H330975

HQ H330975 January 25, 2024 OT:RR:CTF:VS H330975 RRB CATEGORY: Origin Mr. Kim Tao Merlon Limited Nanyang Commercial Bank, Limited 151 Des Voeux Road Central Hong Kong HONG KONG RE: Country of Origin; Marking; Section 301 Measures; Truck Bed Flooring Panels Processed in FTZ Dear Mr. Tao: This is in response to your ruling request, dated November 17, 2022, filed on behalf of Merlon Limited, concerning rough, red oak edge-glued wood boards imported from China and admitted into a U.S. Foreign Trade Zone (“FTZ”), where it will be manufactured into truck bed flooring panels and subsequently entered into the Customs territory of the United States. Specifically, you seek guidance regarding the applicability of Section 301 duties upon admission into the FTZ, the country of origin for duty and marking purposes, and the amount of duty that will be due upon removal from the FTZ and entry into the Customs territory of the United States. FACTS: The requester plans to manufacture truck bed flooring panels in a U.S. FTZ from red oak edge-glued wood boards admitted into the FTZ from China. The red oak edge-glued wood boards from China are classified in subheading 4421.99.9400, Harmonized Tariff Schedule of the United States Annotated (“HTSUSA”), as “Other articles of wood: Other: Other: Other: Edge-glued lumber.” Goods of subheading 4421.99.94, Harmonized Tariff Schedule of the United States (“HTSUS”), which are products of China, are subject to Section 301 trade remedies under subheading 9903.88.03, HTSUS. While in the FTZ, the red oak edge-glued wood boards will undergo various types of processing to manufacture the boards into truck bed flooring panels. First, four sides of the wood boards will be machine-planed, while two sides of the boards will be machine-grooved with edge joinery. Next, the wood boards will be machine-puttied and machine-sanded. The underside of the boards will be painted with black hot-melt polyurethane coating while the topside will be painted with clear UV protective coating. The finished truck bed flooring panels will be subsequently packed for delivery prior to entry into the Customs territory of the United States. Truck bed flooring panels are classified in subheading 4421.99.9800, HTSUSA, as “Other articles of woods: Other: Other: Other: Other: Other.” ISSUES: What is the country of origin of the finished merchandise for duty purposes and Section 301 trade measures upon removal from the FTZ and entry into the Customs territory of the United States? What is the country of origin of the finished merchandise for marking purposes upon removal from the FTZ and entry into the Customs territory of the United States? LAW AND ANALYSIS: Country of origin for duty purposes and section 301 trade measures upon removal from an FTZ and entry into the Customs territory of the United States The United States Trade Representative (“USTR”) has determined that an additional ad valorem duty will be imposed on certain Chinese imports pursuant to USTR’s authority under Section 301(b) of the Trade Act of 1974 (“Section 301 measures”). The Section 301 measures apply to products of China enumerated in Section XXII, Chapter 99, Subchapter III, U.S. Note 20(f)), HTSUS. Here, rough edge-glued wood boards from China will be processed into truck bed flooring panels in an FTZ. Accordingly, the duties owed on the merchandise will depend on the zone status of the edge-glued wood boards from China. On September 21, 2018, USTR clarified how Section 301 measures are applied to products of China listed in U.S. Note 20(f) of Subchapter III, Chapter 99, HTSUS, when they are admitted into a U.S. FTZ. See “Notice of Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property and Innovation” (September 21, 2018, 83 F.R. 47974). Per 83 F.R. 47974, any product of China listed in Annex A, except any product that is eligible for admission under “domestic status” as defined in 19 CFR § 146.43, and that is admitted into a U.S. FTZ, must be admitted as “privileged foreign status” as defined in 19 C.F.R. § 146.41. Such products will be subject upon entry for consumption into the Customs territory of the United States to any ad valorem rates of duty related to its classification under the applicable HTSUS subheading. 83 F.R. 47974. Annex A to 83 F.R. 47874 refers to Section 301 duties under subheading 9903.88.03, HTSUS, which covers “Articles the product of China, as provided for in U.S. note 20(e) and as provided for in the subheadings enumerated in U.S. note 20(f).” Since edge-glued wood boards from China, as merchandise classified in subheading 4421.99.94, HTSUS, are subject to Section 301 measures per U.S. note 20(f), and as identified in Annex A to 83 F.R. 47874, they must be admitted into the U.S. FTZ as “privileged foreign status.” Merchandise admitted into an FTZ as privileged foreign status is treated, for tariff purposes, in its condition at the time of admission to the zone. In accordance with 19 C.F.R. § 146.41(e), “[a] status as privileged foreign merchandise cannot be abandoned and remains applicable to the merchandise even if changed in form by manipulation or manufacture…” Moreover, 19 C.F.R. § 146.65(a) states, in relevant part, that “[p]rivileged foreign merchandise provided for in this section will be subject to tariff classification according to its character, condition and quantity, at the rate of duty and tax in force on the date of filing, in complete and proper form, the application for privileged status.” Because the edge-glued wood boards are required to be admitted to the FTZ as privileged foreign status, once they are imported as finished truck bed flooring panels into the Customs territory of the United States, the merchandise must be classified under the tariff classification and country of origin for duty purposes of the unfinished edge-glued wood boards—i.e., based on its character and condition at the time of admittance into the FTZ. This means that because the character and condition of the merchandise at the time of its admittance into the FTZ was as merchandise of subheading 4421.99.9400, HTSUSA, with China as the country of origin for duty purposes, the tariff classification and country of origin remain in subheading 4421.99.9400, HTSUSA, with China as the country of origin upon entry into the Customs territory of the United States, regardless of any substantial transformation that has occurred in the FTZ. Turning to the application of Section 301 measures, we note that subheading 9903.88.03, HTSUS, Subchapter III, Chapter 99, provides: Except as provided in headings 9903.88.13, 9903.88.18, 9903.88.33, 9903.88.34, 9903.88.35, 9903.88.36, 9903.88.37, 9903.88.38, 9903.88.40, 9903.88.41, 9903.88.43, 9903.88.45, 9903.88.46, 9903.88.48, 9903.88.56, 9903.88.64, 9903.88.66, 9903.88.67 or 9903.88.68, articles the product of China, as provided for in U.S. note 20(e) to this subchapter and as provided for in the subheadings enumerated in U.S. note 20(f) U.S. Note 20(e), Subchapter III, Chapter 99, provides in pertinent part: For the purposes of heading 9903.88.03, products of China, as provided for in this note, shall be subject to an additional 25 percent ad valorem rate of duty. The products of China that are subject to an additional 25 percent ad valorem rate of duty under heading 9903.88.03 are products of China that are classified in the subheadings enumerated in U.S. note 20(f) to subchapter III…. Upon entry into the Customs territory of the United States, the finished truck bed flooring panels are classified as products of China in subheading 4421.99.94, HTSUS, which has a Free rate of duty, but is enumerated in U.S. Note 20(f), Subchapter III, Chapter 99, HTSUS. Therefore, the finished truck bed flooring panels will be subject to Section 301 measures upon entry into the Customs territory of the United States. Accordingly, the truck bed flooring panels with China as the country of ori

Country of origin for duty purposes and section 301 trade measures upon removal from an FTZ and entry into the Customs territory of the United States The United States Trade Representative (“USTR”) has determined that an additional ad valorem duty will be imposed on certain Chinese imports pursuant to USTR’s authority under Section 301(b) of the Trade Act of 1974 (“Section 301 measures”). The Section 301 measures apply to products of China enumerated in Section XXII, Chapter 99, Subchapter III, U.S. Note 20(f)), HTSUS. Here, rough edge-glued wood boards from China will be processed into truck bed flooring panels in an FTZ. Accordingly, the duties owed on the merchandise will depend on the zone status of the edge-glued wood boards from China.On September 21, 2018, USTR clarified how Section 301 measures are applied to products of China listed in U.S. Note 20(f) of Subchapter III, Chapter 99, HTSUS, when they are admitted into a U.S. FTZ. See “Notice of Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property and Innovation” (September 21, 2018, 83 F.R. 47974). Per 83 F.R. 47974, any product of China listed in Annex A, except any product that is eligible for admission under “domestic status” as defined in 19 CFR § 146.43, and that is admitted into a U.S. FTZ, must be admitted as “privileged foreign status” as defined in 19 C.F.R. § 146.41. Such products will be subject upon entry for consumption into the Customs territory of the United States to any ad valorem rates of duty related to its classification under the applicable HTSUS subheading. 83 F.R. 47974. Annex A to 83 F.R. 47874 refers to Section 301 duties under subheading 9903.88.03, HTSUS, which covers “Articles the product of China, as provided for in U.S. note 20(e) and as provided for in the subheadings enumerated in U.S. note 20(f).” Since edge-glued wood boards from China, as merchandise classified in subheading 4421.99.94, HTSUS, are su