Manual fire alarm; HTSUS 9802.00.80; Country of originmarking; NAFTA Article 509; 19 CFR 10.16; 19 CFR 10.22; 19 CFR part 102;Originating good

HQ 558636 December 2, 1994 CLA/MAR-2-05-CO:R:C:S 558636 DEC CATEGORY: Classification and Marking TARIFF NO: 9802.00.80 Mr. Philip Freeman Cain Customs Brokers Progreso International Bridge P.O. Box 10 Progreso, Texas 78579 RE: Manual fire alarm; HTSUS 9802.00.80; Country of origin marking; NAFTA Article 509; 19 CFR 10.16; 19 CFR 10.22; 19 CFR part 102; Originating good Dear Mr. Freeman: This is in response to your letter dated July 20, 1994, in which you seek a ruling regarding the eligibility of manual fire alarm switches from Mexico for the partial duty exemption under the Harmonized Tariff Schedule of the United States (HTSUS) subheading 9802.00.80. In addition, you seek a ruling with respect to the proper country of origin marking and whether the article qualifies as an originating good under the North American Free Trade Agreement (NAFTA). FACTS: Am-Mex Products plans to import manual fire alarm switches from Mexico. They are commonly used in many types of buildings to signal the outbreak of a fire. It does not contain a smoke alarm, but is comprised of an electrical switch which activates an audible alarm when the handle is pulled down. You state that all component parts of the fire alarm are of United States origin. The alarm will be assembled in Mexico by snapping the component pieces together, screwing other parts together, and soldering wires in place. The component parts are from multiple suppliers and are shipped to the assembly facility separately. The fire alarms will be packaged in retail boxes which, in turn, will be packed in a master carton to be imported into the United States. Each retail box will be marked "Assembled in Mexico". ISSUE: 1. Whether the manual fire alarm switches are entitled to subheading 9802.00.80, HTSUS, treatment. 2. Whether the "Assembled in Mexico" is a proper country of origin marking for the imported fire alarms. 3. Whether the imported fire alarms qualify as an originating article under the North American Free Trade Agreement. LAW AND ANALYSIS: 1. Applicability of Subheading 9802.00.80, HTSUS Subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS) provides for a partial duty exemption for (a)rticles . . . assembled abroad in whole or in part of fabricated components, the product of the United States, which (a) were exported in condition ready for assembly without further fabrication, (b) have not lost their physical identity in such articles by change in form, shape or otherwise, and (c) have not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process such as cleaning, lubricating, and painting All three requirements of subheading 9802.00.80, HTSUS, must be satisfied before a component may receive a duty allowance. An article entered under this tariff provision is subject to duty upon the full cost or value of the imported assembled article, less the cost or value of the United States components assembled abroad provided the section 10.24, Customs Regulations (19 CFR 10.24) documentary requirements are satisfied. Section 10.14(a), Customs Regulations (19 CFR 10.14(a)), states, in part, that The components must be in condition ready for assembly without further fabrication at the time of their exportation from the United States to qualify for the exemption. Components will not lose their entitlement to the exemption by being subjected to operations incidental to the assembly either before, during, or after their assembly with other components. Operations incidental to the assembly process are not considered further fabrication operations, as they are of a minor nature and cannot always be provided for in advance of the assembly operations. However, any significant process, operation or treatment whose primary purpose is the fabrication, completion, physical or chemical improvement of a component precludes the application of the exemption under subheading 9802.00.80, HTSUS, to that component. See 19 CFR 10.16(c). Section 10.16(a), Customs Regulations (19 CFR 10.16(a)), provides that assembly operations for purposes of subheading 9802.00.80 encompass any method used to join together solid components such as welding, soldering, riveting, or the use of fasteners and may be accompanied by operations that are incidental to the assembly as provided in section 10.16(b). In this case, you have indicated that all the components of the finished fire alarm that are sent to Mexico for assembly are of United States origin. The assembly process consists of snapping and screwing component pieces together as well as the soldering of wires. Customs has determined that snapping is an acceptable assembly operation under section 10.16. Headquarters Ruling Letter (HRL) 555426, dated August 6, 1990. In addition, screwing component pieces together is an acceptable assembly operation. HRL 557410, dated October 20, 1993, and HRL 555333, dated March 15, 1990. Soldering is also an acceptable assembly operation under section 10.16(a). Therefore, the United States components assembled abroad are entitled to an allowance in duty, under subheading 9802.00.80, HTSUS, upon compliance with the documentary requirements of 19 CFR 10.24. 2. Country of Origin Marking Requirements 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 its container) will permit, in such a manner as to indicate to the ultimate purchaser in the United States the English name of the country of origin of the article. Part 134 of the Customs Regulations 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 interim amendments to the Customs Regulations published as T.D. 94-4 (59 Fed. Reg. 109, January 3, 1994) with corrections (59 Fed. Reg. 5082, February 3, 1994) and T.D. 94-1 (59 Fed. Reg. 69460, December 30, 1993). These interim amendments took effect on January 1, 1994, to coincide with the effective date of the NAFTA. The marking rules used for determining whether a good is a good of a NAFTA country are contained in T.D. 94-4 (adding a new Part 102, Customs Regulations). The marking requirements of these goods are set forth in T.D. 94-1 (interim amendments to various provisions of Part 134, Customs Regulations). Section 134.1(b) of the interim 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. (emphasis added). Section 134.1(j) of the interim 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 interim 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 interim 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. Part 102 of the interim 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 interim regulations sets forth the required hierarchy for determining country of origin for marking purposes. Section 102.11(a) of the interim 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 requirements of these rules are satisfied. "Foreign Material" is defined in section 102.1(e) of the interim regulations 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." Section 102.11(a)(1) and section 102.11(a)(2) do not apply to the facts presented because the good (the fire alarm) is neither wholly obtained or produced in Mexico nor is it produced exclusively from domestic materials. Since an analysis of sections 102.11(a)(1) and 102.11(a)(2) do not yield a country of origin determination, we look to section 102.11(a)(3). Section 102.11(a)(3) provides that the country of origin is the country in which "[e]ach foreign material incorporated in that good undergoes an applicable change in tariff classification in  102.20. . .." The finished fire alarm switch is classified under heading 8531.10, HTSUS. The applicable tariff shift rule found in section 102.20 provides as follows: HTSUS Tariff Shift and/or other requirements 8531.10-8531.80 A change to subheading 8531.10 through 8531.80 from any other subheading, including another subheading within that group, except when resulting from a simple assembly. In this case, all of the United States components of the fire alarm switches meet the tariff shift rule because each component is classified in a subheading other than 8531.10, HTSUS, and because the tariff shifts are not the result of a simple assembly. Section 102.1(o) defines a simple assembly for purposes of the NAFTA Marking Rules as "the fitting together of five or fewer parts all of which are foreign . . .." Since there are more than five component parts, these component parts will meet the applicable tariff shift set forth in section 102.20 as well. Therefore, the country of origin of the finished article is Mexico. As previously noted herein, section 134.1(b) provides that for goods of a NAFTA party, the NAFTA Marking Rules, i.e. the interim regulations under part 102, will determine the country of origin. Pursuant to these rules, we have determined that Mexico is the country of origin. However, with regard to the manner of marking the subject goods, we find the provisions under 19 CFR 10.22 relevant. Section 10.22 provides special marking requirements for goods assembled abroad from United States components which are eligible for a duty exemption under subheading 9802.00.80, HTSUS. Section 10.22 provides, in pertinent part, that [a]ssembled articles entitled to the exception are considered products of the country of assembly for the purposes of the country of origin marking requirements of section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304). Section 10.22 further provides that if an imported article is assembled entirely of United States components, the United States origin of such components may be disclosed by marking the article "Assembled in ----- from material of U.S. origin" or a similar phrase. In this case, we have found that the subject goods will be eligible for a duty exemption under subheading 9802.00.80, HTSUS, provided the documentary requirements are met. You have stated that all of the assembled components are of United States origin, and therefore, we find, the proposed mark, "Assembled in Mexico", acceptable. See HRL 735437, dated June 22, 1994. 3. NAFTA Originating Materials General Note 12, HTSUS provides that (b) For the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as `goods originating in the territory of a NAFTA party' only if-- (i) they are goods wholly obtained or produced in the territory of Canada, Mexico and/or the United States; or (ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that -- (A) except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such good undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein, or (B) the goods otherwise satisfy the applicable requirements of subdivision (r), (s) and (t) where no change in tariff classification is required, and the goods satisfy all other requirements of this note; or (iii) they are goods produced entirely in the territory of Canada, Mexico, and/or the United States exclusively from originating materials . . .. Assuming that the component parts are wholly obtained or produced in the United States or the component parts will become originating materials in the United States pursuant to General Note 12(b)(ii), the fire alarm switches that are assembled in Mexico will qualify as originating goods pursuant to General Note 12(b)(i) or (iii). Even if the component parts are not "originating materials", the assembled fire alarm switches will become "originating goods" if they are transformed in Mexico pursuant to General Note 12(b)(ii)(A). To become "originating goods", the component materials must meet the tariff shift provision applicable to the finished fire alarm which is classified under subheading 8531.10, HTSUS. The applicable General Note 12(t) rule for this good provides as follows: A change to subheading 8531.10 from any other subheading, except from tariff item 8531.90.40. Since the various components used in the assembly of the fire alarm are not classified under subheading 8531.10 or subheading 8531.90.40, the assembly into a finished article in Mexico will result in the components undergoing a tariff shift. Provided that the requisite tariff shift takes place in a NAFTA country, the components will be deemed "originating" and eligible for NAFTA preferential duty treatment. HOLDING: 1. On the basis of the information provided, the operations performed in Mexico constitute acceptable assembly operations within the meaning of subheading 9802.00.80, HTSUS, and, therefore, the fire alarm switches are entitled to the partial duty exemption under this tariff provision, assuming compliance with the documentary requirements of 19 CFR 10.24. 2. The proposed mark, "Assembled in Mexico", is acceptable pursuant to the requirements set forth in 19 CFR 10.22 which is applicable to articles that qualify for subheading 9802.00.80, HTSUS, treatment. 3. Based on the information provided, the fire alarm switches will qualify as originating goods under the NAFTA, pursuant to General Note 12(b). 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, Commercial Rulings Division