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NY C85712




April 13, 1998

CLA-2-39:RR:NC:SP:221 C85712

CATEGORY: CLASSIFICATION

TARIFF NO.: 3926.90.9880

Mr. Louis S. Shoichet
Siegel, Mandell & Davidson, P.C.
One Astor Plaza
1515 Broadway
43rd Floor
New York, NY 10036-8901

RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA) of candy ring bases from Mexico; Article 509

Dear Mr. Shoichet:

In your letter dated March 20, 1998, on behalf of The Topps Company, Inc., you requested a ruling on the classification and status under the NAFTA of candy ring bases from Mexico.

The sample submitted with your letter is a brightly colored plastic ring designed to fit on a child's finger. The top of the ring incorporates a molded plastic base measuring approximately 1 1/2 inches in diameter. In the center of the base there is a circular post approximately 1/2 inch high by 1/8 inch in diameter. After importation, a hard candy will be incorporated onto the ring base to form a confectionery described as a "ring pop lollipop." The sample is being returned as you requested.

The applicable tariff provision for the plastic ring base will be 3926.90.9880, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for other articles of plastics, other. The general rate of duty will be 5.3 percent ad valorem.

The ring is molded in Mexico from plastic resins. Each of the non-originating materials used to make the ring base has satisfied the changes in tariff classification required under HTSUSA General Note 12(t)/39.10. The ring base will also be subject to a Regional Value Content (RVC) requirement of 60% under the Transaction Value Method or 50% under the Net Cost Method as required under the rule applicable to the ring base. Assuming the goods are eligible for preferential treatment under the NAFTA, the merchandise 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 181 of the Customs Regulations (19 C.F.R. 181). Because of insufficient information in your ruling request, Customs has not addressed the Regional Value Content (RVC) of the subject goods. If you desire a ruling regarding the RVC of your goods and their eligibility for NAFTA preferential treatment, please submit the information noted in Section 181.93(b) of the Customs Regulations (19 CFR 181.93(b)), to the Director, Commercial Rulings Division, Headquarters, U.S. Customs Service, 1300 Pennsylvania Avenue, N.W., Washington, D.C. 20229, along with a copy of this letter. That information should list each component material with its country of origin and cost, and identify the country in which each manufacturing process is performed.

You have also inquired as to whether the ring base is exempt from individual country of origin marking, since it will be further processed in the United States into a finished article. 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.

The country of origin marking requirements for a "good of a NAFTA country" are also 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) and the appropriate Customs Regulations. The Marking Rules used for determining whether a good is a good of a NAFTA country are contained in Part 102, Customs Regulations. The marking requirements of these goods are set forth in Part 134, Customs Regulations.

Section 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 within this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin. (Emphasis added).

Section 134.1(j) of the regulations 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) of the regulations 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. Section 134.45(a)(2) of the regulations, provides that a "good of a NAFTA country" may be marked with the name of the country of origin in English, French or Spanish.

In order to determine the country of origin marking requirements we must first apply the NAFTA Marking Rules in order to determine whether the imported candy ring base "is a good of a NAFTA country", prior to being further processed in the U.S.

Part 102 of the regulations sets forth the "NAFTA Marking Rules" for purposes of determining whether a good is a good of a NAFTA country for marking purposes. Section 102.11 of the regulations sets forth the required hierarchy for determining country of origin for marking purposes.

Applying the NAFTA rules of origin set forth in Part 102 of the regulations to the facts of this case, we find that, for marking purposes, the imported ring base is a good of a NAFTA country prior to being further processed in the U.S.

The only issue which remains is whether the U.S. processor is the ultimate purchaser within the meaning of section 134.35(b). Section 134.35(b) of the regulations, provides that
a good of a NAFTA country which is to be processed in the United States in a manner that would result in the good becoming a good of the United States under the NAFTA marking rules is excepted from marking. Unless the good is processed by the importer or on its behalf, the outermost container of the good shall be marked in accord with this part.

Based on the facts of this case, we find that the imported candy ring base, when further processed in the United States to form a "ring pop lollipop," becomes an article of U.S. origin under Part 102 of the regulations.

Accordingly, the imported ring bases, which become U.S. articles as a result of being further processed in the U.S., in the manner described above, are excepted from marking and only the outermost containers are required to be marked with the country of origin "Mexico" if the imported ring bases are not processed by the importer or on its behalf. You have also inquired as to whether the finished product may be marked "Made in USA." The determination as to whether products may be labeled "Made in the United States" is within the jurisdiction of the Federal Trade Commission. You may direct this question to the Federal Trade Commission, Division of Enforcement, 6th and Pennsylvania Avenue, N.W., Washington, D.C. 20580.

Sincerely,

Robert B. Swierupski
Director,

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