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HQ

560821

April 3,
1998
MAR-O5 RR:TC:SM 560821 BLS

CATEGORY: MARKING

TARIFF NO.: 8541.40.95, 8418.69.00

Ms. Jo Kovach-Kelsch
Lockheed Martin, Electronics and Missiles 5600 Sand Lake Road
Orlando, Fl 32819-8907

RE: Country of origin of Cooler-Detector/Dewar Assembly; subheadings 8541.40.95, 8418.69.00; NAFTA; Article 509

Dear Ms. Kovach-Kelsch:

This is in reference to your letter dated January 19, 1998, and subsequent communications, in which you request a ruling concerning the country of origin marking requirements for a Cooler-Detector/Dewar Assembly ("Dewar Cooler Assembly") imported from Canada. In your most recent communication dated February 25, 1998, you also ask that we issue a ruling on the tariff classification of the cooler and the Dewar Cooler Assembly.

FACTS:

Lockheed Martin Electronics and Missiles (Lockheed-Martin) is under contract to produce the "Target Acquisition Designation Sight/Pilot Night Vision System" (TADS/PNVS) for the United Kingdom (UK) Apache Program. In turn, DRS Technologies Canada Company (DRS), a Canadian company, has contracted with Lockheed-Martin to produce the Dewar Cooler Assembly, a subassembly of the "Forward Looking Infrared" component of the TADS/PNVS.

The Dewar Cooler Assembly is described as a sensing device located in the focal plane of an infrared sensor. This detector possesses the same function as the film in a camera, however, instead of producing an image on film the detector generates electrical signals that are used to produce an image on a video display. The literature accompanying your request describes the detector component as the heart of any infrared sensor. A cooler is mated to the detector to maintain the detector material located in the Dewar at very low temperature to maximize the sensitivity of the detector.

DRS imports the cooler component of the unit from Germany, and then forwards it to Lockheed-Martin Infrared Imaging Systems (LMIRIS) in Massachusetts. LMIRIS manufactures the Detector, and then assembles this component with the cooler. The product is tested, and then shipped to DRS in Canada, where a bracket is added and the unit is subjected to an Alignment Test Procedure. You have orally advised that the bracket is an insignificant part of the unit and is added in Canada as part of the Alignment Test. It has no affect upon the performance of the unit. You also advise that you believe that the cooler is of German origin.

ISSUES:

1) What is the classification of the completed Dewar Cooler Assembly and the cooler component when imported into the U.S.?

2) What is the country of origin of the Dewar Cooler Assembly when returned from Canada?

LAW AND ANALYSIS

Classification

In NY Ruling Letter 818018 (February 2, 1996), Customs held that an Integrated Dewar Cooler Assembly was classifiable under subheading 8541.40.95, Harmonized Tariff Schedule of the United States (HTSUS), as an other photosensitive semiconductor device. Based upon the submitted information, the subject assembly appears to be very similar in function and description to the merchandise in NY 818018. Therefore, it is Customs position that the subject assembly is also classifiable under subheading 8541.40.95, HTSUS. See also NY B81746 (February 25, 1997.)

With regard to the cooler portion of the assembly, based upon the information submitted it is Custom position that, because the cooler functions as refrigeration equipment, it is classifiable under subheading 8418.69, HTSUS, as other refrigerating equipment. See NY 814130 (September 15, 1995), which held that a Cyrostream Cooler System, utilizing a Dewar, was classifiable under HTSUS subheading 8418.69.

Country of Origin

The marking statute, section 304 of the 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 United States shall be marked in a conspicuous place as
legibly, indelibly, and permanently as the nature of the article 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. Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.

The country of origin marking requirements for a "good of a NAFTA country" are also determined in accordance with Annex 311 of the 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) and the regulations set forth in 19 CFR Parts 102, 134.

Section 134.1(b) (19 CFR 134.1(b)) of the regulations defines "country of origin" as:

The country of manufacture, production, or growth of any article of foreign origin entering the U.S.
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"; however, for a good of a NAFTA country, the
NAFTA Marking Rules will determine the country of origin.

Section 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) 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.

Part 102 of the regulations (19 CFR Part 102), sets forth the "NAFTA Marking Rules" for purposes of determining whether a good is a good of a NAFTA country. Section 102.11 of the regulations (19 CFR 102.11) sets forth the required hierarchy for determining country of origin for marking purposes. Section 102.11(a) provides that "[t]he 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 requirements of these rules are satisfied."

"Foreign Material" is defined in section 102.1(e) of the regulations 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."

As the Dewar Cooler Assembly is neither wholly obtained or produced, or produced exclusively from domestic (Canadian) materials, section 102.11(a)(3) is the applicable rule which must first be applied. Under this rule, 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. Section 102.20 of the rules sets forth the specific tariff classification changes and/or other operations which are specifically required in order for country of origin to be determined on the basis of operations performed on the foreign materials contained in a good. As noted, the Dewar Cooler Assembly imported from Canada is classifiable under HTSUS subheading 8541.40.95. When imported into Canada from the U.S. (foreign material as defined under 19 CFR 102.1(e)), the unit is also classified under subheading 8541.40.95. (The unit is essentially complete at this stage, but for the addition of a bracket and a final test procedure.) The applicable change in tariff classification set out in section 102.20(o), Section XVI: Chapters 84 through 85, 8541-8542 of the regulations provides:

8541-8542 .... A change to heading 8541 through 8542 from any other subheading, including another subheading within that group; or

A change to a mounted chip, die or wafer classified in heading 8541 or 8542 from an unmounted chip, die or wafer classified in heading 8541 or 8542; or

A change to a programmed "read only memory" (ROM) chip from an unprogrammed "programmable read only memory (PROM) chip.

In this case, we find that the Dewar Cooler Assembly imported into Canada does not undergo the applicable change in tariff classification set out in section 102.20(o), and, as a result, section 102.11(b) of the hierarchal rules must be applied next to determine the country of origin of the imported unit.

Section 102.11(b) of the Customs Regulations (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), the country of origin of the good:

(1) Is the country or countries of origin of the single material that imparts the essential character of the good, or

(2) If the material that imparts the essential character of the good is fungible, has been commingled, and direct physical identification of the origin of the commingled material is not practical, the country or countries of origin may be determined on the basis of an inventory management method provided under the Appendix to part 181 of the Customs
Regulations.

In this instance, because section 102.11(b)(2) is not applicable, the rule that must be applied to determine the country of origin of the imported products is section 102.11(b)(1), i.e., the country of origin of the single material that imparts the essential character of the good. Applying this rule, and the rule of interpretation set forth in section 102.18(b)(1), we find that the single material that imparts the essential character of the Dewar Cooler Assembly is the unit as imported into Canada. In order to determine the country of origin of the unit imported into Canada, we must again apply the NAFTA Marking Rules to determine whether the country of origin of the imported merchandise is either the U.S. or Germany.

As noted above, the cooler imported into the U.S. from Germany is classified under HTSUS subheading 8418.69, and the Dewar Cooler Assembly is classified under HTSUS subheading 8541.40.95. The applicable change in tariff classification is set out in 102.20(o), Section XVI, Chapters 84 through 85, which rule is set forth above. Since there is a change in this case to heading 8541 from subheading 8418.69, the cooler undergoes the applicable tariff shift in the U.S. Therefore, the country of origin of the Dewar Cooler Assembly when imported into the U.S. from Canada is the U.S., the country of origin of the unit when imported into Canada.

HOLDING:

1) The Dewar Cooler Assembly is classifiable under subheading 8541.40.95, HTSUS, as an other photosensitive semiconductor device. The cooler imported from Germany is classifiable under subheading 8418.69, HTSUS, as other refrigerating equipment.

2) The Dewar Cooler Assembly imported into Canada from the U.S. does not undergo the applicable tariff change set forth in section 102.20(o), Customs Regulations (19 CFR 102.20(o)), by the addition of a bracket and an Alignment Testing Procedure. Pursuant to section 102.11(b)(1), (19 CFR 102.11(b)(1)), the country of origin of the good will be the country of origin of the Dewar Cooler Assembly, the material that imparts the essential character to the good. Since the applicable tariff shift set out in 19 CFR 102.20(o) occurs in the U.S. as the result of assembly of the German-origin cooler with the U.S.-origin Dewar Detector, the country of origin of the Dewar Cooler Assembly imported into Canada is the U.S. Therefore, the country of origin of the imported unit is the U.S. As such, the imported article is not required to be marked as to origin under 19 U.S.C. 1304.

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

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