The tariff classification and status under the North American Free Trade Agreement (NAFTA) of prefabricated structures from Mexico

N260635 January 30, 2015 CLA-2-94:OT:RR:NC:2:230 CATEGORY: Classification, Marking TARIFF NO.: 9406.00.8030 Mr. Alan R. San Miguel San Miguel Attorneys, P.C. 222 Pennbright Drive Suite 106 Houston, TX 77090 RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA) of prefabricated structures from Mexico Dear Mr. San Miguel: In your letter, dated July 25, 2014, you requested a binding ruling. The request was returned to you for additional information, which you resubmitted to this office on January 6, 2015. The ruling was requested on prefabricated structures for commercial and residential use. You have requested a ruling regarding marking, country of origin and NAFTA eligibility of the structures. You indicate that the units are utilized for housing, classrooms, offices, restrooms, and similar purposes. Photographs and descriptive literature were submitted for our review. The structures vary in dimension; examples provided measure from 8 to 10 feet in width and 38 feet in length. Information provided indicates that the outer construction of the units is of galvanized steel and inner framework of wood. The structures have built-in components and are designed to be fitted with optional interior accessories. You state that the structures are fully manufactured in Mexico from components with multiple countries of origin. The structures, while movable by trailer, are substantial and generally permanent units. We find that the structures meet the definition of “prefabricated buildings” as set forth in Legal Note 4 to Chapter 94, HTSUS, which states, “prefabricated buildings” means: buildings which are finished in the factory or put up as elements, entered together, to be assembled on site, such as housing or worksite accommodation, offices, schools, shops, sheds, garages, or similar buildings. As noted, the structures are designed to be equipped with accessories. The Explanatory Notes to the Harmonized System explain that only builtin equipment normally supplied is to be classified with the buildings. This includes electrical fittings (wiring, sockets, switches, circuitbreakers, bells, etc.), heating and air conditioning equipment (boilers, radiators, air conditioners, etc.), sanitary equipment (baths, showers, water heaters, etc.), kitchen equipment (sinks, hoods, cookers, etc.) and items of furniture which are built in or designed to be built in (cupboards, etc.).   All additional elements of the structures which are not built-in, standard equipment must be classified separately, and the proper country of origin must be declared. This includes such items as refrigerators, televisions, microwave ovens, washers and dryers, mattresses, sofas, chairs, tables and similar equipment. Please note that the country where the supplier of the goods is located does not constitute the country of origin of the merchandise. Goods purchased from Home Depot in the United States are not of U.S. origin unless the goods are fully manufactured in, or otherwise meet the rules of origin for, the United States. The applicable subheading for the prefabricated structures will be 9406.00.8030, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Prefabricated buildings: Other: Of metal: Other. The rate of duty will be 2.9 percent ad valorem. General Note 12(b), HTSUS, sets forth the criteria for determining whether a good is originating under the NAFTA. General Note 12(b), HTSUS, (19 U.S.C. § 1202) states, in pertinent part, that 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 entirely 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 goods 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 subdivisions (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; or (iv) they are produced entirely in the territory of Canada, Mexico and/or the United States but one or more of the non-originating materials falling under provisions for “parts” and used in the production of such goods does not undergo a change in tariff classification because— (A) the goods were imported into the territory of Canada, Mexico and/or the United States in unassembled or disassembled form but were classified as assembled goods pursuant to general rule of interpretation 2(a), or (B) the tariff headings for such goods provide for and specifically describe both the goods themselves and their parts and is not further divided into subheadings, or the subheadings for such goods provide for and specifically describe both the goods themselves and their parts, provided that such goods do not fall under chapters 61 through 63, inclusive, of the tariff schedule, and provided further that the regional value content of such goods, determined in accordance with subdivision (c) of this note, is not less than 60 percent where the transaction value method is used, or is not less than 50 percent where the net cost method is used, and such goods satisfy all other applicable provisions of this note. You state that the prefabricated structures are fully manufactured in Mexico, which is a country provided for under the NAFTA. The structures will be eligible for the NAFTA preference if they qualify to be marked as goods of Mexico and if they are wholly obtained or produced in the NAFTA territories, or if they are transformed in Mexico so that the non-originating materials undergo a change in tariff classification described in subdivision (t) to General Note 12, HTSUSA. For heading 9406, HTSUS, the appropriate subdivision (t) rule states: “A change to heading 9406 from any other chapter.” As the components listing provided identifies the countries in which the products were procured, not necessarily the countries of origin, it is unclear which components originate in the NAFTA territories. Nonetheless, the components undergo the requisite change in tariff classification in Mexico. Based on the facts provided, the prefabricated structures described above qualify for NAFTA preferential treatment, because they meets the requirements of HTSUS General Note 12(b)(ii)(A). The structures will therefore be entitled to a FREE rate of duty under NAFTA upon compliance with all applicable laws, regulations, and agreements. With regard to country of origin and marking thereof, Section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. 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 U.S. the English name of the country of origin of the article. Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Pursuant to 19 CFR Section 134.1(b), the country of origin is the country of manufacture, production or growth of any article of foreign origin entering the U.S. Further work or material added to a foreign article in the United States must effect a substantial transformation in order to render the final product a good of the U.S. However, for a good of a NAFTA country, the NAFTA Marking Rules (set forth in 19 CFR Part 102) will determine the country of origin. The NAFTA rules will govern in the current scenario. Applying the terms of Section 102.19(a), the country of origin of the prefabricated structures 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 Laurel Duvall at Laurel.Duvall@CBP.DHS.GOV. Sincerely, Gwenn Klein Kirschner Director National Commodity Specialist Division