The tariff classification and country of origin of rectangle cut for a transformer from Mexico

N151495 March 30, 2011 CLA-2-85:OT:RR:NC:N1:109 CATEGORY: Classification TARIFF NO.: 8504.90.9540 Ms. Karia Herrera Attorney-in-Fact R.L. Jones 8830 Siempre Viva Road, Suite 100 San Diego, CA 92154 RE: The tariff classification and country of origin of rectangle cut for a transformer from Mexico Dear Ms. Herrera: In your letter dated January 11, 2011, you requested a tariff classification and country of origin ruling on behalf of your client, JFE SHOJI STEEL AMERICA, INC. The article in question is described as a rectangle cut for a transformer. You indicate that the rectangle cut for a transformer will be manufactured in Mexico, which is a NAFTA country, from materials originating in Japan. The Japanese material is coils of oriented silicon steel. The steel coils will be sent to Mexico where they are to be rolled flat on a machine that will slit the edges. It will also go through a cutting process. The slitting and cutting process will give the finished good its unique characteristic as a part for a transformer. The applicable subheading for the rectangle cut for a transformer will be 8504.90.9540, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Electrical transformers, static converters…; Parts: Other: Other: Other parts: Of transformers.” The general rate of duty will be 2.4 percent ad valorem. With regard to the country of origin of the rectangle cut for a transformer, 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 the purposes of country of origin marking of imported goods. Paragraph (a) of this section provides that the country of origin of a good is the country in which (1) the good is wholly obtained or produced, or (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 of the regulations. "Foreign material" is defined in 19 CFR 102.1(e) 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. Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because the rectangle cut for a transformer is manufactured solely of Japanese materials and therefore is neither wholly obtained or produced, nor produced exclusively from domestic materials. Since an analysis of sections 102.11(a)(1) and 102.11(a)(2) will 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 each foreign material incorporated in that good undergoes an applicable change in tariff classification as set forth in 19 CFR 102.20. Since we have determined that the rectangle cut for a transformer is classified in subheading 8504.90.9540, HTSUS, the applicable tariff shift rule found in section 102.20(o) requires a change to subheading 8504.90 from any other heading.Applying the NAFTA Marking Rules set forth in Part 102 of the regulations to the facts of this case, we find that the non-originating materials undergo the applicable shift in tariff classification. Accordingly, the country of origin of the manufactured rectangle cut for a transformer is Mexico. Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at http://www.usitc.gov/tata/hts/. This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177). 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 Linda M. Hackett at (646) 733-3015. Sincerely, Robert B. Swierupski Director National Commodity Specialist Division