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NY N005950




February 23, 2007

CLA-2-40:RR:NC:N2:221

CATEGORY: CLASSIFICATION

TARIFF NO.: 4016.99.6050

Mr. Ralph Saunders
A.N Deringer, Inc.
1 Lincoln Blvd., Suite 225
Rouses Point, NY 12979

RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA) of blasting mats from Canada; Article 509

Dear Mr. Saunders:

In your letter dated January 22, 2007, on behalf of Meagher Blasting Mats, Canada, you requested a ruling on the status of blasting mats from Canada under the NAFTA.

You state that the articles are mats used in the blasting industry where they are put over the charge to control the splattering of the rock from the immediate area. The blasting mats are made from multiple layers of tirewalls, rigging hardware, steel flat bars and scrap wire rope or cables. The essential character of the mats is imparted by the rubber components.

The applicable tariff provision for the blasting mats will be 4016.99.6050, Harmonized Tariff Schedule of the United States (HTSUS), which provides for other articles of vulcanized rubber other than hard rubber: other: other. The general rate of duty will be 2.5 percent ad valorem.

Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at http://www.usitc.gov/tata/hts/.

You ask whether the blasting mats are eligible for a free rate of duty under the NAFTA. The steel flat bars are produced in Canada. The scrap wire rope is produced in either Canada or the United States. The rigging hardware is produced in China. You indicate that all of the “scrap” tires are purchased in Canada. Although you believe the tires have been manufactured in Canada, you admit it is possible that some of the tires may have been manufactured in a non-NAFTA country. You state that the tires have been deemed unusable as tires because they are not capable of being retreaded. You also state that Meagher receives the tires from a non-related company who provides the tires free of charge to avoid paying a fee to properly dispose of them.

You believe that even if the tires have been manufactured in a non-NAFTA country they should be considered to be originating since they are scrap. Under the NAFTA, a good can be considered to be "wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States" when it consists of "waste and scrap derived from ... used goods collected in the territory of one or more of the NAFTA parties, provided such goods are fit only for the recovery of raw materials." See General Note 12(n)(ix)(B).

General Note 12(b), HTSUS, sets forth the criteria for determining whether a good is originating under the NAFTA. General Note 12(b), HTSUS, (19 U.S.C. § 1202) states, in pertinent part, that

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; or

(iv) they are produced entirely in the territory of Canada, Mexico and/or the United States but one or more of the nonoriginating materials falling under provisions for "parts" and used in the production of such goods does not undergo a change in tariff classification because--

(A) the goods were imported into the territory of Canada, Mexico and/or the United States in unassembled or disassembled form but were classified as assembled goods pursuant to general rule of interpretation 2(a), or

(B) the tariff headings for such goods provide for and specifically describe both the goods themselves and their parts and is not further divided into subheadings, or the subheadings for such goods provide for and specifically describe both the goods themselves and their parts,
provided that such goods do not fall under chapters 61 through 63, inclusive, of the tariff schedule, and provided further that the regional value content of such goods, determined in accordance with subdivision (c) of this note, is not less than 60 percent where the transaction value method is used, or is not less than 50 percent where the net cost method is used, and such goods satisfy all other applicable provisions of this note.

The blasting mats are not considered to be wholly originating because not all of the components are produced in a NAFTA country. The rigging hardware is produced in China. Even if the tires are considered to be scrap fit only for the recovery of raw materials so that the tire component can be deemed to be "wholly obtained or produced entirely in the territory of Canada,” the blasting mat is not eligible for NAFTA unless it meets the tariff shift rules of origin for subheading 4016.99, HTSUS.

General Note 12(b) (ii) (A), HTSUS, (19 U.S.C. § 1202) states, in pertinent part, that goods are eligible for NAFTA if they have been transformed in the territory of Canada, Mexico and/or the United States so that 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. General Note 12(t)/40.14 requires a “change to subheading 4016.99 from any other heading, except from headings 4009 through 4017.”

The rigging hardware produced in China undergoes the requisite tariff shift in the production of the blasting mats. The question of eligibility under NAFTA hinges, then, on whether the tires, when produced in a non-NAFTA country, undergo the requisite tariff shift.

Chapter 40 legal note 6 states that “For the purposes of heading 4004 the expression ‘waste, parings and scrap’ means rubber waste, parings and scrap from the manufacture or working of rubber and rubber goods definitely not usable as such because of cutting-up, wear or other reasons.” The Explanatory Notes to heading 4004 state that the provision includes “worn-out rubber tyres not suitable for retreading” but excludes “used tyres suitable for retreading (heading 40.12).” The Explanatory Notes to heading 4012 state that the heading “includes retreaded pneumatic tyres of rubber and used pneumatic tyres of rubber, suitable either for further use or for retreading.”

Eligibility of the instant blasting mats depends, therefore, entirely on whether the tires from which the mats are constructed, when manufactured in a non-NAFTA country, are suitable for reuse or retreading. If the tires are suitable for reuse or retreading they are not considered to be scrap, and thus cannot be considered to be wholly obtained or produced entirely in the territory of Canada, in accord with General Note 12(n)(ix)(B), by virtue of being waste and scrap collected in Canada derived from used goods fit only for the recovery of raw materials. Tires suitable for reuse or retreading are classifiable in heading 4012. Since tariff shift rule General Note 12 (t) 40.14 requires a change to subheading 4016.99 from any other heading, except from headings 4009 through 4017, tires produced in a non-NAFTA country that are suitable for reuse or retreading, being classifiable in heading 4012, will not have undergone the requisite tariff shift when manufactured to form the blasting mat.

If the tires from which the blasting mats are manufactured are not suitable for reuse or retreading, the mats are eligible for NAFTA preferential treatment under either of two analyses. First, because scrap tires are classifiable in heading 4004, the tires, even if produced in a non-NAFTA country, have undergone the requisite tariff shift. In the alternative, the tires, being waste and scrap collected in Canada from used goods fit only for the recovery of raw materials, are considered to be wholly obtained or produced entirely in the territory of Canada, in accord with General Note 12(n)(ix)(B).

You suggest that even if the tires are not eligible based on the above analyses, that they should be NAFTA eligible based on the de minimis provision contained in GN 12(f). This provision declares that a good shall be considered to be an originating good if the value of all non-originating materials used in the production of the good that do not undergo an applicable change in tariff classification set out in subdivision (t) of the note is not more than 7 percent of the transaction value of the good, adjusted to a F.O.B. value. You suggest that since the cost of the tires is free, that their value is not more than 7 percent of the total FOB Ontario selling price.

This office notes that a determination of de minimis depends on the value, not the cost, of the materials. If the tires are suitable for reuse or retreading, their value, combined with the value of the Chinese rigging hardware, would be greater than 7 percent of the FOB Ontario selling price and the mats would not be eligible for NAFTA preferential treatment.

Based on the facts provided, the blasting mats qualify for NAFTA preferential treatment when made either of tires that originate in a NAFTA country or with scrap tires that are not capable of reuse or of being retreaded, no matter what their country of origin, because they will meet the tariff shift requirements of HTSUS General Note 12(t)/40.14. The goods would then be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.

The blasting mats would not qualify for NAFTA preferential treatment when made of tires that originate in a non-NAFTA country if those tires are capable of reuse or of being retreaded, since the tires would not meet the tariff shift requirements of HTSUS General Note 12(t)/40.14.

This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 C.F.R. 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 Joan Mazzola at 646-733-3023.

Should you wish to request an administrative review of this ruling, submit a copy of this ruling and all relevant facts and arguments within 30 days of the date of this letter, to the Director, Commercial Rulings Division, Headquarters, U.S. Customs and Border Protection, 1300 Pennsylvania Ave. N.W., (Mint Annex), Washington, D.C. 20229.

Sincerely,

Robert B. Swierupski
Director,

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