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HQ 560767




March 3, 1998

MAR-2-05 RR:TC:SM 560767 KSG

CATEGORY: MARKING

Joe A. Estrada
Rudolph Miles & Sons, Inc.
4950 Gateway East
P.O. Box 11057
El Paso, Texas 79983

RE: 19 U.S.C. 1304; tubing connectors; iron connectors; NAFTA; Article 509

Dear Mr. Estrada:

This is in response to your letter of November 24, 1997, on behalf of your client, Hubbell Incorporated, asking whether two imported articles are properly marked with the country of origin in accordance with
19 U.S.C. 1304. Samples of the two articles were enclosed.

FACTS:

Your client imports two different articles. The first article consists of electrical metallic tubing connectors and couplings. The tubes, washers, and nuts are purchased in the U.S. and shipped to Mexico. You state that the tube is classified at heading 7304, Harmonized Tariff Schedule of the United States (HTSUS). In Mexico, the tubes are cut to different lengths, threaded at both ends, and plated. A washer and nut, are machine tightened on both ends of each tube to form a complete electrical connector. For the purposes of this ruling, we are assuming that materials purchased in the U.S. are of U.S. origin.

The nuts are cast in the U.S. with the name "RACO," the connector dimension, and the word "Mexico" die stamped on it. The immediate container and the outermost containers are both marked with the word "Mexico."

You asked if the marking "Mexico" on the end of both nuts would satisfy the country of origin marking requirements.

The second article is a 45 or 90 degree malleable iron connector. The connector bodies, which you state are classified at heading 7307, HTSUS, the rings, washers, and nuts, are cast in the U.S. and sent to Mexico. In Mexico, the bodies are threaded at both ends and plated. The connector is assembled with a ring, washer, and nut which are machine tightened at both ends. For the purposes of this ruling, we will assume that components that are cast in the U.S. and sent to Mexico are of U.S. origin.

Regarding the second article, you asked what the country of origin is for marking purposes and whether the article is eligible for the "MX" duty rate under the North American Free Trade Agreement ("NAFTA").

ISSUES:

What is the country of origin of the two articles and what are the country of origin marking requirements applicable to the articles.

Assuming the facts presented, is the iron connector eligible for the "MX" duty rate?

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930 (19 U.S.C. 1304), provides that unless excepted, every article of foreign origin 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 of 19 U.S.C. 1304.

1. Metallic tubing connectors and couplings

The first question that must be addressed with regard to the metallic tubing connectors and couplings is what is their country of origin. A good of a NAFTA country is defined in 19 CFR 134.1(g) as an article for which the country of origin is Canada, Mexico, or the United States as determined under the NAFTA Marking Rules. The NAFTA Marking Rules, defined in
19 CFR 134.1(j) as the rules promulgated for purposes of determining whether a good is a good of a NAFTA country, are set forth in 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 the purposes of country of origin marking and determining the rate of duty and staging category applicable to an originating good as set out in Annex 302.2. Paragraph (a) of 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.

"Foreign material" is defined in 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." Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented with regard to the first article because there are U.S. origin materials processed in Mexico. Since an analysis of sections 102.11(a)(1) and 102.11(a)(2) will not yield a country of origin determination, we look to section

Section 102.11(a)(3) provides that the country of origin 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...."

You state that the article is classified at subheading 7307.92, HTSUS. The applicable tariff shift rule found in section 102.20(n) provides as follows:

HTSUS Tariff Shift and/or other requirements

7301- 7307..... A change to heading 7301 through 7307 from any other heading, including another heading within that group.

According to the facts you presented, the U.S.- origin tube is classified at heading 7304, HTSUS. The U.S.- origin nut and washer are classified at subheading 7318.16.00, HTSUS. Therefore, all the "foreign materials" undergo the applicable change in tariff classification in Mexico. Pursuant to 19 CFR 102.11(a)(3), the country of origin of the electrical connectors and couplings would be Mexico.

The second issue concerns what country of origin marking would be required to satisfy 19 U.S.C. 1304. Under 19 U.S.C. 1304(c)(1), pipes of iron, steel, or stainless steel, and pipe fittings of steel, stainless steel, chrome-moly steel, or cast and malleable iron are required to be marked with the country of origin by means of die stamping, cast-in-mold lettering, etching, engraving, or continuous paint stenciling. One of these five prescribed methods must be used to mark the article, unless, because of its nature, it is technically or commercially infeasible to do so. In such case, the article may be marked by an equally permanent method of marking or, in the case of small diameter pipe, tube, and fittings, by tagging the containers or bundles. See 19 U.S.C. 1304(c)(2). Small diameter product includes fittings that have a nominal diameter of one-fourth inch or less and pipe with an inner diameter of 1.9 inches or less. (See T.D. 86-15, dated February 5, 1986, 51 FR 24).

The marking statute, 19 U.S.C. 1304, requires that every imported article be marked. The nuts and washers are very securely attached to the tube. The nuts and washers on the sample submitted could not be removed or loosened. Therefore, the nuts and washers are not separately imported; they are part of the imported article. The marking "Mexico" die stamped in large lettering on both ends of the sample (on the nuts only) would satisfy the requirements of 19 U.S.C. 1304.

2. Iron Connectors

The first issue concerns what the country of origin is of the iron connectors. Since it is processed in the U.S. and Mexico, the NAFTA Marking Rules, which are set forth at 19 CFR 102.11, will apply. An analysis of 19 CFR 102.11(a)(1) and 102.11(a)(2) will not yield a country of origin determination in this case because there is processing done in both the U.S. and Mexico, so we look to 19 CFR 102.11(a)(3).

As discussed above, 19 CFR 102.11(a)(3) provides that the country of origin 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 and satisfies any other applicable requirements of that section...."

You state that the completed iron connectors are classified at heading 7307, HTSUS and that the connector bodies sent to Mexico for assembly with the rings, washers, and nuts are also classified in heading 7307. In accordance with 19 CFR 102.20(n), the tariff classification rule, discussed infra, the tubes do not undergo the applicable tariff shift, for purposes of determining the country of origin of the products. Therefore,
19 CFR 102.11(b) of the hierarchial rules must be applied.

The rule set forth at 19 CFR 102.11(b) provides that: 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.

When determining the essential character of a good under 19 CFR 102.11(b), 19 CFR 102.18(b) provides that only domestic and foreign materials that are classified in a tariff provision from which a change is not allowed (or other applicable requirements are not met), shall be taken into consideration, and that in deciding among these materials, consideration is given to various factors, including the nature of the material or component, bulk, quantity, weight, value, and the role of each material in relation to the use of the good.

Since the connector body is the only component that does not undergo the requisite tariff shift, pursuant to 19 CFR 102.18(b)(1)(iii), we find that the single ingredient that imparts the essential character of the good is the connector body. Accordingly, assuming the connector body is of U.S. origin, the country of origin of the iron connector will be the U.S., and it is not subject to the country of origin marking requirements of 19 U.S.C. 1304.

Article 401 of NAFTA is incorporated into General Note 12, HTSUS. General Note 12 provides, in pertinent part, that:

(a)(ii) Goods that originate in the territory of a NAFTA party under sub- division (b) of this note and that qualify to be marked as goods of
Mexico under the terms of the marking rules ....and are entered under a subheading for which a rate of duty appears in the "Special" subcolumn followed by the symbol "MX" in parentheses, are eligible for such duty rate....

(b) For the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative 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 of this note or the rules set forth therein, or

(B) the goods otherwise satisfy the applicable requirements of subdivisions
(r), (s) and (t) where no change in tariff classification is required, and the goods satisfy all other requirements of this note; or

(iii) they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials....

Thus, by operation of General Note 12, the eligibility of a particular article for NAFTA duty preference is predicated upon a finding that the goods are originating in the territory of a NAFTA party under General Note 12(b) and an origin determination under the NAFTA Marking Rules of either Canada or Mexico.

Based on the facts presented, the iron connectors are originating goods under NAFTA pursuant to General Note 12(b)(iii) because they are all made exclusively from originating materials.

The iron connectors are originating goods under General Note 12(b), HTSUS, and their origin has been determined to be the U.S. under 19 CFR 102.11(b). Section 102.19(b) provides in pertinent part as follows:

(b) If, under any provision of this part, the country of origin of a good which is originating ... is determined to be the United States and that good has been exported from, and returned to, the United States after having been advanced in value or improved in condition in another NAFTA country, the country of origin of such good for Customs duty purposes is the last NAFTA country in which that good was advanced in value or improved in condition.

The term "advanced in value" is defined in 19 CFR 102.1(a) as "an increase in the value of a good as a result of production with respect to that good, other than by means of those minor processing' operations described in paragraphs (m)(5), (m)(6), and (m)(7) of this section." The term improved in condition is defined in 19 CFR 102.1(I) as the "enhancement of the physical condition of a good as a result of production with respect to that good, other than by means of those minor processing' operations described in paragraphs (m)(5), (m)(6), and (m)(7) of this section." Paragraphs (m)(5), (m)(6), and (m)(7) describe: (5) unloading, reloading or any other operation necessary to maintain the good in good condition; (6) putting up in measured doses, packing, repacking, packaging, repackaging; and (7) testing, marking, sorting, or grading.

The threading and plating of the connector and its assembly with rings, washers and nuts are done in Mexico. Because that processing is not considered a minor processing operation, as defined in 19 CFR 102.1(m)(5), (m)(6), or (m)(7), and therefore, the product is advanced in value and improved in condition in Mexico, the country of origin of the iron connectors for Customs duty purposes is Mexico, pursuant to 19 CFR 102.19(b). Accordingly, the "MX" NAFTA rate will be applicable to the iron connectors.

HOLDING:

The tubing connectors and couplings are of Mexican origin. The marking "Mexico" die stamped on both sides of the coupling satisfies the country of origin marking requirements of 19 U.S.C. 1304.

The iron connectors are of U.S. origin for marking purposes and therefore, are not required to be marked by 19 U.S.C. 1304. The iron connectors are of Mexican origin for duty purposes.

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, Director
Commercial Rulings Division

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