canada the raw ring gear casting will undergo the following operations:

1. Rough and finish turn outer and inner diameter. 2. Drill and counterbore holes for mounting blocks. 3. Cut teeth on outer diameter.
4. Inspect and finish paint.

After completion, the finished ring gear will be used to adjust the distance between the platens of the clamp, known as the shutheight, in order to accommodate molds of different sizes.

The shutter housing casting will undergo the following operations in Canada:

1. Rough and finish mill all machined surfaces. 2. Drill and counterbore all holes.
3. Inspect and finish paint.

The finished shutter housing will be mounted directly to the clamp piston to support the shutter assembly. The shutter assembly includes a rotating shutter blade which acts as an interface between the clamp columns and clamp piston.

To be eligible for tariff preferences under the NAFTA, goods must be "originating goods" within the rules of origin in general note 12(b), HTS. General note 12(b) states:

For the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitive limitations set forth in the tariff schedule as "goods originating in the territory of a NAFTA party" only if-- (i) they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; or (ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that-- (A) except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein....

Under scenario A, the plastic injection molding machine will be assembled in Canada from the finished Chinese-made raw castings as well as other components of Canadian origin and then exported to the United States (you have advised us that a U.S. Customs NAFTA verification in 1996 and a U.S. Customs NAFTA audit in 1997 have concluded that plastic injection molding machines made by Husky in Canada qualify under NAFTA, except for the issue of the Chinese-made castings). The raw ejector plate and shutter housing castings, prior to finishing in Canada, have the essential character of the finished ejector plate and shutter housing. Accordingly, they would be classifiable in subheading 8477.90.8010, Harmonized Tariff Schedule of the United States (HTS), which provides for other parts of machinery for working rubber or plastics or for the manufacture of products from these materials, not specified or included elsewhere (in chapter 84). The raw ring gear casting, lacking teeth, does not have the essential character of the finished ring gear. Accordingly, it would be classifiable in subheading 7325.99.1000, HTS, which provides for other cast articles of iron or steel: other: other: of cast iron. The applicable subheading for a complete plastic injection molding machine will be subheading 8477.10.80, HTS, which provides for other injection molding machines.

As the plastic injection molding machines exported from Canada will incorporate an ejector plate, ring gear, and shutter housing produced from castings made in China, general note 12(b)(i) is not applicable. Thus, we must resort to general note 12(b)(ii)(A), HTS, in order to decide the NAFTA eligibility of the plastic injection molding machines.

General Note 12(b)(ii)(A) indicates that the non-originating castings must undergo a change in tariff classification in order for the plastic injection molding machines in which they are incorporated to be considered as originating goods. General note 12(t)/8477.10, HTS, describes the acceptable tariff classification change:

A change to subheading 8477.10 from any other subheading, except from tariff item 8477.90.20 or more than one of the following: (A) tariff item 8477.90.40,
(B) subheading 8537.10.

As the ejector plate and shutter housing castings are classifiable in subheading 8477.90.8010, HTS, and the ring gear casting is classifiable in subheading 7325.99.1000, HTS, assembly of these parts with other Canadian parts to form a complete plastic injection molding machine in Canada imparts the requisite tariff change per general note 12(b)(ii)(A), HTS. Thus the complete plastic injection molding machine will be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.

In scenario B, the ejector plate, ring gear and shutter housing will be exported to the United States from Canada in their finished condition. The applicable subheading for the finished ejector plate and shutter housing will be subheading 8477.90.8010, HTS, which provides for other parts of injection-molding machines. The general rate of duty will be 3.4 percent ad valorem. General Note 12(t)/8477.90 describes an acceptable tariff change as:

A change to subheading 8477.90 from any other heading.

However, as the raw ejector plate and shutter housing castings are also classifiable in heading 8477, HTS, no such tariff change will occur and thus these components are not eligible for preferential treatment under the NAFTA when exported from Canada to the United States.

Under scenario B, the ring gear will also be exported to the United States from Canada in its finished condition. The applicable subheading for the finished ring gear will be subheading 8483.40.9000, HTS, which provides for gears and gearing, other than toothed wheels, chain sprockets and other transmission elements entered separately. The general rate of duty will be 2.5 percent ad valorem. The acceptable tariff classification change set out in General Note 12(t)/8483.40(A), HTS, is:

A change to subheadings 8483.40 through 8483.60 from any subheading outside that group, except from subheadings 8482.10 through 8482.80, tariff items 8482.99.05, 8482.99.15 or 8482.99.25, or subheading 8483.90...

As the ring gear casting would be classifiable in subheading 7325.99.1000, HTS, finishing of the ring gear casting in Canada imparts the requisite tariff change and the finished ring gear, when exported from Canada to the United States, will be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.

This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Alan Horowitz at 212-466-5494.

Should you wish to request an administrative review of the portion of this ruling which denies NAFTA preferential treatment to the ejector plate and shutter housing under scenario B, submit a copy of this ruling and all relevant facts and arguments within 30 days of the date of this letter, to the Director, Commercial Rulings Division, Headquarters, U.S. Customs Service, 1301 Constitution Avenue, NW, Franklin Court, Washington, DC 20229.

Sincerely,

Robert B. Swierupski
Chief, Metals & Machinery Branch

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