Request for a ruling regarding the country of origin and marking requirements applicable to stainless steel “Sunbands” exported for further processing; NAFTA Marking Rules; 19 CFR 102.11(b); essential character; 102.18(b)(iii)

HQ 561217 June 18, 1999 MAR-05 RR:CR:SM 561217 KKV CATEGORY: Marking Stephen B. Zisser, Esq. Law Offices of Stephen B. Zisser 2155 Paseo De La Americas Suite 34 San Diego, CA 92173 RE: Request for a ruling regarding the country of origin and marking requirements applicable to stainless steel “Sunbands” exported for further processing; NAFTA Marking Rules; 19 CFR 102.11(b); essential character; 102.18(b)(iii) Dear Mr. Zisser: This is in response to your letter dated November 4, 1998 (and subsequent letter dated April 22, 1999), on behalf of Electro-Mech Components, Inc., requesting a binding ruling regarding the country of origin and marking requirements applicable to die-stamped stainless steel “Sunbands” exported to Mexico, either from the United States or from China, for further processing under one of three separate manufacturing scenarios. Samples of the “Sunbands” at various stages of the manufacturing process have been submitted for our consideration. FACTS: You indicate that Electro-Mech Components, Inc., a contract manufacturer with processing operations in Mexico, manufactures a product described and sold under the name “Sunband.” This product, used primarily in the connector accessory industry as a band to securely join together tubing, hose, piping, etc., is made of 100% stainless steel and is produced in a variety of sizes. Under the first proposed processing scenario, “Sunbands” are die-stamped in the United States in the form of straight strips and exported to Mexico for processing in the following manner: 1. The collar on each “Sunband” strip is subjected to a spot weld for purposes of splicing together the collar tabs. 2. The straight “Sunband” strip is imported back into the U.S. In the second proposed processing scenario, sunbands are die-stamped in the United States in the form of straight strips and exported to Mexico for processing in the following manner: 1. The collar on each “Sunband” strip is subjected to a spot weld for purposes of splicing together the collar tabs. 2. Each “Sunband” is coiled through the collar. 3. The coiled “Sunband” strip is imported back into the U.S. In the third proposed processing scenario, sunbands are die-stamped in the United States in the form of straight strips and exported to Mexico for processing in the following manner: 1. The collar on each “Sunband” strip is subjected to a spot weld for purposes of splicing together the collar tabs. 2. Each “Sunband” is coiled through the collar. 3. Each coiled “Sunband” strip is subjected to an etching process (citric acid bath) which removes the rough edges. 4. The coiled “Sunband” strip is imported back into the U.S. In the alternative, you indicate that the “Sunbands” may be produced in China and exported to Mexico for the same processing operations described above. You assert that the subject “Sunbands” are classifiable under subheading 7326.90.8585, Harmonized Tariff Schedule of the United States (HTSUS), whether straight, coiled or etched, and inquire as to the country of origin and marking requirements applicable to the processed “Sunbands” under each manufacturing scenario. ISSUE: What are the country of origin and marking requirements applicable to die-stamped stainless steel “Sunbands” which are processed in the manner described above? 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 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. By enacting 19 U.S.C. 1304, Congress intended to ensure that the ultimate purchaser would be able to know by inspecting the marking on the imported goods the country of which the goods are the product. The evident purpose is to mark the goods so that 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, 302 C.A.D. 104 (1940). Section 134.1(b), Customs 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 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. Section 134.1(g), Customs 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 at 19 CFR Part 102. Section 134.45(a)(2) of the Customs regulations (19 CFR 134.45(a)(2)), provides that a "good of a NAFTA country" may be marked with the name of the country of origin in English, French or Spanish. Under the facts you present, straight “Sunband” strips, produced either in the United States or China, are exported to Mexico for one of three possible processing scenarios. In the first scenario, the collar on each “Sunband” strip is spot welded to splice together the collar tabs and is subsequently exported to the U.S. in the form of a straight “Sunband” strip. In the second processing scenario, the collar on each “Sunband” strip is spot welded to splice together the collar tabs and is coiled through the collar before being exported to the U.S. In the third processing scenario, the collar on each “Sunband” strip is spot welded to splice together the collar tabs, the strip is coiled through the collar and coiled collar undergoes a citric acid bath to remove its rough edges before exportation to the U.S. 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. 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. Section 102.1(e), Customs 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 or origin as the country in which the good is produced.” In all three proposed processing scenarios, die-stamped, stainless steel “Sunbands” of U.S. or Chinese origin are exported to Mexico for additional processing operations. Because the “Sunbands” to be processed in Mexico are made from steel strips produced either in the U.S. or China, they are neither wholly obtained or produced, nor produced exclusively from domestic materials. Accordingly, origin may not be determined under 19 CFR 102.11(a)(1) or (2), requiring continuation to 19 CFR 102.11(a)(3). Upon examination of the submitted samples, the General Classification Branch, Office of Regulations and Rulings confirms that, upon exportation from the United States or China, the subject “Sunband”strips are classifiable under subheading 7326.90.8585, HTSUS, as “Other articles of iron or steel: Other: Other: Other: Other: Other.” Furthermore, the General Classification Branch also confirms that, in all three processing scenarios presented, the subject “Sunbands” are classifiable under subheading 7326.90.8585, HTSUS, upon importation into the United States. Pursuant to 19 CFR 102.11(a)(3), the country of origin of a good is the country where each foreign material incorporated in that good undergoes an applicable change in tariff classification as set forth in 19 CFR 102.20, which sets forth the specific tariff classification changes and/or other operations that are specifically required to occur in order for country of origin to be determined on the basis of operations performed on the foreign materials contained in a good. In the case before us, because the “Sunbands” remain classifiable under the same provision at all stages of processing set forth above, they do not undergo ANY change in tariff classification, failing to meet the applicable shift required by section 102.20(n), Section XV: Chapters 72 through 83, subheading 7325  7326, HTSUS, which requires “[a] change to heading 7325 through 7326 from any other heading, including another heading in that group.” Consequently, origin cannot be determined under this provision. Because 19 CFR 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 2, where the country origin cannot be determined under paragraph (a), the country of origin of the good: (1) Is the country or countries of origin of the single material that imparts the essential character of the good, ... Under the facts presented in the three proposed processing scenarios, the imported finished “Sunband” is composed of a metal strip, either of U.S. or Chinese origin, which has undergone additional processing in Mexico in the form of welding/coiling/citric acid bath. When determining the essential character of a good under section 102.11, Customs regulations, section 102.18(b)(2), 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.” Because the finished “Sunband” consists of only one material, and because this material does not undergo the requisite tariff shift provided under the applicable rule in 19 CFR 102.20(n), the metal strip is the single material which imparts the essential character to the finished good pursuant to section 102.18(b)(iii). Accordingly, where the metal strips exported to Mexico are of U.S. origin, in all three processing scenarios, the country of origin of the processed “Sunbands” imported into the U.S. after processing in Mexico is the United States, pursuant to 19 CFR 102.11(b). Inasmuch as the marking statute requires that only articles of foreign origin be marked upon importation into the U.S., the processed “Sunbands” will not be subject to the requirements of 19 U.S.C. 1304. However, where the metal strips exported to Mexico for processing were produced in China, in all three processing scenarios presented, the country of origin of the finished “Sunbands” imported into the U.S. is China and the articles must be marked accordingly. HOLDING: On the basis of the information provided, in all three processing scenarios presented, the single material that imparts the essential character of the processed “Sunband” is the metal strip. Accordingly, where the metal strip is produced in the United States, the country of origin of the “Sunbands” imported into the U.S. after processing in Mexico is the United States, pursuant to 19 CFR 102.11(b). Where the metal strip exported to Mexico for processing was produced in China, the country of origin of the “Sunbands” imported into the U.S. is China, pursuant to 19 CFR 102.11(b), and the articles must be marked accordingly. A copy of this ruling letter should be attached to the entry documents filed at the time the goods are 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