N335182

N335182 September 18, 2023 CLA-2:32:OT:RR:NC:N3:136 CATEGORY: Country of Origin; Marking; Trade Program Sarah Stock C.H. Robinson International, Inc. 1501 N. Mittel Blvd., Suite A Wood Dale, IL 60191 RE: The country of origin, marking, and applicability of the United States-Mexico-Canada Trade Agreement (USMCA) of two masterbatch products from Canada; Correction to Ruling Number N334326 Dear Ms. Stock: This letter replaces Ruling Number N334326 dated August 30, 2023, which contained a clerical error. An incorrect citation for marking regulations was indicated. A complete and corrected ruling follows. In your letter dated July 31, 2023, on behalf of your client, Ampacet Corporation, you requested a country of origin, marking, and applicability of the United States-Mexico-Canada Trade Agreement (USMCA) ruling on two masterbatch products. You describe the subject products as follows: Item Description 1. The first product is a finished masterbatch produced in Canada, identified as White PE MB. The finished product is a pelletized colorant that can be used in multiple applications, including but not limited to injection molding, blow molding, extrusions and blown film. This product is comprised of various inputs that are of the following origins: United States, Canada, or China. In some cases, items may be dual-sourced, so inputs may also be sourced from two other countries. Item Description 2. The second product is also a white masterbatch (White PE MB), but with a different finished product/SKU number. This is a finished masterbatch that is designed for standard film applications. This product is comprised of various inputs that are of United States, Canadian, and Chinese origin. Both masterbatches are products that are custom formulated by your client in Canada. The inputs are mixed together under heat (to a molten state of the polymer) and high shear to provide the color in the form that is utilized by customers. If these raw materials were to be used without being converted into a masterbatch with proper distribution and dispersion, they would not have the required properties for the intended end use and could cause defects in the customers’ finished products and processes where they are utilized. Examples of such defects include visual imperfections, agglomeration that affects barrier properties, plugging of process screens, die lip build up, streaking, or inconsistent color and opacity. None of the individual inputs could function as an acceptable product without undergoing the full production process. Some of the production processes described are irreversible; once the production process is complete, the ingredients cannot be separated. Without undergoing the specific production process and using specialized equipment, the masterbatches would not have the properties – i.e., the rheological properties, shape, size, color, dispersion level, and moisture content – required to render them suitable for their intended use. The production process also renders the final products safe for use, including the avoidance of dust explosions or inhalation issues. The applicable subheading for both masterbatch products will be 3206.19.0000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for: Other coloring matter; preparations as specified in note 3 to this chapter, other than those of 3203, 3204 or 3205; inorganic products of a kind used as luminophores, whether or not chemically defined: Pigments and preparations based on titanium dioxide: Other. The general rate of duty will be 6.0 percent ad valorem. Country of Origin and Marking The "country of origin" is defined in 19 C.F.R. §134.1(b) as "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 this part.” However, for a good of a USMCA country, the marking rules set forth in part 102 of this chapter will determine the country of origin. 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 United States 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 United States the English name of the country of origin of the article. Part 134 of the U.S. Customs and Border Protection (“CBP”) Regulations (19 C.F.R. Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. § 1304. To provide a more seamless transition to the USMCA for Canadian and Mexican traders, at this time, CBP continues to utilize the marking rules in 19 C.F.R. Part 102, with the exception of 19 C.F.R. § 102.19, for purposes of country of origin marking with respect to goods of those countries. Title 19, C.F.R. § 102.11(a) provides that the country of origin of a good is the country in which: (a)(1) The good is wholly obtained or produced; (a)(2) The good is produced exclusively from domestic materials; or (a)(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in §102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied. Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because the imported products are neither wholly obtained or produced or produced exclusively from “domestic” materials. Because the analysis of sections 102.11(a)(1) and 102.11(a)(2) does not yield a country of origin determination, we look to section 102.11(a)(3). Pursuant to 19 C.F.R. §102.11(a)(3), the country of origin of a good is the country in which each foreign material incorporated in that good undergoes an applicable change in tariff classification as set forth in 19 C.F.R. §102.20, and satisfies any other applicable requirements of that section. Both masterbatch products, identified as White PE MB, are imported into the U.S. from Canada, both are classified in subheading 3206.19, HTSUS and incorporate foreign materials as defined by 19 CFR §102.1(e), so the rule under 19 CFR § 102.11(a)(3) applies. The applicable tariff classification rule provided under 19 CFR §102.20 states: “A change to subheading 3206.11 through 3206.19 from any other subheading outside that group.” As one of the sourced foreign substances is classified in subheading 3206.11, HTSUS, that item fails to make the required tariff shift, and we must consult the next available rule of origin. The rule under CFR § 102.11(b) does not apply because no single material imparts the essential character of the finished products. As no single material can be considered to impart the essential character to the finished masterbatches, we must consult the remaining rules available under 19 CFR §102.11, in sequential order. As the masterbatches are not specifically described in the Harmonized System as a set or mixture, or classified as a set, mixture or composite good pursuant to General Rule of Interpretation 3, 19 C.F.R. §102.11(c) does not apply. 19 CFR §102.11(d)(1) and §102.11(d)(2) do not apply because the goods are not produced via minor processing or simple assembly as defined within 19 C.F.R. § 102.1. Regarding minor processing, the input materials undergo production processes that are clearly more than dilution with other substances, and the substances are materially altered upon production. Therefore, in applying 19 C.F.R. §102.11(d)(3), which states that “the country of origin of the good is the last country in which the good underwent production,” we have determined that the country of origin for marking purposes for both finished products is Ca

of sections 102.11(a)(1) and 102.11(a)(2) does not yield a country of origin determination, we look to section 102.11(a)(3). Pursuant to 19 C.F.R. §102.11(a)(3), the country of origin of a good is the country in which each foreign material incorporated in that good undergoes an applicable change in tariff classification as set forth in 19 C.F.R. §102.20, and satisfies any other applicable requirements of that section.Both masterbatch products, identified as White PE MB, are imported into the U.S. from Canada, both are classified in subheading 3206.19, HTSUS and incorporate foreign materials as defined by 19 CFR §102.1(e), so the rule under 19 CFR § 102.11(a)(3) applies.  The applicable tariff classification rule provided under 19 CFR §102.20 states: “A change to subheading 3206.11 through 3206.19 from any other subheading outside that group.” As one of the sourced foreign substances is classified in subheading 3206.11, HTSUS, that item fails to make the required tariff shift, and we must consult the next available rule of origin.The rule under CFR § 102.11(b) does not apply because no single material imparts the essential character of the finished products. As no single material can be considered to impart the essential character to the finished masterbatches, we must consult the remaining rules available under 19 CFR §102.11, in sequential order.As the masterbatches are not specifically described in the Harmonized System as a set or mixture, or classified as a set, mixture or composite good pursuant to General Rule of Interpretation 3, 19 C.F.R. §102.11(c) does not apply.19 CFR §102.11(d)(1) and §102.11(d)(2) do not apply because the goods are not produced via minor processing or simple assembly as defined within 19 C.F.R. § 102.1. Regarding minor processing, the input materials undergo production processes that are clearly more than dilution with other substances, and the substances are materially altered upon production.Therefore, in applying 19 C.F.R. §102.11(d