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HQ 560615




October 30, 1997

MAR-2-05 RR:CR:SM 560615 RSD

CATEGORY: MARKING

TARIFF NO.: 8481.90 HTSUS

Sidney H. Kuflik, Esq.
Lamb & Lerch
233 Broadway
51st Floor
New York, New York 10279

RE: Country of origin marking for brass balancing valve bodies imported from Canada; 19 U.S.C. ?1304; 19 CFR ?134.1; NAFTA Marking Rules; 19 CFR Part 102; 19 CFR ?134.35(b); simple assembly

Dear Mr. Kuflik:

This is in response to your letter dated August 14, 1997, on behalf of Taco, Inc. (hereinafter Taco) requesting a ruling on the country of origin marking requirements for brass balancing valve bodies imported from Canada that will be used to make a brass balancing valve in the United States. A copy of a brochure explaining the product was enclosed along with your letter. Your request for confidentiality of the cost information bracketed in your ruling request has been granted.

FACTS:

You state in your letter that Taco is involved in pump manufacturing and the pump resale business. Taco manufactures a brass balancing valve in the United States known as the "Taco Accu-Flo". There are 13 separate components in the "Taco Accu-Flo", of which 12 are made in the United States. The 13th component, the valve body, is produced in Canada, and it is the most expensive of the components.

To make the valve bodies, brass rods originating in the United States are shipped to Canada. In Canada, the brass rods are forged and machined into the valve bodies. The valve bodies are then shipped to Taco in the United States. Taco combines the valve body with the 12 other components to produce the finished brass valve known as the Taco Accu-Flo. You have provided a list of the 13 components and their respective costs. The components are as follows:

1. Valve body
2. "O" ring
3. Plug, Head Hex socket
4. Stem
5. Indicator
6. Stop, Memory
7. Nameplate
8. Bushing, Seat
9. Seat
10. Ball
11. Valve
12. Plug, Pipe
13. Screw Cap

You request a binding ruling on the marking requirements for the imported brass valve bodies produced in Canada. Specifically, you contend that the imported valve bodies are excepted from country of origin marking pursuant to section 134.35 Customs Regulations
(19 CFR ?134.35).

ISSUE:

What are the country of origin marking requirements for the brass valve body made in Canada and used in the U.S. to make a finished brass valve?

LAW AND ANALYSIS:

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).

Pursuant to section 134.35(b), Customs Regulations (19 CFR 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 an article 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 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."

First, we must determine the country of origin of the imported valve bodies, which you indicate are processed in Canada from U.S. made rods of brass. Because the brass valve bodies are made with U.S. materials, they are neither wholly obtained or produced, nor produced in Canada 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 valve bodies.

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 undergoes 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.

You state that the valve bodies are classified in subheading 8481.90, HTSUS. We will assume for the purposes of this ruling that this classification is correct. The applicable rule under 19 CFR 102.20(o) section XVI, Chapters 84 through 85 is as follows:

8481.90 --- A change to subheading 8481.90 from any other heading

You further indicate that the rods of brass, which are processed into the valve bodies, would be classified under subheading 7407.21, HTSUS. Therefore, the brass rods undergo the applicable tariff shift under 19 CFR 102.20, when they are processed in Canada to make the valve body. Accordingly, the valve bodies are a product of Canada.

Next, we determine the country of origin of the finished valves. Since the valve bodies are made in Canada, the finished valves 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, in determining the country of origin of the valves, section 102.11(a)(3), Customs Regulations (19 CFR ?102.11(a)(3)), is the rule that must be applied.

You also state that the finished brass valve is classifiable under subheading 8481.30.10, HTSUS as

Tap, cocks, valves and similar appliances, for pipes, boiler shells, tanks, vats or the like including pressure-reducing valves and thermostatically controlled valves; parts thereof.

As previously noted, the valve bodies are classifiable under subheading 8481.90.10 HTSUS.

For the finished valves classified in subheading 8481.30.10 HTSUS, the applicable change in tariff classification set out in section 102.20(o), Section XVI, Chapters 84 through 85, provides:

A change to subheading 8481.10 through
8481.80 from any other heading, or from subheading 8481.90 except when resulting from a simple assembly.

Accordingly, under the above rule, there are two alternative bases by which an article may undergo a tariff shift. In applying the first part of the rule, we note that the imported valve bodies do not undergo the applicable tariff shift because they do not change headings at the four digit
level, since both the valve bodies and the finished valves are classified under heading 8481, HTSUS. However, the valve bodies classified in subheading 8481.90 will meet the alternative provision in the tariff shift rule if the finished valves are produced other than by a simple assembly.

19 CFR 102.1(o) defines simple assembly as follows:

Simple assembly means the fitting together of five or fewer parts all which are foreign (excluding fasteners such as screws, bolts, etc.) by bolting, gluing, soldering, sewing or by other means without more than minor processing.

The production of the finished valves does not fall within this definition of a simple assembly because it involves 13 parts, of which 12 are of United States origin. Therefore the alternative test of the tariff shift rule is satisfied because the valve bodies change classification in the United States from subheading 8481.90 to subheading 8481.30.10 through processing other than a simple assembly. Accordingly, the country of origin of the finished valve is the United States.

Under 19 CFR134.35(b), because the valve body is a good of a NAFTA country, which is processed in the United States in a manner which results in the good becoming a good of the United States under the NAFTA marking rules, it is excepted from the country of origin marking requirements of 19 U.S.C. 1304. In addition, because the importer, Taco, will process the valve bodies into the valves, the outermost containers in which the valve bodies are imported also do not have to be marked.

HOLDING:

Based on the information provided, the country of origin of the finished valve, assembled in the U.S. with a valve body produced in Canada and various U.S. components, is the United States. Therefore, in accordance with 19 CFR 134.35(b), the finished valve bodies and the outermost containers in which the valve bodies are imported are excepted from marking.

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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