HQ 968190 - Country of Origin Marking Requirements of Pipe Fittings Imported from Mexico under the NAFTA Marking Rules - United States International Trade Commision Rulings

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HQ 968190

June 30, 2006

MAR-2-RR:CTF:TCM 968190 RSD

CATEGORY: MARKING

David Stepp, Esq.
Bryan Cave LLP
120 Broadway
Suite 300
Santa Monica, California 90401-2386

RE: Country of Origin Marking Requirements of Pipe Fittings Imported from Mexico under the NAFTA Marking Rules

Dear Mr. Stepp:

This is in response to your letter dated April 12, 2006, on behalf “EGS Electrical Group” (EGS) concerning the country of origin marking requirements for pipe fittings imported from Mexico under the NAFTA marking rules. The products under consideration were the subject of a Notice of Redelivery issued by the Port of Laredo on December 15, 2005. You indicate that subsequently, the Notice of Delivery was cancelled. You have asked that certain information contained in your ruling request be given confidential treatment and be exempted from release to the public under the Freedom of Information Act (“FOIA”). In a separate letter, we explained that we have concluded that we could only grant your request for confidentiality with respect to your client’s plant locations. However, you indicated that you still wanted us to issue a ruling. You submitted samples of the products under consideration for our review.

FACTS:

The products under consideration are divided into three basic groups. The first group of products, conduit elbows, is fabricated only from U.S.-origin castings. The castings are sent to Mexico for machining and plating. The second group of products, EMT angle compression connectors, are fabricated with U.S-origin castings that are sent to Mexico for machining, plating and assembly with one or two minor parts. The third group of products, expansion conduit unions, consists of screw machine parts that are almost wholly fabricated in Mexico.

The conduit elbows provide an optional 90-degree direction for an electrical conduit run when such a run terminates at an electrical enclosure. It is comprised only of a malleable iron body that is cast in a plant located in the United States. The castings are shipped to a service provider vendor in Mexico, who grinds the iron body to remove any excess materials that had resulted from the casting process. After the grinding, the castings are machine threaded at each end. In Mexico, a vendor applies zinc plating to the body. Next, the plated bodies are packaged into cartons and then imported back into the United States to a warehouse where they are stored until they are sold in bulk for distribution.

The second product group under consideration is the EMT angle compression connectors. They are used as a connection between a conduit and an electrical enclosure when the axis of both items are offset and not aligned. These articles are made up of four parts: the body, a nut, a gland ring, and a lock nut. The body and the nut are the major components, while gland ring and the lock nut are considered minor prefabricated components. The gland ring is placed inside the nut, while the lock nut is placed on the opposite end from the nut. The body and the nut are cast in facilities in the United States, while the gland ring and the lock nut may be of U.S. or foreign origin. The body and the nut are shipped to Mexico to a service provider vendor who grinds them to remove any excess material that resulted from the casting process. The vendor then ships the body and the nut to another facility for further machining. At that facility, each end of the body is threaded, and the opening at one end of the body is enlarged. The opening of the nut is also threaded. The parts are then shipped to a plating vendor in Mexico, where the body and the nut are zinc plated. The body and the nut are then assembled with the two other prefabricated steel parts, the steel gland ring and the locknut. The finished products are packaged into cartons and shipped to a U.S. warehouse for subsequent sale in bulk to distributors.

The third product under consideration is the expansion conduit union. An expansion conduit union facilitates the linear movement of a conduit system that results from thermal expansion and contraction. It also allows the retrofitting of a conduit or an enclosure in pre-existing installations without the need to entirely dismantle the system. This product consists of three parts, the outer body with an inner sliding sleeve, a nut, and a prefabricated copper wire component. The outer body and inner sliding sleeve is fabricated in Mexico from steel bar stock that is either made in Mexico or the United States. A screw machine lathe is used to fabricate the outer body and the inner sleeve from the steel bar stock. Among the machining operations that are performed to the part include drilling, reaming, threading, knurling, marking and cutting. After fabrication, the machined part is shipped to a plating vendor in Mexico, where zinc plating is applied to the part. After the plating is complete, the body and nut are then assembled with the copper wire component part. The copper retaining wire is placed into the outer groove of the inner sleeve, and both items are inserted into the outer body. The peripheral edge of the outer body is then bent inwardly to capture the sleeve and the sprint, thus preventing disassembly of the whole product. The assembled product is packed with others into a carton and then shipped to a U.S. warehouse. The product is then sold in bulk to distributors.

ISSUE:

What are the country of origin marking requirements for the products described above that are imported into the United States from Mexico?

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that unless excepted, every article of foreign origin imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit in such a manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article. Congressional intent in enacting 19 U.S.C. 1304 was that the ultimate purchaser should be able to know by an inspection of the markings on the imported good the country of which the good is the product. “The evident purpose is to mark the goods so at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will.” United States v. Friedlaender & Co., 27 C.C.P.A. 297 at 302 (1940).

Part 134, Customs and Border Protection (CBP) Regulations (19 CFR 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.1(b), CBP Regulations (19 CFR 134.1(b)), defines “country of origin” as the country of manufacture, production, or growth of any article of foreign origin entering the United States. 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 North America Free Trade Agreement (NAFTA) country, the NAFTA Marking Rules determine the country of origin.

Section 134.1(j), CBP 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. Section 134.1(g), CBP Regulations (19 CFR 134.1(g)), 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, set forth in 19 CFR Part 102. Because the pipe fittings that are the subject of this ruling undergo processing performed in Mexico, in this instance we will apply the NAFTA Marking Rules.

Section 102.11(a), CBP Regulations (19 CFR 102.11(a)), sets forth the required hierarchy under the NAFTA Marking Rules for determining the country of origin for marking purposes for goods other than textile and apparel products. This section states that the country of origin of a good is the country in which:

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.

Section 102.1(g), CBP Regulations (19 CFR 102.1(g)), defines a good wholly obtained or produced as including a good produced in that country exclusively from goods referred to in paragraphs (g)(1) through (g)(10) of this section or from their derivatives, at any stage of production. In this instance, the production of the first group and the second group of products, the conduit elbows and the angle compression connections, involves U.S. origin castings that undergo processing in Mexico before they are imported into the United States. Therefore, the conduit elbows and the angle compression connectors would not qualify as goods wholly obtained or produced in a country, and the country of origin of the conduit elbows and the angle compression connectors cannot be determined under section 102.11(a)(1).

The next step under the hierarchy is to consider whether the country of origin can be determined according to section 102.11(a)(2), CBP Regulations. Under this section, the origin of a good may be based on the origin of the materials used to produce the good, provided that the good is produced exclusively from domestic materials. Section 102.1(d), CBP Regulations (19 CFR 102.1(d)), defines domestic material as “a material whose country of origin as determined under these rules is the same country as the country in which the good is produced.” Since the conduit elbows and the angle compression connectors are made from U.S. origin castings that are machined in Mexico, they are not produced exclusively from domestic materials (i.e., Mexican). Accordingly, their country of origin cannot be determined under section 102.11(a)(2). Consequently, to determine the country of origin of the conduit elbows and the angle compression connectors under the NAFTA Marking Rules, the analysis must continue to 19 CFR 102.11(a)(3).

Pursuant to 19 CFR 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 set out in §102.20 and satisfies any other applicable requirements of that section.” Section 102.1(e), CBP Regulations (19 CFR 102.1(e)) defines “foreign material” 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 and the samples that you have furnished, we have determined that the conduit elbows and the angle compression connectors are both classified in subheading 7307.19, Harmonized Tariff Schedule of the United States (HTSUS), as: “Tube or pipe fittings, (for example, couplings, elbows, sleeves), of iron or steel: cast fittings: Other.”

The applicable rule under 19 CFR 102.20(n), Section XV: Chapters 72 through 83 is as follows:

A change to heading 7301 through 7307 from any other heading, including another heading within that group.

Based on your description, we believe that the U.S. origin castings used in fabricating the conduit elbows and the angle compression connectors are also classified under subheading 7307.19, HTSUS, as: “Tubes or pipe fittings of iron or steelOther,” when they are imported into Mexico. Since the imported castings do not change headings as result of the processing performed in Mexico, they do not undergo the requisite tariff shift that is set forth in 19 CFR 102.20(n). Therefore, the country of origin of the conduit elbows and the angle compression connectors cannot be determined under section 102.11(a). Since 19 CFR 102.11(a) (incorporating section 102.20) is not determinative of the country of origin, the next step in determining the marking requirements for these products is to apply section 102.11(b), CBP Regulations, which states in part:

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 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 to the good,.

In the instant case, the conduit elbows and the angle compression connectors are composed of castings, which are produced in the United States, and further processed in Mexico. When determining the essential character of a good under section 102.11, CBP Regulations, section 102.18(b)(1), provides that, for purposes of applying section 102.11, only domestic and foreign materials (including self-produced materials) that are classified in a tariff provision from which a change in tariff classification is not allowed in the rule for the good set out in section 102.20 shall be taken into consideration in determining the parts or materials that determine the essential character of a good. See HQ 560038, dated February 7, 1997.

In this case, the only material in the first two products, the conduit elbows and the angle compression connectors, which does not undergo the applicable tariff shift or meet the other requirements applicable to the goods, are the U.S. origin castings that are classified in the same subheading as the finished conduit elbows and the angle compression connectors. Thus, pursuant to 19 CFR 102.18(b)(1)(iii), the single material that imparts the essential character of the finished conduit elbows and the angle compression connectors are the U.S. origin castings. Therefore, we find that the U.S.-origin castings constitute the material that imparts the essential character of the finished goods, and thus, the country of origin of the conduit elbows is the United States. Regarding the angle compression connectors, while we note that it contains a few minor components other than the U.S. origin castings, since these components are of a minor nature, we find that they do not impart the essential character to the angle compression connectors. Accordingly, the U.S. origin castings also impart the essential character of the angle compression connectors.

19 CFR 134.32(m) provides that products of the United States exported and returned to the United States are excepted from the country of origin marking requirements of 19 U.S.C. 1304. Because the conduit elbows and the angle compression connectors are products of the United States, they need not be marked to indicate their country of origin.

The conduit unions represent the third group of products that are under consideration. They are totally fabricated in Mexico from Mexican origin materials. Since the conduit unions are produced exclusively from Mexican materials in Mexico, in accordance with 19 CFR 102.11(a)(2), they are of Mexican origin. Therefore, they must be marked to indicate that their country of origin is Mexico.

You should be aware that special country of origin marking requirements apply to certain pipes and pipe fittings. Pipes and pipe fittings of iron or steel must be marked to indicate the proper country of origin by means of die stamping, cast-in-mold lettering, etching, engraving, or continuous paint stenciling. See 19 U.S.C. 1304(c)(1). No exception from the marking requirements of 19 U.S.C. 1304(c)(1) may be made under 19 U.S.C. 1304(a)(3) (which includes an exception if the container is properly marked) for these products. CBP has determined that the requirements of 19 U.S.C. 1304(c)(1) are applicable to those articles that are considered pipes, pipe fittings, or tube fittings of iron or steel for classification purposes, which includes the fittings at issue in this case, namely fittings classifiable in heading 7307, HTSUS. See T.D. 86-15.

HOLDING:

In accordance with the NAFTA Marking Rules set forth in 19 CFR 102, the country of origin of the steel fittings which are fabricated only from U.S.-origin castings, such as the conduit elbows and the EMT angle compression connectors, is the United States. Because the country of origin of these products has been determined to be the United States, pursuant to 19 CFR 134.32(m), they are not required to be marked with their country of origin.

The country of origin of the expansion conduit unions, which are made in Mexico from Mexican materials, is Mexico. Therefore, they must be marked in accordance with the special marking requirement for pipes, tubes and fittings made of iron or steel set forth in 19 U.S.C. 1304(c), to indicate that their country of origin is Mexico.

Sincerely,

Gail A. Hamill, Chief

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