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NY F88784




July 14, 2000

CLA-2-73:RR:NC:N1:113 F88784

CATEGORY: CLASSIFICATION

TARIFF NO.: 7325.99.5000; 7326.90.8585

Ms. Cathryn M. Bowman
Electro-Mech Components
1826 Floradale Avenue
South El Monte, CA 91733

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

Dear Ms. Bowman:

In your letter dated June 19, 2000, you requested a ruling on the status of a stainless steel body casting from Mexico under the NAFTA.

The sample you submitted is a stainless steel body casting, item BACC10KB16. It is a component of a coupling or fitting used to transition a wire bundle or cable into an electrical connector or plug. A similar item was the subject of PD F81478 of January 31, 2000, in which the completed article was classified as 7326.90.8585, other articles of iron or steel. The completed assembly consisted of two principal components, a coupling ring and the body.

In the present circumstances, you state that your company is an established contract manufacturer with processing operations in Mexico. Your customer, Joslyn Sunbank Company of California, designs and sells products for the connector accessory industry. Joslyn purchases the raw castings from Worldwide Manufacturing USA, who imports them from China. Joslyn will send the stainless steel raw body casting to Mexico for processing, including machining the inside and outside diameters, drilling holes, deburring and passivation. The raw casting can be made into various part numbers, depending on the inside diameter, the outside diameter, and whether the customer requires a self-locking feature. Your company imports the castings after processing in Mexico.

The applicable tariff provision for the raw body casting, in its condition as imported from China, will be 7325.99.5000, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for other cast articles of iron or steel. The rate of duty will be 2.9 percent ad valorem.

HQ 959315 of October 1, 1996, defined that heading as follows:

Heading 7325 covers all cast articles not elsewhere specified or included in the Nomenclature. Generally, cast articles result from molten blast furnace iron being bottom poured into a mold. After sufficient time for solidification and cooling, the castings are removed from the mold by a shakeout machine. The casting process is considered complete when surface imperfections are removed by blast cleaning, chipping, burning or combinations of these processes.

Once the casting is further processed in Mexico by machine-lathing to specific size and drilling holes, it has been advanced beyond the definition of cast article as intended by heading 7325, HTS. The applicable tariff provision for the advanced body casting, in its condition as imported from Mexico, will be 7326.90.8585, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for other articles of iron or steel, other. The general rate of duty will be 2.9 percent ad valorem.

Rules of Origin.

In order to determine the country of origin marking requirements, we must first apply the NAFTA Marking Rules to determine whether the imported casting is a good of a NAFTA country prior to being further processed in the United States. 19 CFR 102.11 sets forth the NAFTA Marking Rules for purposes of determining whether a good is a good of a NAFTA country for marking purposes.

§ 102.11 General rules.
The following rules shall apply for purposes of determining the country of origin of imported goods other than textile and apparel products covered by § 102.21. (a) 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 § 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.

Section 102.11(a)(1) and section 102.11(a)(2) do not apply to the facts presented because the raw casting is neither wholly obtained nor produced in Mexico nor is it produced exclusively from domestic materials.

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. When imported into Mexico, the raw casting is classified under heading 7325.99.5000, HTS. The advanced casting is classified under heading 7326.90.8585, HTS. The applicable tariff shift rule found in section 102.20 provides as follows:

7325–7326
A change to heading 7325 through 7326 from any other heading, including another heading within that group.

As the change in classification of the subject casting meets the terms of the tariff shift, the country of origin of the subject merchandise is Mexico, and the good qualifies to be marked as a product of Mexico.

2. NAFTA Preference

The casting undergoes processing operations in Mexico which is a country provided for under the North American Free Trade Agreement (NAFTA). General Note 12, HTS, incorporates Article 401 of the North American Free Trade Agreement (NAFTA) into the HTS. Note 12(a) provides, in pertinent part:

(a) Goods originating in the territory of a party to the North American Free Trade Agreement (NAFTA) are subject to duty as provided herein. For the purposes of this note

(ii) Goods that originate in the territory of a NAFTA party under the terms of subdivision (b) of this note and that qualify to be marked as goods of Mexico under the terms of the marking rules set forth in regulations issued by the Secretary of the Treasury (whether or not the goods are marked), when such goods are imported into the customs territory of the United States 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, in accordance with section 201 of the North American Free Trade Agreement Implementation Act.

Accordingly, the casting will be eligible for the “Special” “MX” rate of duty provided it is a NAFTA “originating” good under General Note 12(b), Harmonized Tariff Schedule of the Unites States Annotated (HTSUSA), as it qualifies to be marked as a good of Mexico. Note 12(b) provides, in pertinent part,

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 (r), (s) and (t) of this note or the rules set forth therein

Accordingly, the casting qualifies for NAFTA treatment only if the provisions of General Note 12(b)(ii)(A) are met, that is, if the merchandise is transformed in the territory of Mexico so that the non-originating material (the casting from China) undergoes a change in tariff classification as described in subdivision (t).

As the casting is classifiable in subheading 7326.90.8585, HTS, subdivision (t), Chapter 73, rule 27, applies. The required change in this case is a change to headings 7325 through 7326 from any heading outside that group. Since the tariff shift for the casting is from heading 7325.99.5000, HTS, to heading 7326.90.8585, HTS, the rule is not satisfied for NAFTA preference purposes.

The merchandise does not qualify for preferential treatment under the NAFTA because the non-originating material used in the production of the goods will not undergo the change in tariff classification required by General Note 12(t)/Ch. 73 (27), HTS.

This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 C.F.R. 181).

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist James Smyth at 212-637-7008.

Should you wish to request an administrative review of this ruling, submit a copy of this ruling and all relevant facts and arguments within 30 days of the date of this letter, to the Director, Commercial Rulings Division, Headquarters, U.S. Customs Service, 1300 Pennsylvania Ave. N.W., Washington, D.C. 20229.

Sincerely,

Robert B. Swierupski
Director

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