Eligibility for NAFTA tariff preference of a metal suitcase

HQ H064920 August 11, 2009 CLA-2 OT:RR:CTF:TCM H064920 GC CATEGORY: Origin Mr. John G. Jakubowski, CCS Manager, Trade and Customs Advisory Services FedEx Trade Networks Transportation and Brokerage (Canada), Inc. 7075 Ordan Drive Mississauga, ON L5T 1K6 Canada RE: Eligibility for NAFTA tariff preference of a metal suitcase Dear Mr. Jakubowski: This is in response to your letter, dated May 19, 2009, on behalf of your client, Rimowa North America, Inc. (Rimowa), requesting a binding ruling on the eligibility for tariff preference under the North American Free Trade Agreement (NAFTA) of a certain metal suitcase. FACTS: At issue is the “Topas 29’’ Multiwheel Case”. When fully assembled and imported into the United States, it is a fitted grooved aluminum suitcase measuring 29.7 inches by 19.9 inches by 10.8 inches. The suitcase features a textile-lined divided interior compartment with a holder for clothes hangers, hinged split-top with trunk-like fasteners, combination lock, plastic handle, telescoping handle, four double-spinning wheels, and an “add-a-bag” holder. Per your submission, Rimowa will manufacture the subject merchandise according to the following the steps. Rimowa will import into Canada approximately one hundred items named in a list provided to this office, which includes the items mentioned above along with items such as a leather identification tag and straps, from Germany, China, Czech Republic, Taiwan, Vietnam and Italy. In Canada, pre-cut aluminum sheets will be bent to build the tray sections of the suitcase and the corner flaps will be bent to close the side walls. Other processes taking place in Canada include the riveting of the side walls and the mounting of the recess covers, pre-bent aluminum frame, corner protectors and gliders. The remaining parts (i.e., wheels and support stands, locks, latches, handles, “add-a-bag” holder, leather straps, leather luggage tag, etc.) will also be assembled onto the suitcase in Canada. After assembly, the finished suitcase will undergo quality control and an adjustment process to ensure the proper fit of the frames and wheels. The suitcases will then be packaged and shipped to the United States. ISSUE: Is the merchandise eligible for preferential tariff treatment under the NAFTA? LAW AND ANALYSIS: General Note 12, HTSUS, provides, in pertinent part: Goods originating in the territory of a party to the [NAFTA] are subject to duty as provided herein. For the purposes of this note – Goods that originate in the territory of a NAFTA party under the terms of subdivision (b) of this note and that qualify to be marked as goods of Canada under the terms of the marking rules set forth in regulations issued by the Secretary of Treasury (whether or not the goods are marked), and goods enumerated in subdivision (u) of this note, when such goods are imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appears in the "Special" subcolumn followed by the symbol "CA" in parentheses, are eligible for such duty rate, in accordance with section 201 of the North American Free Trade Agreement Implementation Act. . . . . 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 --. . . . they have been transformed in the territory of Canada, Mexico and/or the United States so that – except as provided in subsection (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein[.] . . . . (f) De Minimis. (i) Except as provided in subdivisions (f)(iii) through (vi), inclusive, a good shall be considered to be an originating good if the value of all non-originating materials used in the production of the good that do not undergo an applicable change in tariff classification set out in subdivision (t) of this note is not more than 7 percent of the transaction value of the good, adjusted to a F.O.B. basis, or, if the transaction value is unacceptable under section 402(b) of the Tariff Act of 1930, as amended, the value of all such non-originating materials is not more than 7 percent of the total cost of the good, provided that -- . . . . (B) the good satisfies all other applicable requirements of this note. . . . . (t) Change in Tariff Classification Rules. . . . . Chapter 42. . . . . 4. A change to subheading 4202.19 through 4202.21 from any other chapter. When imported into the United States, the instant aluminum suitcase would be classified in heading 4202, HTSUS (subheading 4202.19, HTSUS) as a suitcase with outer materials other than plastics or textiles. See heading 4202, HTSUS, which provides eo nomine for “suitcases” and subheading 4202.19, HTSUS, which provides for, in pertinent part: “…suitcases…: Trunks, suitcases, vanity cases, briefcases, school satchels and similar containers: Other…” We have verified that all of the items imported into Canada for the manufacture and assembly of the instant suitcase are independently classifiable outside of chapter 42, HTSUS, with the exception of two items, which are a leather strap set and a leather address tag. Thus, the subject merchandise does not meet NAFTA rule of origin General Note 12(t) 42/4 for subheading 4202.19, HTSUS. However, we note that it may be eligible to receive preferential tariff treatment under the NAFTA if the value of the merchandise independently classifiable under chapter 42, HTSUS, satisfies the de minimis rule of General Note 12(f), HTSUS. With regard to the requirement set forth in General Note 12(a)(i) that goods originating in Canada must also qualify to be marked as goods of Canada under the NAFTA marking rules, 19 C.F.R. §102.11 states, in pertinent part, the following: The following rules shall apply for the purposes of determining the country of origin of imported goods… . . . . (d) Where the country of origin of a good cannot be determined under paragraph (a), (b) or (c) of this section, the country of origin of the good shall be determined as follows: . . . . (3) If the country of origin of the good cannot be determined under paragraph (d)(1) or (d)(2) of this section, the country of origin of the good is the last country in which the good underwent production. The country of origin of the instant suitcase cannot be determined using the marking rules set forth under 19 C.F.R. §102.11(a), (b), (c), (d)(1) or (d)(2) because none of those rules are applicable here for the following reasons. The suitcase is not wholly obtained or produced in Canada (19 C.F.R. §102.11(a)(1)), is not exclusively produced from Canadian materials (19 C.F.R. §102.11(a)(2)), and does not meet the requirement of the tariff shift rules of 19 C.F.R. §102.20 for merchandise of subheading 4202.19, HTSUS, because the suitcase was assembled from foreign cut components (19 C.F.R. §102.11(a)(3)). In addition, there is no single material that imparts the essential character of the suitcase (102.11(b)), and it is not a set, mixture or composite good (19 C.F.R. §102.11(c)). Finally, the suitcase will not be produced using “minor processing” (19 C.F.R. §102.11(d)(1)) or “simple assembly” (19 C.F.R. §102.11(d)(2)).( Consequently, the country of origin for marking purposes would be the last country in which the subject suitcase undergoes production, which is Canada. See 19 C.F.R. §102.11(d)(3). If, in addition, the de minimis rule set forth in General Note 12(f) can be satisfied with the respect to the value of the components that are independently classified in Chapter 42, HTSUS, then the country of origin of the suitcase for duty purposes will be Canada and it may be marked as such. HOLDING: The instant suitcase does not satisfy the terms of General Note 12(t) 42/4, HTSUS. However, if the value of the suitcase components that are classified in chapter 42, HTSUS, meet the de minimis requirements of General Note 12(f)(i), then the Rimowa “Topas 29’’ Multiwheel Case” will be eligible for treatment as a good of a NAFTA country (Canada) and may be marked as such. However, if these components do not meet the requirements of General Note 12(f), then the suitcase will not be eligible for treatment as a good of Canada. 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 CBP officer handling the transaction. Sincerely, Gail A. Hamill, Chief Tariff Classification and Marking Branch