NY N006623 - Country of origin marking under the North American Free Trade Agreement of four mixtures of polypropylene pellets and additive pellets from Mexico. - United States International Trade Commision Rulings

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NY N006623

March 9, 2007

CLA-2-39:RR:E:NC:SP:237

CATEGORY: MARKING

Mr. David G. Forgue
Barnes, Richardson & Colburn
303 E. Wacker Drive - Suite 1100
Chicago, Illinois 60601

RE: Country of origin marking under the North American Free Trade Agreement of four mixtures of polypropylene pellets and additive pellets from Mexico.

Dear Mr. Forgue:

In your letter dated February 8, 2007, on behalf of Intermatic Incorporated, you requested a country of origin marking ruling under the North American Free Trade Agreement (NAFTA) for U.S. manufactured polypropylene pellets and assorted additive pellets mixed in Mexico and returned to the United States.

The product will be imported in four different mixtures. The first mixture consists of clear polypropylene pellets (96%) and colorant pellets. The second consists of clear polypropylene pellets (96%) and ultra violet inhibitor pellets. The third consists of clear polypropylene pellets (96%) and colored polypropylene pellets. The fourth consists of clear polypropylene pellets (84%), flame retardant pellets, high ultra violet polypropylene pellets and colorant pellets.

The individual component pellets are manufactured in the United States and separately imported into a manufacturing facility in Mexico. The individual pellets are then poured into a gravimetric blender for accurate measure in the appropriate proportion, mixed and ultimately used in an injection molding machine to create plastic parts. Any amounts of the pellet mixture that remain after the manufacturing run is complete are removed, assigned a part number for inventory purposes and exported to the United States for storage. Although possible, the mixture is not sorted to re-separate the individual components. This mixture is the product that will be imported.

In your letter you state: The individual component pellets are manufactured in the United States by an outside supplier and separately imported into Intermatic’s manufacturing facility in Juarez, Mexico. You further state: The identity and percent by weight of the domestic and/or foreign materials used to manufacture each pellet is proprietary and not available to Intermatic; however, each individual component pellet will be independently certified by the supplier as originating in the United States.

Pursuant to General Note 12, HTSUS, for an article to be eligible for NAFTA preference, two criteria must be satisfied. Firstly, the article in question must be "originating" under the terms of that General Note 12(b), HTSUS, and secondly, the article must qualify to be marked as a good of a NAFTA country under the NAFTA Marking Rules contained in Part 102 of the CBP Regulations.

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.

Based on the information provided, the goods described above qualify for NAFTA preferential treatment, because they will meet the requirements of HTSUS General Note 12(b)(iii). The goods will therefore be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.

Part 102 of the Customs Regulations (19 CFR 102), 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 sets forth a hierarchy for determining the country of origin of imported goods.

Section 102.11(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; 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.

A "foreign material" is defined in section 102.1(e), Customs Regulations (19 CFR 102.1(e)), 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."

Based on the information provided, the goods described above are neither "wholly obtained or produced," nor "produced exclusively from domestic materials." Therefore, for purposes of determining the origin of the imported good, section 102.11(a)(3) is the applicable rule that next must be applied. Under this rule, 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 section 102.20.

Section 102.20(g) requires: "A change to heading 3901 through 3915 from any other heading, including another heading within that group, provided that the domestic polymer content is no less than 40 percent by weight of the total polymer content."

Based on the information provided, the U.S. manufactured polypropylene pellets are classifiable under heading 3902, HTSUS, which provides for polymers of polypropylene, in primary forms. Although the chemical formulas and percent by weight of the domestic and/or foreign materials used to manufacture the U.S. assorted additive pellets were not provided, the colorant pellets, ultra violet inhibitor pellets, and flame retardant pellets are in the form of master batches generally classifiable outside of headings 3901 to 3915, HTSUS.

However, Section 102.11(a)(3) requires that each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20. The Section 102.11(a)(3) requirement is not satisfied because the requisite tariff shift rule for each component is not met. Accordingly, section 102.11(b) of the hierarchal rules must be applied next to determine the origin of the product.

Section 102.11(b) of this section states: 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 (GRI) 3, where the country of 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 of the good, or

If the material that imparts the essential character of the good is fungible, has been commingled, and direct physical identification of the origin of the commingled material is not practical, the country or countries of origin may be determined on the basis of an inventory management method provided under the appendix to part 181 of the Customs Regulations.

Based on the information provided, the U.S. manufactured assorted additive pellets consist of polypropylene and/or master batches of polypropylene or polyethylene and additive as follows:

Polypropylene
Polyethylene and colorant blue
Polypropylene and flame retardant
Polypropylene and additive H.L.U.V.
Polypropylene and colorant Dark Grey
Polypropylene, random copolymer natural
Polypropylene, U.V. inhibitor additive
Polypropylene, natural
Polypropylene, random copolymer, clarified natural

Based on the information provided, the components are equally essential and no single material component imparts the essential character of the good.

The requirements of HTSUS Section 102.11(a) and 102.11(b) are not met.

Section 102.19, the NAFTA preference override provides:

(a) Except in the case of goods covered by paragraph (b) of this section, if a good which is originating within the meaning of Sec. 181.1(q) of this chapter is not determined under Sec. 102.11(a) or (b) or Sec. 102.21 to be a good of a single NAFTA country, the country of origin of such good is the last NAFTA country in which that good underwent production other than minor processing, provided that a Certificate of Origin (see Sec. 181.11 of this chapter) has been completed and signed for the good.

(b) If, under any other provision of this part, the country of origin of a good which is originating within the meaning of Sec. 181.1(q) of this chapter is determined to be the United States and that good has been exported from, and returned to, the United States after having been advanced in value or improved in condition in another NAFTA country, the country of origin of such good for Customs duty purposes is the last NAFTA country in which that good was advanced in value or improved in condition before its return to the United States.

"Advanced in value" is defined in section 102.1(a) as "an increase in the value of a good as a result of production with respect to that good, other than by means of those 'minor processing' operations described in paragraphs (m)(5), (m)(6) and (m)(7) of this section". "Improved in Condition" is defined in section 102.1(i) as "the enhancement of the physical condition of a good as a result of production with respect to that good, other than by means of those 'minor processing' operations described in paragraphs (m)(5), (m)(6) and (m)(7) of this section". The minor processing operations described in paragraphs (m)(5), (m)(6) and (m)(7) of section 102.1, include unloading, reloading or any other operation necessary to maintain the good in good condition; putting up in measured doses, packing, repacking, packaging, repackaging; and testing, marking, sorting or grading.

The individual U.S. manufactured pellets are separately imported into a manufacturing facility in Mexico. The polypropylene pellets and assorted additive pellets (including colorant pellets, colored polypropylene pellets, flame retardant pellets, ultra violet inhibitor pellets, and/or high ultra violet polypropylene pellets) are mixed in a gravimetric blender for accurate measure in the appropriate proportion and chiefly intended to give the finished products special physical properties or desireable characteristics. The mixed pellets are ultimately designed for use in an injection molding machine to create plastic parts with special physical properties or desirable characteristics. Therefore, the individual U.S. manufactured pellets undergo production other than minor processing in a manufacturing facility in Mexico. The individual U.S. manufactured pellets have been advanced in value and improved in condition in Mexico.

Based on the information provided, the goods described above qualify under the NAFTA Preference Override in Section 102.19(b). Therefore, the country of origin for Customs duty and marking purposes will be Mexico, which is the last NAFTA country in which the goods were advanced in value or improved in condition.

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 Frank Cantone at (646) 733-3038.

Sincerely,

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