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NY G81782




September 25, 2000

CLA-2-73:RR:NC:N1:113 G81782

CATEGORY: CLASSIFICATION

TARIFF NO.: 7325.99.5000; 7326.90.8585; 7616.99.5060; 7616.99.5090

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 September 13, 2000, you requested a ruling on the status of body castings of either stainless steel or aluminum from Mexico under the NAFTA.

The merchandise is a body casting, a component of a coupling or fitting used to transition a wire bundle or cable into an electrical connector or plug. 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 may also consider purchasing them from other distributors who import them from Taiwan. Joslyn will send the raw body castings to Mexico for processing. This includes machining the inside and outside diameters using CNC lathes, drilling holes to assist in further assembly of parts to the casting, deburring, passivation and other cleaning processes.

The raw castings can be made into various part numbers, depending on the inside diameter, the outside diameter, and whether the customer requires a self-locking feature. Some body castings are aluminum investment castings, some are stainless steel investment castings, and some are aluminum die-castings. The castings come in different configurations, such as 450 or 900 elbows. All are designed to accept a type of saddle bar or tightening band. Your company imports the castings after processing in Mexico.

The applicable tariff provision for the steel 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 steel 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.

For the like reason, mutatis mutandis, the aluminum raw body casting will be classified in the equivalent headings in Chapter 76, HTS. Since there is no separate heading for cast articles of aluminum in that chapter, the aluminum raw casting and the finished body will fall within the same heading. Only the statistical suffix will vary. The applicable tariff provision for the aluminum raw body casting, in its condition as imported from China or Taiwan, will be 7616.99.5060, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for other articles of aluminum, other, other, other, other, castings. The applicable tariff provision for the finished body casting, in its condition as imported from Mexico, will be 7616.99.5090, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for other articles of aluminum, other, other, other, other, other, other. The general rate of duty, in either case, will be 2.5 percent ad valorem.

Rules of Origin.

(A). The steel casting.

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. 19 CFR 102.11 sets forth the NAFTA Marking Rules.

§ 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 because the raw castings are neither wholly obtained nor produced in Mexico nor are they 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 steel raw casting is classified under heading 7325.99.5000, HTS. The advanced steel 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 steel 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.

(B). The aluminum casting.

When imported into Mexico, the aluminum raw casting is classified under heading 7616.99.5060. The advanced aluminum casting is classified under heading 7616.99.5090, HTS. The applicable tariff shift rule found in section 102.20 provides as follows:

7616.10–7616.99
A change to subheading 7616.10 through 7616.99 from any other subheading, including another subheading within that group.

Here the subheading remains the same, only a the statistical suffix varies. As the change in classification of the aluminum casting does not meet the terms of the tariff shift, the country of origin of the subject merchandise cannot be determined under paragraph (a) or (b) of Section 102.11. Nor can it be determined under paragraph (c) of that section, since it is not a set, mixture or composite good.

Section 102.11(d) provides that:

Where the country of origin of a good cannot be determined under paragraph (a), (b) or (c) of this section, the country of origin of the good shall be determined as follows: (1) If the good was produced only as a result of minor processing, the country of origin of the good is the country or countries of origin of each material that merits equal consideration for determining the essential character of the good; (2) If the good was produced by simple assembly and the assembled parts that merit equal consideration for determining the essential character of the good are from the same country, the country of origin of the good is the country of origin of those parts; or (3) If the country of origin of the good cannot be determined under paragraph (d)(1) or (d)(2) of this section, the country of origin of the good is the last country in which the good underwent production.

Section 102.1 (1)(8)(m) defines minor processing to be:

Mere dilution with water or another substance that does not materially alter the characteristics of the good; Cleaning, including removal of rust, grease, paint, or other coatings; Application of preservative or decorative coatings, including lubricants, protective encapsulation, preservative or decorative paint, or metallic coatings; Trimming, filing or cutting off small amounts of excess materials; Unloading, reloading or any other operation necessary to maintain the good in good condition; Putting up in measured doses, packing, repacking, packaging, repackaging; Testing, marking, sorting, or grading;
Ornamental or finishing operations incidental to textile good production designed to enhance the marketing appeal or the ease of care of the product, such as dyeing and printing, embroidery and appliques, pleating, hemstitching, stone or acid washing, permanent pressing, or the attachment of accessories notions, findings and trimmings; or Repairs and alterations, washing, laundering, or sterilizing.

The good is not the result of minor processing nor simple assembly. Since the country of origin cannot be determined under Section 102.11(d)(1) or (2), the country of origin, under Section 102.11(d)(3) is determined to be the last country in which the good underwent production.

Section 102.1(1)(8)(n) defines production as “growing, mining, harvesting, fishing, trapping, hunting, manufacturing, processing or assembling a good.” The raw aluminum casting while in Mexico will undergo such processing as machining the inside and outside diameters to a specific size. The machining and drilling processes are necessary to the completion of the finished good. Therefore, the last country in which the good undergoes production is Mexico. The finished aluminum castings qualify to be marked as a product of Mexico.

2. NAFTA Preference

The castings undergo 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 castings will be eligible for the “Special” “MX” rate of duty provided they are 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 castings qualify 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 castings from China or Taiwan) undergoes a change in tariff classification as described in subdivision (t).

As the steel 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 steel casting is from heading 7325.99.5000, HTS, to heading 7326.90.8585, HTS, the rule is not satisfied for NAFTA preference purposes.

As the aluminum casting is classifiable in subheading 7616.99.5090, HTS, subdivision (t), Chapter 76, rule 7, applies. The required change in this case is a change to headings 7615 through 7616 from any heading, including another heading within that group. Since there is no heading change for the aluminum casting, the rule is not satisfied for NAFTA preference purposes.

The steel casting 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.

The aluminum casting 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. 76 (7), 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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