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HQ 562881




December 24, 2003

MAR-2 RR:CR:SM 562881 KSG

CATEGORY: MARKING

Rolando Cruz
Ormco Corporation
1332 S. Lone Hill Avenue
Glendora, California 91740

RE: Eligibility and country of origin under NAFTA for imported stainless steel foil mesh strip

Dear Mr. Cruz:

This is in response to your letter of July 2, 2003, and your additional letter of August 26, 2003, requesting a binding ruling concerning the eligibility of imported stainless steel foil mesh strip ("mesh strip") for preferential tariff treatment under the North America Free Trade Agreement ("NAFTA") and the country of origin marking under NAFTA. You submitted a sample for our examination.

FACTS:

You state that woven stainless steel mesh ("mesh") was obtained from a company in Germany. For the purposes of this ruling, we will assume that the country of origin of the mesh is Germany. The mesh is classified in heading 7314 of the Harmonized Tariff Schedule of the United States ("HTSUS"). Cold-rolled stainless steel foil ("foil"), which is classified in heading 7220, HTSUS, is produced in the United States. In the U.S., the mesh is placed on top of the foil and the two layers are bonded together under very high pressure while subjecting them to a high temperature in a diffusion oven. The stainless steel foil mesh sheets are 12 inches in width and 24 inches in length and .12 in thickness. As discussed above, the resulting foil mesh sheet is classified in heading 7314, HTSUS.

The foil mesh sheets are shipped to Mexico where they are cut into strips that measure from 0.240 inches to 0.260 inches in width. Approximately 44 to 46 strips are usually produced per sheet. The strips are then welded end to end and wound on reels. Approximately 275 of the welded strips are wound on one reel. The reels of mesh strip are then imported into the U.S. The mesh strip is used in the U.S. to make orthodontic brackets.

ISSUES:
I. What is the proper classification of the mesh strips?

II. Whether the imported mesh strip is eligible for preferential tariff treatment under the NAFTA.

III. What is the proper country of origin marking under the NAFTA for the imported mesh strip?

LAW AND ANALYSIS:

I. Classification of the imported mesh strip

With respect to goods that are, prima facie, classifiable in two or more headings, each heading describing only part of the good, General Rule of Interpretation (GRI) 3(a), HTSUS, regards those headings as being equally specific in relation to the good. Cold-rolled stainless steel foil is provided for in heading 7220, HTSUS, while woven stainless steel mesh is provided for in heading 7314, HTSUS. Each heading describes only part of the good. The available evidence does not permit us to determine whether either component is more or less significant than the other to the use of the completed good as parts of orthodontic brackets. Therefore, we cannot establish an essential character for the good under GRI 3(b). Under GRI 3(c), both the foil mesh sheets and the mesh strip are classified in heading 7314, as the heading which occurs last in numerical order among those headings meriting equal consideration. Depending on the fineness of the meshes per lineal centimeter, the appropriate 8-digit subheadings are 7314.14.10, 7314.14.20, and 7314.14.90, HTSUS.

II. Eligibility of the imported mesh strip for NAFTA

General Note 12, HTSUS, incorporates Article 401 of NAFTA into the HTSUS. General Note 12(a)(ii) provides, in pertinent part:

(i) 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 (without regard to whether 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 NAFTA Implementation Act.

Accordingly, the mesh strip will be eligible for the “Special” “MX” rate of duty provided they are NAFTA “originating” goods under General Note 12(b), HTSUS, and qualify to be marked as a product of Mexico under the marking rules. General Note 12(b), HTSUS, 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,
or

(B) the goods otherwise satisfy the applicable requirements of subdivisions (r), (s) and (t) where no change in tariff classification is required, and the goods satisfy all other requirements of this note; or

(iii) they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials.

Pursuant to the tariff shift rule set forth in GN 12(t)/73.9, a qualifying tariff shift occurs if there is a change to headings 7312 through 7314 from any other heading, including another heading within that group.

In this case, there is not a qualifying tariff shift because the stainless steel mesh and foil mesh sheets made therefrom are classified in heading 7314, as is the imported mesh strip from Mexico. Accordingly, the imported mesh strip is not eligible for preferential treatment under the NAFTA.

III. Country of origin marking of the imported mesh strip

Section 304 of the 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. 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 which the goods is the product. The evident purpose is to mark the goods so that at the time of 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. Friedlaender & Co., 27 C.C.P.A. 297 at 302; C.A.D. 104 (1940). Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.

Section 102.11, Customs Regulations (19 CFR 102.11), sets forth the required hierarchy for determining whether a good is a good of a NAFTA country for the purposes of country of origin marking and determining the rate of duty and staging category applicable to a NAFTA originating good as set out in Annex 302.2. Paragraph (a) of this section states that 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 section 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.

Since the mesh strip is not wholly obtained or produced in a NAFTA country, we proceed to 102.11(a)(3). Pursuant to 19 CFR 102.20(n), the tariff shift rule for heading 7314, HTSUS, is as follows:

7309-7314 A change to heading 7309 through 7314 from any other heading, including another heading within that group.

Since the stainless steel foil mesh sheets are classified in heading 7314, there is not a change to another heading. Since no tariff shift occurs under 19 CFR 102.11(a)(3), pursuant to the hierarchical rules, we proceed to 19 CFR 102.11(b). Section 102.11(b) provides:

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: (1) 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....

When there is only a single material that does not meet the tariff shift requirement, pursuant to 19 CFR 102.18(b)(1)(iii), that material will represent the single material that imparts the essential character to the good under section 102.11.

The country of origin of the mesh strip pursuant to 19 CFR 102.11(b), is the country of origin of the foil mesh sheet. Applying the tariff shift rule above to the foil mesh sheet classified in heading 7314, HTSUS, the steel mesh from Germany does not undergo the requisite tariff shift. Therefore, the country of origin of the mesh sheet and therefore, the mesh strip, will be Germany.

HOLDING:

Based on the information provided, the mesh sheets and the mesh strip is classified in heading 7314, HTSUS. The imported mesh strip is not originating under the NAFTA. The country of origin of the mesh strip for marking purposes is Germany.

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

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