H334090

H334090 November 27, 2023 OT:RR:CTF:VS H334090 JMV CATEGORY: Origin Mr. Peter A. Quinter Gunster 600 Brickell Ave Miami, FL 33131 RE: Prospective Ruling Request; Regional Value Content of Meal and Product Delivery Robots under the U.S.-Colombia Trade Promotion Agreement (CTPA) Dear Mr. Quinter: This letter is in response to your request, dated October 5, 2022, filed on behalf of your client Kiwi Campus, Inc., for a binding ruling pursuant to 19 CFR § 177. Your request concerns the tariff classification and eligibility for preferential tariff treatment under the U.S.-Colombia Trade Promotion Agreement (“CTPA”) of certain meal and product delivery robots. A previous ruling, Headquarters Ruling (“HQ”) H329911, dated June 7, 2023, addressed the classification of the subject merchandise. This ruling will address the preferential tariff treatment under CTPA. FACTS: The subject merchandise consists of meal and product delivery robots from Colombia known as “Kiwibots.” You state that the robots are aimed at universities, cities, and companies and that they circulate along the sidewalks to deliver meals and products ordered and tracked by customers using an Application Programming Interface (“API”). The robots use artificial intelligence and machine learning (including deep learning) to partially modify their speed autonomously on sidewalks based on the proximity of people. To communicate with their surroundings, the robots have digitally animated eyes and can play sounds. You state that the robots are equipped with an inner plastic container for placing meals and products. Each robot incorporates electric hub motors to self-propel. The robots use five distance sensors to avoid obstacles, a set of four cameras, a “Real Sense” camera, a GPS, and antennas for proper operation. The subject robots are assembled in Colombia with components of Chinese, U.S., and Colombian origin. You state that there are different versions of the Kiwibot; however, the instant ruling applies to the Kiwibot version 4.2A. To support the claim that the Kiwibot version 4.2A qualifies for preferential tariff treatment under COPTA, you submitted a production flow chart and a bill of materials that outlines the cost and origin of each component. ISSUE: Whether the subject the Kiwibot version 4.2A qualifies for preferential tariff treatment under CTPA. LAW AND ANALYSIS: The U.S.- Colombia Trade Promotion Agreement Implementation Act, Public Law 112-42, 125 Stat. 462, is implemented in the Harmonized Tariff Schedule of the United States at General Note (“GN”) 34. GN 34(b) provides in relevant part: (b) For the purposes of this note, subject to the provisions of subdivisions (c), (d), (n) and (o) thereof, a good imported into the customs territory of the United States is eligible for treatment as an originating good of Colombia or of the United States under the terms of this note if– the good is wholly obtained or produced entirely in the territory of Colombia or of the United States, or both; (ii) the good is produced entirely in the territory of Colombia or of the United States, or both, and-- each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (o) of this note; or the good otherwise satisfies any applicable regional value-content or other requirements set forth in such subdivision (o); and satisfies all other applicable requirements of this note and of applicable regulations; or . . . . Since the robots contain non-originating materials, they will not qualify as originating pursuant to GN 34(b)(i). We must therefore consider whether the robots qualify as originating pursuant to GN 34(b)(ii). In HQ H329911, U.S. Customs and Border Protection (“CBP”) found that the subject robots were properly classified under subheading 8704.60.00, Harmonized Tariff Schedule of the United States (“HTSUS”), which provides for “Motor vehicles for the transport of goods: Other, with only electric motor for propulsion.” The applicable rule of origin set forth in GN 34(o), Chapter 87, Rule 1 provides, “No change in tariff classification to headings 8701 through 8706 is required, provided that there is a regional value content of not less than 35 percent under the net cost method.” According to GN 34(h)(i): For purposes of subdivision (b)(ii)(B) of this note, the regional value content of an automotive good referred to in subdivision (o) of this note may be calculated by the importer, exporter or producer of the good on the basis of the following net cost method, RVC = ((NC - VNM) / NC) X 100, where RVC is the regional value content, expressed as a percentage; NC is the net cost of the automotive good; and VNM is the value of nonoriginating materials that are acquired and used by the producer in the production of the automotive good, but does not include the value of a material that is self-produced. A nonoriginating material is defined in GN34(c)(ii)(C)(3) as a material “that does not qualify as originating material under this note.” According to GN34(h)(viii)(E) the term “net cost” means “total cost minus sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs and nonallowable interest costs that are included in the total cost.” The term “Total cost” means: all product costs, period costs and other costs for a good incurred in the territory of Colombia or of the United States, or both; and does not include profits that are earned by the producer, regardless of whether they are retained by the producer or paid out to other persons as dividends, or taxes paid on those profits, including capital gains taxes. GN34(h)(viii)(B). According to counsel, Kiwi Campus, Inc. calculated its costs in accordance with GN34(h)(vii)(B), which states: The importer, exporter or producer of an automotive good shall, consistent with the provisions regarding allocation of costs provided for in generally accepted accounting principles, determine the net cost of the automotive good under subdivision subdivision (h)(ii) by– . . . (B) calculating the total cost incurred with respect to all goods produced by that producer, reasonably allocating the total cost to the automotive good, and then subtracting any sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs and nonallowable interest costs that are included in the portion of the total cost allocated to the automotive good; Based on this method of cost allocation, the Bill of Materials provided provides that the value of non-originating materials is $3,030.10, the cost of all the components and assembly is $5,389.80, and the total packing costs are $10.25. Therefore, the RVC = (($5,379.55 - $3,030.10)/ $5,379.55) X 100 = 43.7%. Since the RVC is not less than 35%, the subject robots qualify for preferential tariff treatment under the CTPA. HOLDING: The Kiwibot version 4.2A qualifies for preferential tariff treatment under the CTPA. Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a Customs Service field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.” A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction. Sincerely, Elif Eroglu, Acting Chief Valuation and Special Programs Br

The U.S.- Colombia Trade Promotion Agreement Implementation Act, Public Law 112-42, 125 Stat. 462, is implemented in the Harmonized Tariff Schedule of the United States at General Note (“GN”) 34. GN 34(b) provides in relevant part:(b) For the purposes of this note, subject to the provisions of subdivisions (c),(d), (n) and (o) thereof, a good imported into the customs territory of the United States is eligible for treatment as an originating good of Colombia or of the United States under the terms of this note if–the good is wholly obtained or produced entirely in the territory of Colombia or of the United States, or both;(ii) the good is produced entirely in the territory of Colombia or of the United States, or both, and--each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (o) of this note; orthe good otherwise satisfies any applicable regional value-content or other requirements set forth in such subdivision (o); andsatisfies all other applicable requirements of this note and of applicable regulations; or . . . .Since the robots contain non-originating materials, they will not qualify as originating pursuant to GN 34(b)(i). We must therefore consider whether the robots qualify as originating pursuant to GN 34(b)(ii). In HQ H329911, U.S. Customs and Border Protection (“CBP”) found that the subject robots were properly classified under subheading 8704.60.00, Harmonized Tariff Schedule of the United States (“HTSUS”), which provides for “Motor vehicles for the transport of goods: Other, with only electric motor for propulsion.” The applicable rule of origin set forth in GN 34(o), Chapter 87, Rule 1 provides, “No change in tariff classification to headings 8701 through 8706 is required, provided that there is a regional value content of not less than 35 percent under the net cost method.”According to GN 34(h)(i):For purposes of subdivision (b)(ii)(B) of this note, the r