HQ 560504 - Country of origin marking; impellers/casings; 19 CFR 102.11; 19 CFR 102.18; NAFTA; Article 509; essential character - United States International Trade Commision Rulings

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HQ 560504

October 7, 1997

MAR-2-05 RR:TC:SM 560504 DEC

CATEGORY: MARKING

Mr. Rudy A. Pina
Joffroy Customs Brokers, Incorporated
Nogales Foreign Trade Zone
P.O. Box 698
Nogales, Arizona 85628-0698

RE: Country of origin marking; impellers/casings; 19 CFR 102.11; 19 CFR 102.18; NAFTA; Article 509; essential character

Dear Mr. Pina:

This is in response to your letter dated June 2, 1997, in which you seek a ruling on behalf of your client, Tri-Clover, Incorporated (Tri-Clover), with respect to the appropriate country of origin marking for stainless steel cast or fabricated impellers and casings which are manufactured in the U.S. and then polished in Mexico before being returned into the U.S.

FACTS:

You state that Tri-Clover exports metal impellers and casings of U.S. origin which are classified under subheading 8413.91, Harmonized Tariff Schedule of the United States (HTSUS), to its maquiladora operation in Mexico. In Mexico, the metal impellers and casings undergo polishing operations and then are shipped to the U.S. and will be entered under subheading 8413.91, HTSUS. You state that the impellers and casings are produced entirely in North America exclusively of originating materials.

ISSUE:

What are the country of origin and marking requirements for the impellers and casings which are processed in the manner described above?

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."

In the manufacturing scenario described above, unfinished impellers and casings of U.S. origin are exported to Mexico for further processing into finished impellers and casings. Since the impellers and casings are processed in Mexico of U.S. material, the impellers and casings are neither wholly obtained or produced, nor produced exclusively from domestic materials. Accordingly, 19 CFR 102.11(a)(3) is the applicable rule that next must be applied to determine the origin of the impellers and casings.

For purposes of this ruling, we are assuming that the impellers and casings are classified under subheading 8413.91, HTSUS, as parts of pumps at the time the articles are shipped into Mexico and when they are imported into the U.S. after the polishing operations. 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. This section sets forth the specific tariff classification changes and/or other operations, which are specifically required to occur in order for country of origin to be determined on the basis of operations performed on the foreign materials contained in a good. In the case before us, because the finished impellers and casings imported into the U.S. from Mexico are classified under subheading 8413.91, HTSUS, the change in tariff classification must be made in accordance with section 102.20(o) which states in pertinent part:

8413.91 A change to subheading 8413.91 from any other heading.

The impellers and casings do not undergo the applicable tariff shift because the impellers and casings exported to Mexico also are classified under subheading 8413.91, HTSUS. Therefore, the country of origin of the finished impellers and casings cannot be determined under 19 CFR 102.11(a).

Section 102.11(b) provides that where the country of origin cannot be determined under section 102.11(a), and the good is not specifically designated as a set pursuant to the Harmonized System nor classified as a set under General Rule of Interpretation 3, the country of origin of the article is "the country or countries of origin of the single material that imparts the essential character of the good. . .."

In regard to determining the "essential character" of the finished impellers and casings, section 102.18(b)(1) of the regulations provides as follows:

(1) For purposes of identifying the material that imparts the essential character to a good under ? 102.11, the only materials that shall be taken into consideration are those domestic or foreign materials that are classified in a tariff provision from which a change in tariff classification is not allowed under the ? 102.20 specific rule or other requirements applicable to the good. For purposes of this paragraph (b)(1): . . .
(iii) If there is only one material that is classified in a tariff provision from which a change in tariff classification is not allowed under the ? 102.20 specific rule or other requirements applicable to the good, then that material will represent the single material that imparts the essential character to the good under ? 102.11.

In this case, the only material that does not undergo the applicable tariff shift is the impeller/casing. Therefore, the U.S.-origin impeller/casing is the material that imparts the essential character of the good. The country of origin of the finished impellers and casings will be the U.S.

Since the finished impellers and casings will be a product of the U.S., they will not be subject to the country of origin marking requirements set forth in 19 U.S.C. 1304. Accordingly, no statement as to the country of origin will be required under the Customs laws. Whether an article may be marked as "Made in the USA" is an issue under the authority of the Federal Trade Commission (FTC). We suggest that you contact the FTC Division of Enforcement, 6th and Pennsylvania Avenue, N.W., Washington, D.C. 20508 on the propriety of proposed markings indicating that an article is made in the U.S.

HOLDING:

The impellers and casings that are produced in the manner described above will be considered products of the U.S. for purposes of country of origin marking. Since 19 U.S.C. 1304 only requires country of origin marking for articles of foreign origin, no statement as to the country of origin will be required under the Customs laws on the impellers and casings or their containers when they are imported from Mexico.

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
Commercial Rulings Division

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