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NY R02567




October 11, 2005

MAR-2 RR:NC:N1:105 R02567

CATEGORY: MARKING

Ms. Heather Ganley
Taco, Inc.
1160 Cranston Street
Cranston, RI 02920

RE: COUNTRY OF ORIGIN MARKING AND CLASSIFICATION OF IMPORTED INTERNAL CIRCUIT BOARDS; ARTICLE 509

Dear Ms. Ganley:

This is in response to your letter dated September 14, 2005 requesting a ruling on the classification of and the country of origin marking requirements for an imported article, which is claimed to be a good of a NAFTA country, that is later to be further processed in the U.S. into a finished article. A marked sample was not submitted with your letter for review.

You state: “Taco, Inc. imports circuit boards from Tekmar Control Systems, LTD. Located in Canada, which become an internal component in i Series Mixing Valves. The i Series Mixing Valves are a very cost effective way to control temperature in heating systems.”

You also state: “I would also like to request a significant transformation ruling on the circuit board. I believe for country of origin purposes that a substantial transformation occurs when all the components (valve assembly – body, seat, pins, washer, ball valve, o-rings, etc., actuator cover and housing, plastic gear, labels and packaging) are assembled, tested and packages to form a completed valve.

The question that we are posing to Customs is: Under the factual scenario described above, will the Canadian imported internal i series circuit board qualify as a significant transformation under the applicable customs statutory and regulatory provisions?”

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.

The country of origin marking requirements for a "good of a NAFTA country" are also determined in accordance with Annex 311 of the North American Free Trade Agreement ("NAFTA"), as implemented by section 207 of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat 2057) (December 8, 1993) and the appropriate Customs Regulations. The Marking Rules used for determining whether a good is a good of a NAFTA country are contained in Part 102, Customs Regulations. The marking requirements of these goods are set forth in Part 134, Customs Regulations.

Section 134.1(b) of the regulations, defines "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. (Emphasis added).

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) of the regulations, 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. Section 134.45(a)(2) of the regulations, provides that a "good of a NAFTA country" may be marked with the name of the country of origin in English, French or Spanish.

In order to determine the country of origin marking requirements we must first apply the NAFTA Marking Rules in order to determine whether the imported internal circuit board "is a good of a NAFTA country", prior to being further processed in the U.S.

Part 102 of the regulations, sets forth the "NAFTA Marking Rules" for purposes of determining whether a good is a good of a NAFTA country for marking purposes. Section 102.11 of the regulations, sets forth the required hierarchy for determining country of origin for marking purposes.

Applying the NAFTA rules of origin set forth in Part 102 of the regulations to the facts of this case, we find that, for marking purposes, the imported internal circuit board is a good of a NAFTA country prior to being further processed in the U.S.

From your description, we are assuming that all of its components are Canadian.

Since the imported product is a NAFTA product, it is not relevant whether or not it is substantially transformed in the United States in accordance with Customs Regulation 134.35 (a).

The only issue which remains regarding its marking is whether the U.S. processor is the ultimate purchaser within the meaning of section 134.35(b). Section 134.35(b) of the regulations, provides that
a good of a NAFTA country which is to be processed in the United States in a manner that would result in the good becoming a good of the United States under the NAFTA marking rules is excepted from marking. Unless the good is processed by the importer or on its behalf, the outermost container of the good shall be marked in accord with this part.

Based on the facts of this case, we find that the imported internal circuit board as a result of the further processing performed in the U.S. becomes an article of U.S. origin under Part 102 of the regulations.

Accordingly, the imported internal circuit boards, which are goods of a NAFTA country that become U.S. articles as a result of being further processed in the U.S., in the manner described above, are excepted from marking and only the outermost containers are required to be marked with the country of origin Canada if the imported internal circuit boards are not processed by the importer or on its behalf.

We have determined that the i Series Mixing Valve produced in the United States are classified in HTS 8481.80 so the applicable specific Rule of Origin is in CR 102.20 (o).

Per NIS R. Laman’s telephone call to you on 9-20-05, the circuit board has a temperature sensor attached. The internal circuit board’s purpose is to compare the input desired temperature with the actual temperature reported by the sensor and to send an electrical signal to the actuator to change the flow of water into the boiler and thereby cause the measured temperature to change to the desired temperature.

The applicable subheading for the internal circuit board will be 9032.10.0060, Harmonized Tariff Schedule of the United States (HTS), which provides for thermostats for air conditioning, refrigeration or heating systems, not designed for wall mounting. The general rate of duty will be 1.7 percent ad valorem.

Regarding the classification, this ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).

Regarding the marking, this ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 CFR Part 181).

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 J. Sheridan at 646-733-3012.

Sincerely,

Robert B. Swierupski
Director,

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