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NY G86713




February 8, 2001

MAR:RR:NC:2:224 G86713

CATEGORY: MARKING

Jonathan M. Fee
Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP 245 Park Avenue 33rd floor
New York NY 10167-3397

RE: NAFTA; Article 509; Country of origin marking for softball bats; 19 U.S.C. 1304; 19 CFR Part 134; 19 CFR 102.11; 19 CFR 102.20;

Dear Mr. Fee:

This is in response to your letter dated January 29, 2001, on behalf of your client, Worth Inc., Tulahoma TN, requesting a ruling on the country of origin marking requirements for unfinished softball bats imported from Canada.

On behalf of your client, you have submitted samples of softball bats in various stages of completion. One sample represents the product of a U.S. origin aluminum tube that has been drawn and extruded, and then shaped to form a bat. An aluminum tube of U.S. origin representing the first layer of a sleeve is applied to the barrel of the bat. The bat is then exported to Canada where the second and final sleeve layer of fine carbon mesh is fitted onto the barrel over the first layer. Decals of U.S. origin are also added in Canada. The decals show brand names and other designs.

A second sample of a bat in its condition as returned to the United States for finishing is provided. In the U.S., a plug of U.S. origin is fitted onto the end of the barrel. Polyurethane material is inserted into the barrel through the handle. A knob of U.S. origin is welded to the end of the handle. Tape of Taiwanese origin is wound around the handle to make a grip. The bat is clear coated. Finally, the bat is shrink-wrapped.

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. Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C 1304.

Section 134.1(b), of the Customs Regulations defines the term “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.

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) defines a “good of a NAFTA country” as an article for which the country of origin is Canada, Mexico or the U.S. as determined under the NAFTA Marking Rules.

In this case, American originated unfinished softball bats are advanced in value and improved in condition in Canada prior to being exported back to the U.S. for finishing operations. Thus, in order to determine the appropriate marking requirements for the imported bats, that is, whether the unfinished bats of U.S. origin retain their status as products of the U.S. after exportation and processing in Canada, we must determine under the NAFTA Marking Rules the country of origin of the softball bats which are partly manufactured in Canada in the manner described above

Part 102, Customs Regulations (19 CFR Part 102), sets forth the “NAFTA Marking Rules.” Section 102.11, Customs Regulations sets forth the required hierarchy for determining the country of origin for marking purposes. Section 102.11(a) states that “the country of origin of a good is the country in which:

The good is wholly obtained or produced;
The good is produced exclusively from domestic materials: or 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 section 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.”

In the situation here, the imported softball bats are neither “wholly obtained or produced,” nor “produced exclusively from domestic materials.” Since an analysis of sections 102.11(a)(1) and 102.11(a)(2) will not yield a country of origin determination, we must look next to section 102.11(a)(3). Under this rule, the country of origin 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***.” When imported into Canada the aluminum shaped bat with its aluminum sleeve is considered an unfinished or incomplete bat for tariff purposes, and in this condition would be classified in subheading 9506.99.1500 of the Harmonized Tariff Schedule of the United States (HTSUS), based on the information available. This classification also describes the bat and its condition at the time of exportation from Canada following operations in that country. Accordingly, the U.S. produced bat component that is transported to Canada to be further processed does not undergo the applicable tariff shift or change in classification set out in section 102.20 of the Customs Regulations. A country of origin determination cannot be made under section 102.11(a)(3)

Since no country of origin determination could be made applying section 102.11(a), the analysis continues with section 102.11(b) of the hierarchical rules, which instructs us to examine the article’s essential character to determine its country of origin. Section 102.11(b) holds:

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:

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, 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.

The imported article is not described in the Harmonized System as a set, nor is it classified as a set pursuant to General Rule of Interpretation 3. Thus, section 102.11(c) is not applicable. Further, section 102.11(b)(2) is not applicable to the circumstances. In consequence, the rule that must be applied to determine the country of origin of the imported article is section 102.11(b)(1).

In determining the “essential character” of the merchandise, section 102.18(b)(2) of the regulations provides as follows:

For purposes of applying 102.11, only domestic and foreign materials (including self-produced materials) that are classified in a tariff provision from which a change in tariff classification is not allowed in the rule for the good set out in 102.20 shall be taken into consideration in determining the essential character of the good.

In this case, the material that does not undergo the applicable tariff shift is the aluminum bat tubing. Therefore, applying section 102.11(b)(1) to the facts of this case, we find that the single material that imparts the essential character of the good is the bat tube. From this analysis, the country of origin of the bat is the United States.

Because the origin of the exported tubing component does not change as a result of the processing performed in Canada under section 102.20(s), as explained above, the country of origin of the imported unfinished bat for marking purposes is the country of origin of the bat tube when imported into Canada. The imported bat is a product of the United States pursuant to the NAFTA Marking Rules. Accordingly, the softball bats are exempt from country of origin marking requirements under 19 U.S.C.1304 when returned to the United States for final processing.

This ruling is being issued under the provisions of Section 177 of the Customs Regulations (19 C.F.R. 177).

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 Tom McKenna at 212.637.7015.

Sincerely,

Robert B. Swierupski
Director,
National Commodity

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