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HQ 562884




February 27, 2004

CLA-2 RR:IA 562884 RFC

CATEGORY: MARKING

TARIFF NO.: 8506.10.0000

Mr. Andrew Rogers
Orion Electronics Limited
P.O. Box 2728
Windsor, NS
BON 2T0
Canada

RE: Country of Origin of Certain Battery Packs; NAFTA Marking

Dear Mr. Rogers:

This letter is in reference to your request to the National Commodity Specialist Division of the U.S. Bureau of Customs and Border Protection concerning the country of origin of certain battery packs imported from Canada. Your request has been forwarded to this office for a response. We apologize for the delay in responding to your request.

FACTS:

The facts as presented in the ruling request are as follows: There are two types of battery packs for which the country of origin is sought.

ST100BP: It contains 16 AA alkaline batteries (total voltage 12V). The batteries are non-rechargeable. The battery pack is used to power various types of global positioning devices.

ST300BP: It contains 8 D alkaline batteries (total voltage 12V). The batteries are non-rechargeable. The battery pack is used to power various types of global positioning devices.

In both types of battery packs, the battery cells are stated to be products of U.S. origin. They are assembled into the battery packs in Canada.

For purposes of this ruling, we shall assume that all the materials used to make the battery packs are classified outside of subheading 8506.10.0000 with the exception of the battery cells.

ISSUE:

What is the country of origin for marking purposes of the battery packs when imported into the United States from Canada?

LAW AND ANALYSIS:

Classification of the Merchandise

As determined in NY J84176 (September 25, 2003), the above-mentioned battery packs are classified in subheading 8506.10.0000 of the Harmonized Tariff Schedule of the United States when imported into the United States. The battery cells found in each of the battery packs are also classified in subheading 8506.10.0000.

Country of Origin Marking for the Merchandise

The U.S. law relating to country of origin marking for imported merchandise (“the marking statute”) is found in section 304 of the Tariff Act of 1930, as amended (19 U.S.C. § 1304). This law provides that, unless excepted, every article of foreign origin (or its container) 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 United States the English name of the country of origin of the article. See 19 U.S.C. § 1304(a). Products made in the United States do not have to be marked with their country of origin under this statute. The purpose of the marking statute is to allow the ultimate purchaser of the goods to know, by simple inspection, specifically where they were made in case such knowledge might influence his or her decision to purchase the goods (i.e., to permit the ultimate purchaser in the United States to choose between domestic and foreign-made products, or between the products of different foreign countries). See generally, United States v. Friedlaender & Co. Inc., 27 C.C.P.A. 297, at 302 (1940).

The “ultimate purchaser” is defined, in pertinent part, in Part 134 of the Customs Regulations as:

[G]enerally the last person in the United States who will receive the article in the form in which it was imported; however, for a good of a NAFTA country, the “ultimate purchaser”' is the last person in the United States who purchases the good in the form in which it was imported.

19 CFR § 134.1(d)

Annex 311 to the North American Free Trade Agreement (NAFTA) requires the parties to the agreement to establish rules for determining whether a good is a good of a party for country of origin marking purposes. See Annex 311, North American Free Trade Agreement, December 17, 1992, Can-Mex-U.S., 32 I.L.M. 289 (1993). The NAFTA was implemented into U.S. law through the North America Free Trade Agreement Implementation Act. Pub. L. 103-182, 107 Stat. 2057 (December 8, 1993). For the United States, the rules discussed in Annex 311 can be found in part 102 of the Customs Regulations. See 19 CFR § 102. They are known as the “NAFTA Marking Rules,” and they are to be used for “determining whether a good is a good of a NAFTA country.” See 19 CFR § 134.1(j). A good of a NAFTA country is an article for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules. See 19 CFR § 134.1(g). The NAFTA Marking Rules are the rules to be used to determine the country of origin for marking purposes for goods imported into the United States from Canada or Mexico. See generally, Bestfoods v. United States, 165 F.3d 1371 (Fed. Cir. 1999).

In regard to the NAFTA Marking Rules, section 102.11 to those rules provides, in pertinent part, as follows:

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

(b) 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.

19 CFR § 102.11

With respect to interpreting these rules, section 102.18 provides, in pertinent part, as follows:

(b) (1) For purposes of identifying the material that imparts the essential character to a good under § 102.11, the only materials that shall be taken into consideration are those domestic or foreign materials that are classified in a tariff provision from which a change in tariff classification is not allowed under the § 102.20 specific rule or other requirements applicable to the good.

For purposes of this paragraph (b)(1):

(i) The materials to be considered must be classified in a tariff provision from which a change in tariff classification is not allowed under the specific rule or other requirements applicable to the good under consideration. For example, in the case of a good classified in HTSUS subheading 8607.11 (the rule for which specifies a change to subheading 8607.11 from any other subheading, except from subheading 8607.12, and except from subheading 8607.19 when that change is pursuant to GRI 2(a)), the only materials that may be considered for purposes of identifying the materials that impart the essential character to the good are those that are classified in subheadings 8607.11, 8607.12 and, if the tariff shift is pursuant to GRI 2(a), 8607.19;

(ii) Materials that may be considered include materials produced by the producer of the good and incorporated in the good. For example, if a producer of a good purchases raw materials and converts those raw materials into a component that is incorporated in the good, that component is a material that may be considered for purposes of identifying the materials that impart the essential character to the good, provided that the component is classified in a tariff provision from which a change in tariff classification is not allowed under the specific rule or other requirements applicable to the good; and

(iii) If there is only one material that is classified in a tariff provision from which a change in tariff classification is not allowed under the § 102.20 specific rule or other requirements applicable to the good, then that material will represent the single material that imparts the essential character to the good under § 102.11.

19 CFR § 102.18

“Foreign material” is defined in 19 CFR 102.1(e) as “a material whose country of origin determined under these rules is not the same country as the country in which the good is produced.”

The country of origin of the battery packs cannot be determined under section 102.11(a)(1) or (a)(2) because they are not wholly obtained or produced, or produced exclusively from domestic (Canadian) materials. Since an analysis of section 102.11(a)(1) and (a)(2) will not yield a country of origin determination, we look to section 102.11(a)(3).

With respect to the above-listed rule in section 102.11(a)(3), the required change in tariff classification or tariff shift in section 102.20 for goods classified in HTSUS subheading 8506.10.0000 is as follows:

A change to subheading 8506.10 from any other subheading; or A change to a primary cell or battery of maganese dioxide of an external volume not exceeding 300 cm\3\ of subheading 8506.10 from any other good of subheading 8506.10; or A change to a primary cell or battery of maganese dioxide of an external volume exceeding 300 cm\3\ of subheading 8506.10 from any other good of subheading 8506.10.

19 CFR § 102.20

In the instant case, the battery packs do not make the required change in classification insofar as the battery cells contained in the battery packs are classified in the same subheading, i.e., subheading 8506.10. Therefore, the origin of these two battery packs cannot be determined by application of the rule in section 102.11(a)(3): each foreign material incorporated in the goods does not undergo the above-listed change in tariff classification (as the battery packs do not undergo the above-listed change in tariff classification based on the processing that occurs in Canada, i.e., the battery cells are classified in subheading 8506.10 when imported into Canada and remain classified in that subheading after being processed into the finished battery packs in Canada).

Applying the rules in the required hierarchical order, reference must be made to section 102.11(b)(1) to determine the single material that imparts the essential character to the good.

With respect to the material that imparts the essential character to the good, section 102.18(b)(1)(iii) to the Customs Regulations provides if there is only one material that is classified in a tariff provision from which a change in tariff classification is not allowed under the rule or other requirements applicable to the good, then that material will represent the single material that imparts the essential character to the good under section 102.11 (b)(i).

In the instant case, the one material that does not undergo a change in tariff classification for both battery packs is the battery cells. Therefore, as the origin of the battery cells is stated to be the United States, the country of origin of both battery packs under the NAFTA Marking Rules is the United States.

HOLDING:

The country of origin for marking purposes of the two above-mentioned battery packs is the United States. As products of the United States, these battery packs are not subject to the country of origin marking statute.

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs Service officer handling the transaction.

Sincerely,

Myles B. Harmon, Director
Commercial Rulings Division

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