United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 2002 HQ Rulings > HQ 562393 - HQ 962521 > HQ 562476

Previous Ruling Next Ruling
HQ 562476




August 20, 2002

MAR-05 RR:CR:SM 562476 TJM

CATEGORY: MARKING

Thomas W. Phalen
Plantronics, Inc.
234 Encinal Street
Santa Cruz CA 95060

RE: NAFTA; country of origin marking; telephone headsets; Plantronics; de minimis; GN 12(f); 19 USC § 1304; 19 CFR §102.11; 19 CFR §102.13(a); HQ 548162; HQ 548104.

Dear Mr. Phalen:

This is a response to your letters dated January 14, 2002, and January 15, 2002, requesting a ruling on the eligibility of certain telephone headsets for NAFTA preference and as products of Mexico for marking purposes. The Value Branch of this office responded to the NAFTA eligibility issue on July 8, 2002, by way of Headquarters Ruling Letters (HRL’s) 548162 and 548104.

FACTS:

Plantronics imports telephone headsets (Models S10, S20, CS10, and LKA 10) from its subsidiary manufacturing facility, Plamex SA de CV, located in Tijuana, Mexico. According to the National Commodity Specialist Division, the headsets are classified under subheading 8518.30.2000, Harmonized Tariff Schedule of the United States (HTSUS).

The S10 model is a telephone headset system consisting of a headset made in Mexico (8517.80.1020, HTSUS) and an adapter/amplifier made in China (8517.80.1020, HTSUS). This product was the subject of New York Ruling E86983, dated October 7, 1999. The S10 is comprised of many components that are manufactured in several countries, but all of the non-NAFTA components make a tariff shift to heading 8518, HTSUS, except the speaker (8518.29.8000, HTSUS) and the microphone (8518.10.8030, HTSUS). The Value Branch of this office ruled in HRL 548104, dated July 8, 2002, that the value of the two non-originating components (speaker and microphone) that do not undergo a tariff shift equals less than seven percent of the total cost of the finished telephone headsets. Therefore, pursuant to the NAFTA de minimis rule (General Note (GN) 12(f)(i)), this office determined that the final good qualifies for the NAFTA preferential treatment.

Model S20 is a telephone headset consisting of a headset and an adapter/amplifier made in Mexico and sold as a set. The non-originating components that do not undergo a change in tariff classification are the speaker (8518.29.8000, HTSUS) and the microphone (8518.10.8030, HTSUS).

Model CS10 is a telephone headset system consisting of a headset (8517.80.1020, HTSUS) made in Mexico, and a wireless adapter/amplifier (8517.80.1020, HTSUS) made in Korea. The non-originating components that do not undergo a change in tariff classification are the speaker (8518.29.8000, HTSUS) and the microphone (8518.10.8030, HTSUS).

Model LKA10 is a telephone headset system that consists of a headset (8517.80.1020, HTSUS) that is made in Mexico and a wireless adapter/amplifier (8517.80.1020, HTSUS) that is made in Korea. The non-originating components that do not undergo a change in tariff classification are the speaker (8518.29.8000, HTSUS) and the microphone (8518.10.8030, HTSUS).

In HRL 548162, dated July 8, 2002, the Value Branch of this office ruled that for Models S20, CS10, and LKA10, the value of the non-originating components that do not undergo a change in tariff classification is less than seven percent of the total cost of the fininshed good. Therefore, pursuant to the NAFTA de minimis rule (GN 12(f)(i), HTSUS), the finished goods are eligible for NAFTA preference.

By telephone on August 19, 2002, you stated that the total cost of the finished goods is the value you claim upon entry of the goods for customs purposes.

ISSUE:

What is the country of origin for marking purposes of the above described telephone headsets that qualify for NAFTA preference under the de minimis rule?

LAW AND ANALYSIS:

General Marking Requirements

As you are aware, Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. § 1304), provides that unless excepted, every article of foreign origin imported into the United States 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. 19 CFR part 134 implements the country of origin marking requirements of 19 U.S.C. § 1304.

Section 134.1(d), Customs Regulations (19 CFR § 134.1(d)), provides that the “ultimate purchaser” is generally the last person in the United States who will receive the article in the form in which it was imported. Congressional intent in enacting 19 U.S.C. § 1304 was “that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of origin of which the goods is the product. The evident purpose is to mark the goods so that at the time of the purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will.” United States v. Friedlander & Co., 27 C.C.P.A. 297 at 302; C.A.D. 104 (1940).

Country of Origin

The country of origin of a "good of a NAFTA country" is determined in accordance with Annex 311 of the North American Free Trade Agreement ("NAFTA"), as implemented by 19 CFR § 102.11. For a good of a NAFTA country, section 102.11, Customs Regulations (19 CFR § 102.11), sets forth the required hierarchy for determining country of origin for marking purposes. Specifically, section 102.11(a), Customs Regulations (19 CFR § 102.11(a)) states, in pertinent part, 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.

Because the products at issue are not wholly obtained or produced in Mexico and because the products are not produced exclusively from domestic material, section 102.11(a)(3) is applicable. Pursuant to 19 C.F.R. § 102.11(a)(3), 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 prescribed in 19 C.F.R. § 102.20. Section 102.20, Customs Regulations (19 CFR § 102.20), 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.

In the instant case, all four telephone headset models are classifiable in subheading 8518.30.2000, HTSUS. See HRL 548162 and 548104, both dated July 8, 2002. See also NYRL E88224, dated October 29, 1999, and HRL 963867, dated August 7, 2000. Therefore, the change in tariff classification must be made in accordance with 19 C.F.R. §102.20(p), Section XVI: Chapters 84 through 85, subheading 8518.10 – 8518.50, HTSUS, which states that:

A change to subheading 8518.10 through 8518.50 from any other heading.

This means that each foreign material (non-Mexican components in this case) incorporated in the telephone headsets must come from a different heading than 8518, HTSUS.

In the instant case, based on the information provided and incorporating the analysis of HRL 548104 and 548162, it appears that all the components undergo a change in tariff classification, except for the speakers (8518.29.8000, HTSUS) and microphones (8518.10.8030, HTSUS) used to manufacture all four models.

The NAFTA rules of origin for marking purposes also provide a de minimis rule. Section 102.13(a), Customs Regulations (19 CFR § 102.13(a)), states, in pertinent part, that:

Except as otherwise provided in paragraphs (b) and (c) of this section, foreign materials that do not undergo the applicable change in tariff classification set out in § 102.20 or satisfy the other applicable requirements of that section when incorporated into a good shall be disregarded in determining the country of origin of the good if the value of those material is no more than 7 percent of the value of the good or 10 percent of the value of a good of Chapter 22, Harmonized System. (Emphasis added)

Furthermore, section 102.1(p), Customs Regulations (19 C.F.R. § 102.1(p)), defines value for purposes of the marking regulations as:

“Value” means, with respect to § 102.13: (1) In the case of a good, its customs value or transaction value within the meaning of the appendix to part 181 of this chapter; or. . . .

In the instant case, the Value Branch of this office determined, pursuant to 19 C.F.R. Part 181, App. § 5(1)(b), that in each case of the four models, the value of the non-originating components (the speaker and the microphone) is not more than seven percent of the total cost of the good. See HRL 548104 (for Model S10) and HRL 548162 (for Models S20, CS10, and LKA 10). By telephone, the importer confirmed that the total cost of the good is the customs value which he claims upon entry of the goods.

Assuming that the value of the non-originating components does not exceed seven percent of the value of the good, by application of the de minimis rule for NAFTA marking purposes (19 CFR 102.13(a)), the subject telephone headsets qualify as products of Mexico for marking purposes and should so be marked in accordance with country of origin marking requirements set forth in 19 C.F.R. part 134.

HOLDING:

Based on the information provided, pursuant to the de minimis rule for NAFTA marking purposes (19 CFR 102.13), the country of origin for marking purposes of the four telephone headset products (Models S10, S20, CS10, and LKA10) is Mexico. Each of the finished goods should be marked as a product of Mexico in accordance with the country of origin marking requirements set forth in 19 C.F.R. part 134.

A copy of this ruling letter should be attached to the entry documents filed at the time the 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,

Myles B. Harmon, Acting Director
Commercial Rulings Division

Previous Ruling Next Ruling

See also: