The tariff country of origin and classification of paper bags

N303702 April 22, 2019 CLA-2-48:OT:RR:NC:N1:130 CATEGORY: Country of Origin, Classification TARIFF NO.: 9903.88.03; 4819.40.0040 Mr. Paul Volpe Innovative Retail Packaging, Inc. 806 Agusta Street Philadelphia, PA 19152 RE: The tariff country of origin and classification of paper bags Dear Mr. Volpe: In your letter, received on February 2, 2019, you requested a country of origin ruling. The request was returned to you for additional information, which was received by this office on March 28, 2019. Product information and a sample were submitted for our review. The product under consideration is a gift bag. The sample provided measures approximately 22cm (L) x 10cm (W) x 30cm (H). The bag is constructed of heavy coated paper and has woven synthetic cord handles. The bag in the submitted photo appears to have different dimensions and has twisted synthetic cord handles. Since you do not identify other possible dimensions of the gift bags, we will presume that they each measure less than 40cm in width. You set forth a scenario wherein the paper is manufactured, cut to shape, printed, punched, and machine folded in China. The paper is then sent to Vietnam, where the additional manufacturing is completed by hand, including gluing (Vietnam-origin glue), the insertion of grey boards (stabilizing paperboard, Vietnam-origin), manufacturing and insertion of handles, and packing for shipment to the United States. You inquire as to whether the manufacturing renders China or Vietnam the country of origin. Title 19, Code of Federal Regulations, Section 134.1(b) defines “country of origin” as the country of manufacturing, production, or growth of a good imported into the United States. However, “work or material added to an article in another country must effect a substantial transformation in order to render such other country the “country of origin” within the meaning of this part.” In China, the paper is cut to shape and machine-folded into a bag formation, effectively rendering the product an unassembled bag. In Vietnam, the unassembled bag is glued, stabilized, and supplemented with handles. We find that the substantial transformation occurs when the paper is cut to shape and machine-folded. The operations taking place in Vietnam are finishing operations, and therefore, do not effect a substantial transformation. The country of origin for the bags will be China. See Headquarters ruling HQ 559964. The applicable subheading for the paper gift bags will be 4819.40.0040, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Cartons, boxes, cases, bags and other packing containers, of paper, paperboard, cellulose wadding or webs of cellulose fibers; box files, letter trays and similar articles, of paper or paperboard of a kind used in offices, shops or the like: Other sacks and bags, including cones: Other. The rate of duty will be free. Effective July 6, 2018, the Office of the United States Trade Representative (USTR) imposed an additional tariff on certain products of China classified in the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(b), HTSUS. The USTR imposed additional tariffs, effective August 23, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(d), HTSUS. Subsequently, the USTR imposed further tariffs, effective September 24, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(f) and U.S. Note 20(g), HTSUS. For additional information, please see the relevant Federal Register notices dated June 20, 2018 (83 F.R. 28710), August 16, 2018 (83 F.R. 40823), and September 21, 2018 (83 F.R. 47974). Products of China that are provided for in subheading 9903.88.01, 9903.88.02, 9903.88.03, or 9903.88.04 and classified in one of the subheadings enumerated in U.S. Note 20(b), U.S. Note 20(d), U.S. Note 20(f) or U.S. Note 20(g) to subchapter III shall continue to be subject to antidumping, countervailing, or other duties, fees and charges that apply to such products, as well as to those imposed by the aforementioned Chapter 99 subheadings. Products of China classified under subheading 4819.40.0040, HTSUS, unless specifically excluded, are subject to the additional 10 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.03, in addition to subheading 4819.40.0040, HTSUS, listed above. 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