Affirmation of NY N284256; country of origin of multilayer wood flooring

U.S. Department of Homeland Security Washington, DC 20229 U.S. Customs and Border Protection HQ H302244 June 24, 2022 OT:RR:CTF:FTM H302244 JER CATEGORY: Origin Daniel J. Gluck Simon Gluck Kane 535 Fifth Avenue, 4th Floor New York, NY 10017 RE: Affirmation of NY N284256; country of origin of multilayer wood flooring Dear Mr. Gluck: This letter is in response to your request for reconsideration of New York Ruling Letter (“NY”) N284256, dated March 23, 2017, issued by U.S. Customs and Border Protection (“CBP”) to your client, Wickham Hardwood Flooring. At issue in NY N284256 was the classification and country of origin of multilayer wood flooring panels (wood flooring). In your reconsideration request, you only challenge certain aspects of CBP’s country of origin determination and claim that they are contrary to law and certain provisions of 19 C.F.R. § 134 and 19 C.F.R. § 102.20. We have reviewed your request for reconsideration of NY N284256, and for the reasons set forth below, we hereby affirm our decision in NY N284256. In NY N284256, the subject merchandise was described as a “a multilayer flooring product consisting of a 2mm-thick oak or maple face ply laminated onto a 7.8mm-thick high-density fiberboard (HDF) core, and backed with a 1.2mm-thick birch veneer. The panels are imported in widths of 3.5” and 5”, and in lengths of 15” to 48.” The panels were continually shaped on edges and ends with an interlocking ‘click’ mechanism for installation. The panels were stained and coated with a clear material that did not obscure the grain of the wood.” In NY N284256, Wickham Hardwood Flooring presented a set of circumstances wherein the wood flooring was manufactured in the People’s Republic of China (“China”) and was shipped to Canada for sorting, sanding, staining, varnishing, and packaging before being shipped to the United States. Since the wood flooring in NY N284256 was manufactured in part, in a North American Free Trade Agreement (“NAFTA”) country (Canada), CBP applied the NAFTA Rules of Origin, which are set forth in 19 C.F.R. Part 102, to determine the country of origin for marking purposes (hereinafter referred to as the part 102 Rules). Under the part 102 Rules with respect to heading 4412, Harmonized Tariff Schedule of the United States (“HTSUS”), there must be a change to the surface-covered plywood from any other plywood that is not surface covered or is surface-covered only with a clear or transparent material which does not obscure the grain, texture, or markings of the face ply. CBP found that the further processing in Canada—of adding stain and a clear material to the plywood—met the requirement to be Canadian in origin for marking purposes as set forth in 19 C.F.R. Part 102. Accordingly, in NY N284256, CBP determined that the wood flooring’s country of origin for marking purposes was Canada. Nonetheless, CBP also concluded that the country of origin for duty purposes was China. The crux of your position challenges CBP’s conclusion that the country of origin for duty purposes was China. Specifically, you state that the “conclusion that for duty purposes only, the [wood flooring] was subject to duty as if it were a product of China” is incorrect. You argue that “the country of origin is the basis on which duties are assessed,” and because the country of origin of the wood flooring for marking purposes is Canada, the duty assessed should also be Canada. You argue the duty should be “between NAFTA Preference (if so qualified” or Column One General (based on the country of origin of the goods).” Accordingly, in your request for reconsideration, you ask for a review of the ruling with respect to the determinations that the wood flooring is to be marked country of origin Canada for marking purposes under 19 C.F.R. §102.20, but dutiable as a product of China. You do not challenge the originating good or preferential tariff treatment determination in NY N284256. You also do not challenge the country of origin for marking purposes. Therefore, as indicated in NY N284256, the country of origin for marking purposes remains Canada. In responding to your arguments, we would like to address the requirements for country of origin for duty purposes and for marking purposes. Although 19 C.F.R. § 102 serves the purpose of determining the country of origin for marking purposes and for duty, for duty at the time NY N284256 was issued, it was only for the limited purpose of determining whether a good may receive preferential tariff treatment under NAFTA pursuant to General Note 12 (“GN 12”), HTSUS. For other duty purposes, the substantial transformation test is currently used. See, e.g., Headquarters Ruling Letter (“HQ”) H301619, dated November 6, 2018 (electric motors) (the Part 102 marking rules are applicable for the limited purposes of country of origin marking; “when determining the country of origin for purposes of applying current trade remedies under Section 301, Section 232, and Section 201, the substantial transformation analysis is applicable”); NY N283499, dated March 16, 2017 (multilayer wood flooring panels) (“the country of origin for duty purposes is Russia” and “the country of origin for marking purposes only, is Canada”); HQ H264609, dated June 20, 2016 (pup joints) (“the longer pup joints are not eligible for preferential tariff treatment under the NAFTA, and the country of origin is the country of origin of the pipes that comprise them, Austria”). Your argument that the conclusion of 19 C.F.R. § 102 analysis should dictate the result for the conclusion of GN 12, HTSUS, analysis misunderstands the NAFTA requirements for country of origin under GN 12, HTSUS. Under our facts, the wood flooring panels do not qualify for NAFTA preferential tariff treatment and, as such, for a reduced rate of duty, as these articles do not meet the criteria set forth in either GN 12(a)(i) or GN 12(b). In order to be eligible for preferential tariff treatment under NAFTA (i.e., wherein the rate of duty is reflected in the “Special” column followed by the symbol “CA” in parentheses), the goods must be determined to be originating and qualify to be marked as goods of Canada. The rule in GN 12 is a conjunctive rule whereby the goods must be both “originating” and “qualify to be marked” as a product of a NAFTA country. The first part of the rule establishes whether the goods are originating for duty purposes; while the second part of the rule determines whether the goods qualify to be marked as goods of a NAFTA country. As we noted in NY N284256, the goods do not satisfy the rule set forth in GN 12(b). General 12(b), subdivision (t) states that, in order to be subject to NAFTA, the manufacturing in a NAFTA country must result in a change as follows: a change to headings 4401 through 4421 from any other heading; including another heading within that group. Because the subject flooring panels from China are classifiable in heading 4412, HTSUS, and after further manufacturing conducted in Canada, the subject flooring panels remain classifiable in heading 4412, HTSUS, the rule set forth in GN 12(b) is not met. As such, the wood flooring panels do not qualify for NAFTA preferential tariff treatment, and though the wood flooring panels are determined to be the products of Canada for marking purposes, these articles are not the products of Canada for other non-preferential country of origin purposes. In accordance with section 102.0, the part 102 Rules determine the country of origin of imported goods for the purposes specified in paragraph 1 of Annex 311 of the NAFTA. Under NAFTA, these specific purposes are: country of origin marking; determining the rate of duty and staging category applicable to originating textile and apparel products as set out in Section 2 (Tariff Elimination) of Annex 300-B (Textile and Apparel Goods); and determining the rate of duty and staging category applicable to an originating good as set out in Annex 302.2 (Tariff Elimination). Accordingly, the part 102 Rules will determine the country of origin for marking purposes only, the substantial transformation test will determine the country of origin for other non-preferential purposes such as the current trade remedies. See HQ 563205, dated June 28, 2006. In addition, as advised in NY N284256, the instant product may be subject to antidumping duties or countervailing duties for imports of multilayer wood flooring from China. In your request for reconsideration, you question the language in HQ H300226, dated September 13, 2018, with respect to the applicability of the substantial transformation analysis to the antidumping and countervailing duties. However, please note that HQ H300226 was modified by HQ H301619, dated November 6, 2018, which amended (or removed) the exact language you question. While the country of origin for marking purposes is Canada, and the wood flooring panels remain Chinese in origin for other non-preferential purposes, written decisions regarding the scope of AD/CVD orders are issued by the Import Administration in the Department of Commerce (“Commerce”) and are separate from tariff classification and origin rulings issued by CBP. For inquiries, you can contact them at http://www.trade.gov/ia/ (click on “Contact Us”). For your information, you can view a list of current AD/CVD cases at the United States International Trade Commission website at http://www.usitc.gov (click on “Antidumping and countervailing duty investigations”), and you can search AD/CVD deposit and liquidation messages using the AD/CVD Search tool at http://addcvd.cbp.gov/. For all the aforementioned reasons, the country of origin for non-preferential duty purposes remains China, and the country of origin for marking purposes remains Canada. Accordingly, we AFFIRM NY N284256, dated March 23, 2017. Sincerely, Yuliya A. Gulis For Craig T. Clark, Director Commercial and Trade Facilitation Division