N308175

N308175 January 2, 2020 CLA-2-39: OT: RR: NC: 4:434 CATEGORY: Classification; Marking; Trade Programs TARIFF NO.: 3926.10.0000 Ms. Yenne Luu Avery Products Corporation 50 Pointe Drive Brea, CA 92821 RE: The marking, country of origin and status under the North American Free Trade Agreement (NAFTA) of plastic dividers Dear Ms. Luu: In your letter, dated November 26, 2019, you requested a ruling on the marking, country of origin and status under the North American Free Trade Agreement for one style of pocketed plastic divider. Samples were submitted for review and will be returned, per your request. FACTS: The item under consideration is a packaged set of five polypropylene insertable plastic dividers with pockets and tabs (SKU# 7278216176000MX), each measuring approximately 9 ¼ ” by 11 1/8”. The surface of the backer material and tab is write and erase. The dividers can be inserted into a notebook or binder by the ultimate consumer. The dividers will first undergo manufacturing in China and then be further processed in Mexico. In China, plastic sheets are cut to specific dimensions to form the front pocket piece, including a diagonal cut delineating the top of the pocket. They are scored along the bottom and sides to form an overlap where the edges will be sealed. A separate backer piece, the “divider body” is cut to the finished divider dimensions, including a tab. The unfinished dividers are then sent to Mexico. In Mexico, the unfinished dividers are finished via the following steps: The plastic pocket piece is placed on top of the divider body in the heat sealing machine. The three scored edges of the pocket piece are folded to overlap the divider body and heat sealed together. Three holes are punched along the left hand side. The dividers are collated into sets of five multi-colored tabbed dividers and packaged as such with a literature sheet in a clear polypropylene bag. The paper elements and bag are sourced in Mexico. Finally, the sets are packed into a shipper case for export to the United States. CLASSIFICATION: Although you did not explicitly request a tariff classification ruling, in order to arrive at NAFTA eligibility, a tariff classification is necessary. In your submission, you propose classification of the dividers in 3926.10.0000, Harmonized Tariff Schedule of the United States (HTSUS). This subheading provides for “Office or school supplies” (of plastic). We agree that the plastic dividers with pockets meet the parameters of goods classifiable within 3926.10.0000, HTSUS. The General column rate of duty is 5.3 percent ad valorem. 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 the World Wide Web at https://hts.usitc.gov/current. NAFTA-LAW AND ANALYSIS: General Note 12 (b), HTSUS, sets the criteria for determining whether a good is originating under the North American Free Trade Agreement (NAFTA). General Note 12 (b) 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— (i) they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; or (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; or (iii) they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials; For goods classified in heading 3926, HTSUS, General Note 12(t) requires: A change to subheadings 3926.10 through 3926.40 from any other heading, provided there is regional value content of not less than: 60% where the transaction value method is used 50 percent where the net cost method is used As stated earlier in this ruling, the finished dividers (SKU# 7278216176000MX) are classified under subheading 3926.10.0000, HTSUS. Based on the manufacturing facts provided, it is not true that “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. You propose that the divider body upon leaving China is classifiable in subheading 3926.10.0000, HTSUS. We agree. The divider body possesses the essential character of its ultimate use as an office or school supply. The body does not undergo a tariff shift. Further, although you propose that the unfinished pocket sheets made in China are classifiable in heading 3920.20.0055 upon export to Mexico, we disagree. Per the Explanatory Notes to the Harmonized Tariff Schedule, to be classified as a sheet in headings 3920 or 3921 the product cannot be further worked. (i.e. ground edges, drilled, milled, hemmed, twisted, framed or cut into shapes other than rectangular). The unfinished dividers are far more than sheets of plastic, as they are cut to size and shape; they are not rectangular. Furthermore, under General Rule of Interpretation 2(a), HTSUS, “Any reference to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article.” At time of export from China, the two pre-cut, scored sheets are identifiable as forming their finished pocketed divider with a simple assembly process. They are classifiable in subheading 3926.10.0000, the same classification as when it leaves Mexico for the United States after finishing in Mexico. As a result, the goods described above do not qualify for NAFTA preferential treatment. COUNTRY OF ORIGN AND MARKING: You have also requested a ruling on country of origin and marking. The marking statute, 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. The country of origin marking requirements for a "good of a NAFTA country" are also determined in accordance with Annex 311 of the North American Free Trade Agreement, as implemented by section 207 of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat 2057) (December 8, 1993) and the appropriate Customs Regulations. The Marking Rules used for determining whether a good is a good of a NAFTA country are contained in Part 102 of the Customs Regulations, the NAFTA Marking Rules. Because the plastic dividers are processed in Mexico prior to importation into the United States, we apply the NAFTA Marking Rules. Part 102 of the regulations set forth the hierarchy for determining country of origin for marking purposes. Section 102.11(a) states that the country of origin of a good is the country in which (1) the good is wholly obtained or produced; (2) the good is produced exclusively from domestic materials; or (3) each foreign material incorporated in that good undergoe

General Note 12 (b), HTSUS, sets the criteria for determining whether a good is originating under the North American Free Trade Agreement (NAFTA). General Note 12 (b) 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—(i) they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; or(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; or(iii) they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials; For goods classified in heading 3926, HTSUS, General Note 12(t) requires: A change to subheadings 3926.10 through 3926.40 from any other heading, provided there is regional value content of not less than:60% where the transaction value method is used50 percent where the net cost method is usedAs stated earlier in this ruling, the finished dividers (SKU# 7278216176000MX) are classified under subheading 3926.10.0000, HTSUS. Based on the manufacturing facts provided, it is not true that “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. You prop