The classification and country of origin of rigid gift boxes

N315536 November 5, 2020 CLA-2-48:OT:RR:NC:1:130 CATEGORY: Classification; Country of Origin TARIFF NO.: 4819.50.4040; 9903.88.03 Mr. William G. Braier Radix Group International dba DHL Global Forwarding Regulatory & Compliance Consulting Group 6120 Ace Industrial Drive Cudahy, WI 53110 RE: The classification and country of origin of rigid gift boxes Dear Mr. Braier: In your letter, dated October 27, 2020, you requested a binding ruling on behalf of your client, IG Design Group Americas (“IG”), a division of Berwick Offray LLC (Design Group). Product and manufacturing information was submitted for our review. Your request concerns the classification and country of origin of rigid, two-piece, decorated gift boxes. The boxes are constructed of rigid greyboard (paperboard) overlaid with decorative paper that has been laminated to the outer surfaces. They boxes will be imported in multiple sizes and themes. The term “box” used herein references both the body and lid components. The applicable subheading for the two-piece, rigid, paperboard gift boxes will be 4819.50.4040, 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 packing containers, including record sleeves: Other: Other: Rigid boxes and cartons. The rate of duty will be free. You describe two manufacturing scenarios for which you are requesting country of origin determinations. In the first scenario, the paperboard is manufactured and die-cut to box shape in China. The decorative overlay paper is manufactured and die-cut to box shape in China. The paper and paperboard components are shipped to Indonesia, where the boxes are folded into a three-dimensional shape and glued, and the decorative paper is subsequently laminated onto the complete box form. The box bodies and lids are then combined, and the boxes are packaged. In the second scenario, the paperboard sheet is manufactured and embellished in China, but is not cut to shape. The decorative overlay paper is manufactured and die-cut to box shape in China. The paperboard and cut decorative paper are shipped to Indonesia, where the paperboard is die-cut to box shape. In Indonesia, the box is folded into three-dimensional shape and glued, and the decorative paper is laminated onto the complete box form. The box bodies and lids are then combined, and the boxes are packaged. Section 134.1(b) of the Customs Regulations (19 CFR 134.1(b)) provides that the "[c]ountry of origin" means the country of manufacture, production or growth of any article of foreign origin entering the United States. Further 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 Part 134, Customs Regulations (19 CFR Part 134). Substantial transformation requires that "[t]here must be a transformation; a new and different article must emerge, ‘having distinctive name, character, or use.’" Anheuser-Busch Brewing Association v. United States, 207 U.S. 556, 28 S. Ct 204 (1908). We must therefore determine if or where a substantial transformation of materials occurs in order to determine country of origin. Customs has long ruled that the cutting to shape of material constitutes a substantial transformation. Fabric yardage, for example, is substantially transformed when cut into garment pieces; the country where the cutting takes place is the country of origin. See HQ rulings 083461 (May15, 1990), 555189 (June 12, 1989), 554027 (January 13, 1987), 554025 (December 16.1986), amongst others. The paperboard forms the boxes and therefore is the primary material (the decorative paper merely imparts a decorative aspect on the box). We find that die-cutting the paperboard into shapes that are ready to be folded into boxes is analogous to the cutting to shape of fabric garment pieces. Therefore, the country of origin is the country wherein the paperboard is cut to shape. In the scenario in which the paperboard is die-cut to shape in China, the country of origin is China. In the scenario in which the paperboard is die-cut to shape in Indonesia, the country of origin is Indonesia. Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 4819.50.4040, HTSUS, unless specifically excluded, are subject to an additional 25% percent ad valorem rate of duty.  At the time of importation, you must report the Chapter 99 subheading, 9903.88.03, in addition to subheading 4819.50.4040, HTSUS, listed above.   The HTSUS is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Note cited above and the applicable Chapter 99 subheading.  For background information regarding the trade remedy initiated pursuant to Section 301 of the Trade Act of 1974, you may refer to the relevant parts of the USTR and CBP websites, which are available at https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions and https://www.cbp.gov/trade/remedies/301-certain-products-china, respectively. 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