NY N022377 - COUNTRY OF ORIGIN MARKING OF IMPORTED PIPE SPOOLS. - United States International Trade Commision Rulings

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NY N022377

February 11, 2008

MAR-2 OT:RR:E:NC:N1:117

CATEGORY: COUNTRY OF ORIGIN MARKING

Mr. Les Suzuki
Livingston Consulting
720-1140 West Pender Street
Vancouver, BC V6E 4HC
Canada

RE: COUNTRY OF ORIGIN MARKING OF IMPORTED PIPE SPOOLS.

Dear Mr. Suzuki:

This is in response to your letter dated January 24, 2008, on behalf of Wellons Canada, requesting a ruling on the country of origin and corresponding marking requirements for pipe spools of iron or steel. A marked sample was not submitted with your letter for review.

Pipe of Chinese origin is imported into Canada where it is machined, threaded and painted. Fittings, including couplings, of US, Canadian or of other non-originating origin are assembled onto the pipe to produce pipe spools. Your letter provides a cost breakdown of the material components and of the labor, overhead and packaging involved in producing the pipe spools in Canada as well as the final value of the spools for Customs purposes. Based on the figures submitted, the value of the non-originating pipe is less than 7%.

You further state that the pipe spools are fabricated from non-alloy welded steel pipe of circular cross section with a wall thickness of 7mm. As such the pipe is classified in subheading 7306.30. The Explanatory Notes constitute the official interpretation of the tariff at the international level. The Explanatory Notes to Chapter 73 define pipes and tubes and they specifically state that pipe and tube, “may be polished coated, bent (including coiled tubing), threaded and coupled or not, drilled, waisted, expanded, cone shaped or fitted with flanges, collars or rings.” The finished spools will also be classified under 7306.30.

Section 102.11 of the Customs Regulations (19 CFR 102.11), sets forth the required hierarchy for determining country of origin of goods from NAFTA countries for marking purposes. Section 102.11(a) of the Customs Regulations states that, “[t]he 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."

The requirements of CR 102.11 (a), (1) and (2) are not applicable since the pipe spools are neither wholly obtained nor produced exclusively from domestic materials. The requirement of CR 102.11 (a) (3) has also not been met. CR 102.20 for headings 7301-7307 requires a change to heading 7301 through 7307 from any other heading, including another heading within that group. The Chinese pipe incorporated into the spool has not undergone the required tariff shift.

Section 102.13 of the Customs Regulations (19 CFR 102.13) establishes that foreign materials that do not undergo the applicable change in tariff classification set out in 102.20 or satisfy the other applicable requirements of that section when incorporated into a good shall be disregarded in determining the country of origin of the good if the value of those materials is no more than 7 percent of the value of the good. Therefore, the pipe shall be disregarded in determining the country of origin of this good.

Since the country of origin cannot be determined under paragraph (a) of section 102.11, section 102.11(b) must be looked to under the marking rules of origin hierarchy. Under (b), the country of origin of the good is the: (1) country or countries of origin of the single material that imparts the essential character of the good. The pipe has been disregarded and the other component of the goods, the fitting, does not impart the essential character to the good. The issue of fungibility under 102.11 (b) (2) is also inapplicable. Since the pipe spool is neither a mixture, set nor a composite good, Section 102.11 (c) is also inapplicable.

Section 102.11(d) is next in the rules of origin hierarchy. These rules state that the country of origin of a NAFTA good shall be determined as follows:

(1) If the good was produced only as a result of minor processing, the country of origin of the good is the country or countries of origin of each material that merits equal consideration for determining the essential character of the good. (2) If the good was produced by simple assembly and the assembled parts that merit equal consideration for determining the essential character of the good are from the same country, the country of origin is the country of origin of those parts. (3) The country of origin of the good is the last country in which the good underwent production. The pipe spools have been drilled, threaded and painted and so are not produced simply by minor processing. They are also not the result of simple assembly. Therefore, 102.11 (d) (1) and (2) do not apply. The country of origin will be determined according to 102.11 (d) (3) as the last country in which the good underwent production. As the pipe and fittings were produced into pipe spools in Canada, the good is a product of Canada.

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.

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 134.45(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. 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.

19 U.S.C. 1304(c)(1), requires that all pipe (iron, steel, stainless steel), tube and pipe fittings (steel, stainless steel, chrome-moly steel or cast or malleable iron) shall be marked to indicate the proper country of origin by one of five methods, die stamping, cast-in-mold lettering, etching, engraving, or continuous paint stenciling.

This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 CFR Part 181).

The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in 19 CFR 177.9(b) (1). This section states that a ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated therein, either directly, by reference, or by implication, is accurate and complete in every material respect.

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 Gloria Stingone at 646-733-3020.

Sincerely,

Robert B. Swierupski
Director,

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