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HQ 562995





May 25, 2004

CLA-02 RR:CR:SM 562995 DCC

CATEGORY: MARKING

Mr. Larry Stone

N.W. Art In Motion, Inc.

2000 Brigantine Drive
Coquitlam, British Columbia
Canada V3K 7B5

RE: Country of Origin Marking and NAFTA Eligibility of Canadian Lithographs Matted and Framed in China

Dear Mr. Stone:

This is in response to your letter dated February 24, 2004, requesting a binding ruling on the country of origin marking of imported framed lithographic prints. You provided sample framed and unframed lithographs for our review.

FACTS:

Art In Motion, Inc. produces offset lithographic prints in Canada. After printing, Art In Motion plans to ship the lithographs to China for matting and framing. In China, frames will be produced by cutting polystyrene molding to length and fastening the sides of the frame together with vee-nails. Clear float glass will be cut to size and placed in the center of the frame. A mat board also will be cut to size and glued to the back of the print. The matted print will then be placed in the frame behind the glass and stapled into place along the edge of the frame. Kraft paper backing will be glued to the back of the frame and a metal hanger will be screwed into the back of the frame. Aside from vee-nails, which originate from Italy, all other framing materials originate from China. The completed framed print will then be shipped form China to the United States.

ISSUES:

Whether lithographs printed in Canada and framed in China may be marked “Made in Canada” upon importation into the United States.

Whether lithographs printed in Canada and framed in China are eligible for preferential tariff treatment under the North American Free Trade Agreement (“NAFTA”).

LAW AND ANALYSIS:

Country of Origin Marking

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 container) will permit in such a manner as to indicate to an ultimate purchaser in the United States 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 markings on the imported goods the country of which the good is the product. “The evident purpose is to mark the goods so 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 (1940).

Part 134, Customs Regulations (19 C.F.R. 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.1(b), Customs Regulations (19 C.F.R. 134.1(b)), defines “country of origin” as the country of manufacture, production, or growth of any article of foreign origin entering the United States. 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 the meaning of this part; however, for a good of a NAFTA country, the NAFTA Marking Rules determine the country of origin.

Section 134.1(j), Customs Regulations (19 C.F.R. 134.1(j)), 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), Customs Regulations (19 C.F.R. 134.1(g)), defines a “good of a NAFTA country” as an article for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules, set forth at 19 C.F.R. Part 102.

Section 102.11(a), Customs Regulations (19 C.F.R. 102.11(a)), sets forth the required hierarchy under the NAFTA Marking Rules for determining country of origin for marking purposes. This section 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.

Section 102.1(g), Customs Regulations (19 C.F.R. 102.1 (g)), defines a good wholly obtained or produced as including “A good produced in that country exclusively from goods referred to in paragraphs (g)(1) through (g)(10) of this section or from their derivatives, at any stage of production.” Because the framed print is produced from materials made in Canada, China, and Italy, the framed lithographs would not qualify as “a good wholly obtained or produced” in a country. Therefore, the country of origin of the framed prints may not be determined under section 102.11(a)(1).

The next step under the hierarchy is to consider whether the country of origin may be determined according to section 102.11(a)(2). Under this section, the origin of the good may be based on the origin of the materials used to produce the good, provided the good is produced exclusively from domestic materials. Section 102.1(d), Customs Regulations (19 C.F.R. 102.1(d)), defines domestic material as “a material whose country of origin as determined under these rules is the same country as the country in which the good is produced.” Because the framed lithographs include materials from Canada, China, and Italy, the finished articles are not produced exclusively from domestic materials. Accordingly, neither 19 C.F.R. 102.11(a)(1) nor 102.11(a)(2) may be used to determine the origin of the framed lithographs. Therefore, analysis must continue to 19 C.F.R. 102.11(a)(3) to determine the country of origin of the framed lithographs under the NAFTA Marking Rules.

You state that at the time they are exported from Canada, the lithographic prints are classifiable in 4911.91.2020, HTSUS, which provides for lithographs on paper or paperboard not over 0.51 mm in thickness. After matting and framing in China, the finished goods will be classifiable in subheading 4911.91.3000, HTSUS, which provides for lithographs on paper or paperboard over 0.51 mm in thickness. For purposes of this ruling, we are assuming that these classifications are correct.

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 set out in §102.20 and satisfies any other applicable requirements of that section.” Section 102.1(e), Customs Regulations (19 C.F.R. 102.1(e)) defines “Foreign material” 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.” The applicable rule under 19 C.F.R. 102.20(m), Customs Regulation (19 C.F.R. 102.20(m)), states:

4901 – 4911 A change to heading 4901 through 4911 from any other heading, including another heading within that group.

In the case before us, the lithographic prints, which are initially classified under heading 4911, HTSUS, remain classified under heading 4911, HTSUS, after matting and framing in China. Thus, there is no applicable change in tariff classification within the requirements of section 102.20, and country of origin of the good may not be determined in accordance with this provision.

Because the country of origin cannot be determined under 19 C.F.R. 102.11(a) (incorporating section 102.20), the next step is section 102.11(b), Customs Regulations (19 C.F.R. 102.11(b)), which states, in part:

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 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 . . .

In this case, the imported framed lithograph is composed of a lithographic print of Canadian origin that has been matted and framed in China. When determining the essential character of a good under section 102.11(b), section 102.18(b)(1), Customs Regulations (19 C.F.R. 102.18(b)(1)), provides that:

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.

The framed lithograph consists of the lithographic print, polystyrene frame molding, glass, mat board, backing paper, fasteners, and hanging hardware. The lithographic print is the only material that is classifiable in a tariff provision from which a change in tariff classification is not allowed under the applicable rule in 19 C.F.R. 102.20(m). Therefore, the Canadian lithographic print from Canada is the single material that imparts the essential character of the finished good pursuant to section 102.18(b)(1), Customs Regulations (19 C.F.R. 102.18(b)(1)). Accordingly, for country of origin marking purposes, the country of origin of the lithographs after matting and framing in China is Canada, and the framed lithographs must be marked accordingly upon importation into the United States. The marking “Made in Canada” would be acceptable.

NAFTA Eligibility

Under NAFTA, there are certain prohibitions in the law against the transshipment of originating goods outside the territories of the NAFTA countries. In particular, Section 16 of Part 181, Appendix (19 C.F.R. Part 181, Appendix), states:

A good is not an originating good by reason of having undergone production that occurs entirely in the territory of one or more of the NAFTA countries that would enable the good to qualify as an originating good if subsequent to that production
the good is withdrawn from customs control outside the territories of the NAFTA countries; or
the good undergoes further production or any other operation outside the territories of the NAFTA countries, other than unloading, reloading, or any other operations necessary to preserve the good in good condition, such as inspection, removal of dust that accumulates during shipment, ventilation, spreading out or drying, chilling, replacing salt, sulphur dioxide, or other aqueous solutions, replacing damaged packing materials and containers and removal of units of the good that are spoiled or damaged and present a danger to the remaining units of the good, or to transport the good to the territory of a NAFTA country.

According to your submission, the lithographic prints will be shipped from Canada to China for matting and framing. Consequently, the lithographs will be removed from customs control and subject to further production in a non-NAFTA country. Pursuant to Section 16 of Part 181, Appendix, the framed lithographic prints will not be eligible for NAFTA preferential tariff treatment.

HOLDING:

Pursuant to section 102.11(b)(1) of the Customs Regulations, the country of origin of the lithographic prints that are printed in Canada and matted and framed in China is Canada for country of origin marking purposes and they must be so marked. Furthermore, in accordance with 19 C.F.R. Part 181, App., sec. 16, the Canadian lithograph shipped to China for matting and framing would not be considered an "originating good" for purposes of qualifying for preferential tariff treatment under NAFTA when imported into the United States.

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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