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HQ 560754




February 25, 1998

MAR-02 RR:CR:SM 560754 RSD

CATEGORY: CLASSIFICATION MARKING

TARIFF NO. 9801.00.10

Robert Noell
Vice President
Cain Customs Brokers
Texano Industrial Park
415 S. Industrial
P.O. Box 150
Hidalgo, Texas 78557

RE: Applicability of duty exemption under HTSUS subheading 9801.00.10 to remote bulb clamps, United States v. Superscope, Inc.,13 CIT 997,727 F.Supp. 629 (CIT 1989), country of origin marking, NAFTA Marking, Simple Packaging, Essential Character

Dear Mr. Noell:

This is in response to your letter dated November 18, 1997, on behalf Alco Controls Division of Emerson Electric Co. (Alco), concerning the applicability of the duty exemption under subheading 9801.00.10, Harmonized Tariff Schedule of the United States (HTSUS), to remote bulb clamps which will be imported into the United States from Mexico. You also inquire regarding the country of origin marking requirements for the remote bulb clamps. We received a supplemental submission on February 6, 1998, by fax containing tariff classifications of the component parts of the remote bulb clamps.

FACTS:

Alco plans to import remote bulb clamps from Mexico through Hidalgo, Texas. The products are used after importation to attach thermal bulbs to the suction lines in air-conditioning and refrigeration systems. The remote bulb clamps consist of three basic types of components: a metal strap made of either copper or steel, nuts, and screws. The imported product may also contain a ziplock bag and an instruction sheet. All of the components of the bulb clamps are made in the United States except for the nuts. The clamp parts of U.S. origin are exported to Mexico where they are packaged together with the foreign nuts. In this case, the foreign nuts are made in Taiwan. After the packaging in Mexico is completed, the remote bulb clamps are imported into the U.S. The nuts make up between six to eighteen percent of the total value of the imported packaged product.

ISSUES:

Whether U.S. made remote bulb clamp parts which are packaged together with Taiwanese nuts in Mexico are eligible for entry under subheading 9801.00.10, HTSUS when they are imported into the United States

What are the country of origin marking requirements for the packaged remote bulb clamps?

LAW AND ANALYSIS:

9801.00.10

Subheading 9801.00.10, HTSUS, provides for the free entry of products of the U.S. that have been exported and returned without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, provided the documentary requirements of section 10.1, Customs Regulations, are satisfied. While some change in the condition of the product while it is abroad is permissible, operations which either advance the value or improve the condition of the exported product render it ineligible for duty-free entry upon return to the U.S. Border Brokerage Company, Inc. v. United States, 314 F. Supp. 788 (1970), appeal dismissed, 58 CCPA 165 (1970).

The pertinent documents required by 19 CFR 10.1, are a declaration from the foreign shipper that the articles were exported from the U.S. and that they are returned without having been advanced in value or improved in condition, and a declaration from the owner, importer, consignee, or agent that the articles were manufactured in the U.S. and that the articles were exported from the U.S. without benefit of drawback.

In this instance, parts made in the U.S. are sent to Mexico, where they are packaged with Taiwanese nuts into U.S. made containers before they are returned to the United States. Customs has consistently held that the packaging abroad of U.S.-made products will not preclude classification under subheading 9801.00.10, HTSUS, when there is no improvement in condition or advancement in value of the products themselves, apart from their containers. For example, in Headquarters Ruling Letter (HRL) 555685, dated August 15, 1990, we held that infant formulas exported to Canada, where they were merely packaged into consumer size cans, were eligible for classification under 9801.00.10, HTSUS, when they were imported into the United States. In HRL 555148, dated March 15, 1990, soybean and corn oils were shipped to Canada and packaged into consumer size bottles and then labeled but did not undergo any further processing, such as blending or mixing. Customs found the oils to be eligible for subheading 9801.00.10, HTSUS, treatment when the oils were imported into the United States.

The other concern is whether the inclusion of the Taiwanese nuts in the package would preclude eligibility under subheading 9801.00.10, HTSUS, for the remaining U.S. made parts when the remote bulb clamps are returned to United States. In Superscope, Inc. v. United States, 13 CIT 997, 727 F. Supp. 629 (1989), the court held that certain glass panels of U.S. origin that were exported, repacked abroad with certain foreign components, and returned to the U.S. as part of unassembled audio cabinets, were entitled to duty-free entry under item 800.00, Tariff Schedules of the United States (TSUS) (now subheading 9801.00.10, HTSUS), since the U.S. panel portion of the imported article was "not 'advanced in value or improved in condition . . . while abroad,' but [was] merely repacked." Id. at 631. Although the Superscope case concerned the TSUS, not the HTSUS, the decision is believed to be equally applicable to similar situations arising under the HTSUS, since item 800.00, TSUS, and relevant Schedule 8, TSUS, headnotes were carried over virtually unchanged into the HTSUS.

We believe that the decision in Superscope is controlling with regard to the facts of the instant case. The mere packaging of the U.S.-origin items with the Taiwanese nuts neither advances the U.S. items in value nor improves their condition. Therefore, an allowance in duty may be made under subheading 9801.00.10, HTSUS, for the cost or value of the U.S. components that are merely packaged abroad and returned. This presumes that the documentation requirements of 19 CFR ?10.1 are met and that the port director of Customs at the port of entry is satisfied that the items are, in fact, of U.S. origin.

Country of Origin Marking

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.

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 the meaning of this part; however for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin.

Section 134.1(j), Customs Regulations (19 CFR ?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. A "good of a NAFTA country" is defined in 19 CFR Canada, Mexico, or the U.S. as determined under the NAFTA Marking Rules set out at 19 CFR Part 102.

Section 102.11, Customs Regulations (19 CFR ?102.11), sets forth the required hierarchy for determining whether a good is a good of a NAFTA country for marking purposes. Paragraph (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; (2) The good is produced exclusively from domestic materials; or
(3) 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.

"Foreign Material" is defined in section 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."

In this case, the applicable rule is 19 CFR ?102.11(a)(3). The remote copper or brass bulb clamps are stated to be classifiable in subheading 7419.99.5050, HTSUS. The remote steel bulb clamps are stated to be classified in subheading 7326.90.8585, HTSUS. First, for remote copper or brass clamps, the applicable change in tariff classification for headings 7419.10-7419.99 set out in section 102.20(n), Section XV, Chapters 72 through 83, provides:

A change to subheading 7419.10 through 7419.99 from any other subheading, including another subheading within that group.

With respect to the remote steel bulb clamps, the applicable change in tariff classification for headings 7325-7326 set out also in section 102.20(n), Section XV, Chapters 72 through 83, provides:

A change to heading 7325 through 7326 from any other heading, including another heading within that group

The following is a list of all the components used in the remote bulb clamps, together with their classifications under the HTSUS, and their country of origins.
description classification origin
steel strap 7326.90
U.S. copper strap 7419.99
U.S. nut 7318.16 Taiwan screws 7318.15
U.S. envelope 4817.10
U.S. instruction sheet 4901.10
U.S.

We note that the only operation performed in Mexico is packing. Although the origin of all the materials in the remote bulb clamps is U.S., except for the nuts, under the defintion provided in 19 CFR 102.1(e), all the components of the remote bulb clamps, including the U.S. components, are considered foreign materials. Because the metal straps for both steel and copper remote bulb clamps do not undergo the applicable change in tariff classification, the country of origin of the remote bulb clamps, cannot be determined using 19 CFR ?102.11(a)(3). Furthermore, although the applicable rule for change of tariff classification for the other components is satisfied for both the copper and the steel remote bulb clamps, 19 CFR 102.17(c) provides that:

A foreign material shall not be considered to have undergone an applicable change in tariff classification specified in ?102.20 or ? 102.21 or to have met any other applicable requirements of those sections merely by reason of one or more of the following...

(c) simple packing, repacking or retail packing without more than minor processing;

In this instance, the change in tariff classification of the other components is due to the fact that they are packaged together to make the remote bulb clamps. Therefore, the change in tariff classification of the other components must also be disregarded in ascertaining the country of origin of the remote bulb clamps.

Since a country of origin determination cannot be made applying section 102.11(a), the analysis continues with section 102.11(b) which instructs us to examine the article's essential character to determine its country of origin. Section 102.11(b) provides that where the country of origin cannot be determined under section 102.11(a), and the good is not specifically designated as a set pursuant to the Harmonized System nor classified as a set under General Rule of Interpretation 3, the country of origin of the article is "the country or countries of origin of the single material that imparts the essential character of the good. . .."

In regard to determining the "essential character" of the remote bulb clamps, section 102.18(b)(1) of the regulations provides as follows:

(1) 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.

In this case, all the materials in the remote bulb clamps do not undergo the applicable tariff shift or meet other requirements applicable to the good. The metal straps are classified in the same subheading as the finished remote bulb clamps. The other materials in the remote bulb clamps do not meet the other requirements applicable to the good because they only undergo the applicable tariff shift due to fact that they are packaged together.

In selecting which of several materials impart the essential character of a good, 19 CFR 102.18(b)(2) provides that:

For purposes of determining which one of two or more materials described in paragraph
(b)(1) of this section imparts the essential character to a good under ?102.11, various factors may be examined depending upon the type of good involved. These factors include but are not limited to the following:

(i) The nature of each material, such as its bulk, quantity, weight or value; and

(ii) The role each material in relation to use of the good.

Considering their size, weight, value and relative importance in the use of the good compared to other components in the remote bulb clamps, we find that the U.S.-origin metal straps are the materials that impart the essential character of the finished good. Consequently, the country of origin of the remote bulb clamps is the same as the metal straps, which in this case is the United States.

19 CFR 134.32(m) provides that products of the United States exported to the United States are excepted from the country of origin marking of 19 U.S.C. 1304. Because the remote bulb clamps are products of the United States that are exported and returned, they need not be marked to indicate their country of origin, and as such, the country of origin of the foreign made nuts also do not have to be marked to indicate their country of origin.

HOLDING:

The U.S.-origin components of the remote bulb clamps which are merely packaged aboard with the U.S.-origin packaging materials will be entitled to duty-free treatment under subheading 9801.00.10, HTSUS, when returned to the U.S., provided the documentary requirements of Section 10.1, Customs Regulations (19 CFR ?10.1), are met.

On the basis of the information provided, for country of origin marking purposes, the country of origin of the remote bulb clamps imported into the United States is the U.S., pursuant to 19 CFR ?102.11(b)(1). Therefore, the remote bulb clamps are not subject to the marking requirements of 19 U.S.C. ?1304.

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,

John Durant,
Director

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