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NY F89874

July 28, 2000

CLA-2-76:RR:NC:1:118 F89874


TARIFF NO.: 7609.00.0000

Ms. Martha Ferrell
Mohawk Customs & Shipping Corp.
P.O. Box 3065
Syracuse, NY 13220-3065

RE: The Country of Origin Marking of aluminum condulet outlet body; Article 509; the tariff classification and status under the North American Free Trade Agreement (NAFTA); 9802.00.5060, Harmonized Tariff Schedule of the United States (HTS).

Dear Ms. Ferrell:

This is in response to your letter dated July 17, 2000, requesting a ruling on the country of origin marking requirements for aluminum condulet outlet bodies from the United States (US), which have been further processed in Mexico. In addition, you requested that we include the status of this merchandise under the NAFTA and the applicability of 9802.00.5060, HTS.

The aluminum condulet outlet body, ¾” LL, is manufactured in the United States and will be sent to Mexico for further processing. In Mexico, the item is washed, coated (with a non-insulating metallic coating), tapped with threads, packaged and shipped back to the U.S. The approximate value of the condulet outlet body upon exportation is $1.50. The value added in Mexico is approximately $0.30 per unit. After importation, a cover is screwed in place on top of the opening to cover the wires.

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 C.F.R. 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.

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, first, we must apply the NAFTA Marking Rules in order to determine whether the condulet outlet body "is a good of a NAFTA country". 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.

Section 102.1(e), Customs Regulations (19 C.F.R. §102.1(e)) defines “foreign material” as “a material whose country of origin as determined under these rules is not the same country or origin as the country in which the good is produced.” Because the condulet is processed in Mexico of U. S. material, the condulets are neither wholly obtained or produced, nor produced exclusively from domestic materials. Accordingly, neither 19 C.F.R. §102.11(a)(1) nor 102.11(a)(2) may be used to determine the origin of the finished articles, and analysis must continue to 19 C.F.R. §102.11(a)(3).

Pursuant to 19 C.F.R. §102.11(a)(3), 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 as set forth in 19 C.F.R. §102.20, and satisfies any other applicable requirements of that section. In this case, because the condulet outlet bodies imported into the U.S. from Mexico are classified under subheading 7609.00.00, HTS, the change in tariff classification must be made in accordance with section 102.20(n), Section XV: Chapters 72 through 83, heading 7606-7615, HTS, which requires “A change to heading 7606 through 7615 from any other heading, including another heading within that group.”

In the case before us, the condulets which are exported to Mexico are initially classified under heading 7609, HTS, and remain classified under heading 7609, HTS, subsequent to the cleaning, coating, tapping with threads and packaging in Mexico. Thus there is no applicable change in tariff classification within the requirements of section 102.20, and the country of origin of the good may not be determined in accordance with this provision.

Because 19 C.F.R. §102.11(a) (incorporating section 102.20), is not determinative of origin, the next step is section 102.11(b), Customs Regulations, which states, in part:

Except for a good that is specifically described in the Harmonized Tariff Schedule as a set, or is classified as a set pursuant to General Rule of Interpretation 3, where the country of origin cannot be determined under paragraph (a) of this section:

(1) 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, ...

In the instant case, the imported condulet outlet body is composed of a U.S. origin condulet outlet body which has undergone additional processing in the form of cleaning, coating and threading.

When determining the essential character of a good under section 102.11, Customs regulations, section 102.18 is consulted. The finished condulet outlet body consists of only one material, and because that material is classifiable in a tariff provision from which a change in tariff classification is not allowed under the applicable rule in 19 C.F.R. §102.20(n), the U.S. origin condulet is the single material which imparts the essential character to the finished good pursuant to section 102.18(b)(iii). Accordingly, the country of origin of the finished threaded condulet outlet body is the U.S. Inasmuch as marking requirements of 19 U.S.C. §1304 are applicable only to articles of “foreign origin,” the condulet, referenced here, need not be marked upon entry into the U.S. However, you should be aware that even though Customs has determined that the condulet outlet body was a product of the U.S., the determination of whether a good may be marked “Made in USA” is under the primary jurisdiction of the Federal Trade Commission and not this service. We therefore recommend that you contact the Federal Trade Commission, Division of Enforcement, located at 6th and Pennsylvania Avenue, N.W., Washington, DC 20580, for any views concerning marking a product which is of U.S. origin.

By operation of General Note 12, HTS, the eligibility of a particular article for NAFTA duty preference is predicated, in part, upon an origin determination under the NAFTA Marking Rules of either Canada or Mexico. As demonstrated by the foregoing analysis, in the case before us, application of the NAFTA Marking Rules contained in 19 C.F.R. §102.11 did not yield an origin determination of either Canada or Mexico, but the United States.

However, the NAFTA Preference Override set forth in 19 C.F.R. §102.19 is applicable to the subject merchandise. Specifically, 19 C.F.R. §102.19(b) states:

(b) If, under any provision of this part, the country of origin of a good which is originating ..... 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.

Based on the facts presented, the condulet outlet bodies at issue are originating goods under NAFTA and have been determined under section 102.11(b) to be a good of U.S. origin. Since the articles were returned to the U.S. after having been advanced in value or improved in condition in Mexico by virtue of threading, the country of origin of the condulet for Customs duty purposes is Mexico, pursuant to 19 C.F.R. §102.19(b). Accordingly, the “MX” NAFTA rate, which is free, will be applicable to the condulet outlet body.

You have also inquired as to the applicability of 9802.00.5060, HTS. Subheading 9802.00.5060, HTS, concerns other articles returned to the United States after having been exported to be advanced in value or improved in condition by repairs or alterations. The duty in such a case would be assessed upon the value of the repairs or alterations. However, this provision does not apply where the exported articles are incomplete for their intended use and the foreign processing operation is a necessary step in the preparation or manufacture of finished articles. Accordingly, your condulet outlet bodies would not be eligible for 9802.00.5060, HTS.

This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 C.F.R. Part 181). This ruling letter is binding only as to the party to whom it is issued and may be relied on only by that party.

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 Kathy Campanelli at 212-466-5492.

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 Service, 1301 Constitution Ave., NW, Franklin Court, Washington, DC 20229.


Robert B. Swierupski

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