The tariff classification, country of origin, and status under the North American Free Trade Agreement (NAFTA) of multilayer wood flooring panels

N277420 August 12, 2016 CLA-2-44:OT:RR:NC:3:230 CATEGORY: Classification; Country of Origin; Trade Agreements TARIFF NO.: 4418.72.9500 Ms. Darlene DiBernardo A.N. Deringer, Inc. 173 West Service Road Champlain, NY 12919 RE: The tariff classification, country of origin, and status under the North American Free Trade Agreement (NAFTA) of multilayer wood flooring panels Dear Ms. DiBernardo: In your letter, dated April 27, 2016, you requested a ruling on behalf of your client, Commonwealth Plywood Co. Ltd., Husky Flooring Division (“Husky”). The ruling was returned for additional information, which was received by this office on July 15, 2016. Samples and product information were submitted for review and will be retained for reference. The ruling request regards two styles of multilayer wood flooring panels, and seeks the tariff classification, country of origin, and status under the NAFTA for the two styles. Both samples consist of a plywood-construction substrate faced with a wood veneer exceeding 4mm in thickness. That is to say, each sample is constructed of plies of wood laminated together with the grains of each ply running at an angle to that of the subsequent plies. One sample is made up of ten veneer layers, with a face ply that measures approximately 4.5mm in thickness and is finished with polyurethane. The second sample is made up of nine veneer layers with an unfinished face ply measuring 5mm in thickness. Both are flooring panels assembled from multiple laminated plies or layers. The Explanatory Notes to the Harmonized System for heading 4412, Harmonized Tariff Schedule of the United States (HTSUS), define plywood as “consisting of three or more sheets of wood glued and pressed on the other and generally disposed so that the grains of successive layers are at an angle.” Both of the panel constructions are described by this definition. However, Additional US Note 4(b) to Chapter 44, HTSUS, states that Heading 4418 includes multi-layer assembled flooring panels having a face ply 4mm or more in thickness. Under these rules, both panels are classifiable under heading 4418. The applicable subheading for the multilayer wood flooring panels will be 4418.72.9500, HTSUS, which provides for Builders' joinery and carpentry of wood, including cellular wood panels and assembled flooring panels; shingles and shakes: Assembled flooring panels: Other, multilayer: Other: Other. The rate of duty will be 5 percent ad valorem. You indicate in your submission that Husky sources birch plywood from Russia that will serve as the substrate for the flooring panels. No ply of this substrate material exceeds 6mm in thickness, and the plywood is classifiable in heading 4412, HTSUS. Lumber sourced in the United States and Canada is processed into veneers in Canada. In Canada, the Russian plywood is cut into strips, the face veneers are laminated onto the plywood substrate, the strips are tongued and grooved, the panels are finished with or without polyurethane, and the complete panels are packaged. General Note 12, HTSUS, incorporates Article 401 of the NAFTA into the HTSUS. General Note 12(a)(i) provides, in pertinent part: (a) Goods originating in the territory of a party to the North American Free Trade Agreement (NAFTA) are subject to duty as provided herein. For the purposes of this note-- (i) 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 the Treasury (without regard to whether 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. 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— (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; Subdivision (t) states that, in order to be subject to NAFTA, manufacturing 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 Russian plywood is classifiable in heading 4412, HTSUS, and the final flooring panels are classifiable in heading 4418, HTSUS, the rule is met; provided the panels qualify to be marked as a product of Canada, the panels meet the rule for NAFTA preferential treatment. With regard to country of origin and marking of the flooring panels, 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 Rules of Origin (set forth in 19 CFR Part 102) will determine the country of origin and marking. Because the flooring panels are partly manufactured in a NAFTA country (Canada), the NAFTA rules govern the current scenario. Section 102.20, Customs Regulations (19 CFR 102.20) states that, for goods of heading 4418, HTSUS, the manufacturing must result in a change to plywood of subheading 4418.71 through 4418.79 from any other good of heading 4418 or from any other heading, except from heading 4412. As described above, both panels have a Russian plywood substrate that is classifiable in heading 4412. The manufacturing of that panel in Canada results in a panel classifiable in heading 4418. Since this heading shift is precluded by the above rule, the country of origin of this product would remain Russia. However, this determination is reversed by the NAFTA preference override set forth in 19 CFR 102.19(a). This regulation states: Except in the case of goods covered by paragraph (b) of this section, if a good which is originating within the meaning of §181.1(q) of this chapter is not determined under §102.11(a) or (b) or §102.21 to be a good of a single NAFTA country, the country of origin of such good is the last NAFTA country in which that good underwent production other than minor processing, provided that a Certificate of Origin (see §181.11 of this chapter) has been completed and signed for the good. Because both panels meet the tariff change rule, but have been determined to not be Canadian origin under 19 CFR 102.11(a) (includes rules under 19 CFR 102.20), 19 CFR 102.19(a) tells us that the country of origin is the last NAFTA country in which production other than minor processing took place. The manufacturing completed in Canada is beyond minor processing. Therefore, provided that a Certificate of Origin has been completed and signed for both panels, the country of origin of each is Canada. The flooring qualifies for NAFTA preferential treatment and is subject to duty-free treatment upon importation into the United States. 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 https://hts.usitc.gov/current. 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, Steven A. Mack Director National Commodity Specialist Division