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HQ 959560

FEBRUARY 11, 1997

CLA-2 RR:TC:MM 959560 JAS


TARIFF NO.: 7508.90.50

Mr. C.E. Walker
INCO Limited
145 King Street West, Suite 1500
Toronto, Canada M5H 4B7

RE: Nicke l Coated Carbon Fibers Covered With Polycarbonate Resin; Nickel Oxide Sinter Matte Thermally Deposited onto Carbon Fibers and Coated With Polycarbonate Resin; INCOSHIELD; Composite Good, GRI 3(b), Essential Character; Originating Goods, North American Free Trade Agreement (NAFTA), General Note 12(b)(ii)(A)

Dear Mr. Walker:

In a letter, dated July 31, 1996, you inquire as to the tariff classification and country of origin of a nickel-coated carbon fiber material to be used in frequency interference shielding. You provided additional information by telephone on February 5, 1997, and requested country of origin information both for marking purposes and for the purpose of determining eligibility under the North American Free Trade Agreement (NAFTA). As we advised, you will receive a separate country of origin marking ruling.


The merchandise in issue, designated INCOSHIELD, is a nickel-coated carbon graphite fiber product designed to provide electrical conductivity in injection molded shapes for the purpose of shielding sensitive electronic equipment from electromagnetic and radio frequency interference. You describe the product as a composite of carbon fiber, elemental nickel and polycarbonate resin.

INCOSHIELD is produced from carbon graphite fibers of United States origin, 7 microns in diameter and in spools of continuous filaments, processed in Wales by the thermal deposition of a 99
percent pure nickel oxide sinter matte, of Canadian origin, for the purpose of achieving a final specific electrical resistivity. The nickel-coated fibers are then shipped to Canada where they are coated in bundles with a polycarbonate resin, then chopped to lengths of 7 mm. This is the condition of the merchandise as imported.

You note that a similar process by which the company's nickel powders are produced allows you to use heading 7504.00.00, Harmonized Tariff Schedule of the United States (HTSUS), nickel powders and flakes. Moreover, you advised us by telephone that the thermal deposition of nickel is not an alloying process; the nickel content is 45-55 percent, by weight, of the graphite fibers; the resin serves merely as a binder for handling purposes and to facilitate the injection molding of specific shapes; and finally, that while the carbon imparts strength to the final product, it is the nickel that imparts the critical electro-magnetic shielding characteristics for which INCOSHIELD is marketed.


Whether the essential character of INCOSHIELD is carbon or nickel; whether the combining of originating materials in a non-NAFTA country affects originating good status.


Merchandise is classifiable under the Harmonized Tariff Schedule of the United States (HTSUS) in accordance with the General Rules of Interpretation (GRIs). GRI 1 states in part that for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes, and provided the headings or notes do not require otherwise, according to GRIs 2 through 6.

The frequency interference shielding material in issue is a composite good consisting in part of carbon graphite fibers and in part of nickel. Heading 6815, Harmonized Tariff Schedule of the United States (HTSUS), provides for articles of other mineral substances (including carbon fibers and articles of carbon fibers), while heading 7508 provides for other articles of nickel. Each heading describes part only of this composite good. There is no indication that heading 7504.00.00 merits consideration. GRI 3(b), HTSUS, in part requires that composite goods be classified as if consisting of that material that gives the good its essential character. The nature of a material or its role in relation to the use of the good are among relevant -3 -
factors to be considered. In this case, while the carbon imparts mechanical strength to the injection molded shape it is the nickel that dissipates the static electricity, which clearly is the purpose the frequency interference shielding material serves. We conclude, therefore, that nickel imparts the essential character to the whole such that the INCOSHIELD is to be classified as if it were an article of nickel of heading 7508.

Paragraph (b) of General Note 12, HTSUS, North American Free Trade Agreement, establishes the criteria under which goods imported into the customs territory of the United States qualify as originating goods for NAFTA purposes. General Note 12(l), HTSUS, Transshipment, states that a good shall not be considered to be an originating good by reason of having undergone production that satisfies the requirements of this note if, subsequent to that production, the good undergoes further production or any other operation outside the territories of the NAFTA parties, other than unloading, reloading or any other operation necessary to preserve it in good condition or to transport the good to the territory of Canada, Mexico and/or the United States. Rule 12(l) is interpreted by the NAFTA Rules of Origin Regulations which appear in the Appendix to Part 181 of Title 19, Code of Federal Regulations (19 CFR 181). Paragraph (1)(a) of PART VI, SECTION 16. TRANSSHIPMENT, states in relevant part that a good otherwise qualifying as an originating good loses that status if the good is withdrawn from customs control outside the territories of the NAFTA countries. The combining in Wales of carbon graphite fibers of U.S. origin with the nickel sinter matte of Canadian origin, results in nickel-coated graphite carbon fibers which are not originating goods under General Note 12.

However, the non-originating fiber bundles may still qualify as originating goods if the coating with polycarbonate resin and chopping to 7 mm. lengths in Canada results in an authorized change in tariff classification. The required change in this case is to headings 7507 through 7508 from any heading outside that group. See General Note 12(t) Ch. 75 (6), HTSUS. As the fibers, both before and after the coating and chopping operations performed in Canada, are provided for in heading 7508, the additional processing in Canada does not produce the required change.


Under the authority of GRI 3(b), HTSUS, the nickel-coated carbon graphite fibers, designated INCOSHIELD, are provided for in heading 7508. They are classifiable in subheading 7508.90.50, HTSUS, as other articles of nickel. The rate of duty under this provision is 4.5 percent ad valorem. For the stated reasons, INCOSHIELD does not qualify as an originating good for NAFTA purposes.


John Durant, Director
Tariff Classification

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