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CBP Ruling Changes on Classification, Origin of Beds, Fish Oil, Pill Cases, Steel Tubing

Wednesday, October 02, 2019
Sandler, Travis & Rosenberg Trade Report

The following proposed and final revocations and modifications of U.S. Customs and Border Protection rulings are included in the Sept. 25, 2019, Customs Bulletin and Decisions. Comments on the proposed changes are due by Oct. 25, and the final changes will be effective with respect to goods entered or withdrawn from warehouse for consumption on or after Nov. 25.

For more information on how to seek or utilize classification rulings, please contact customs attorney Deb Stern at (305) 894-1007.

Bed Components

CBP is proposing to reclassify headboards, footboards, and side rails imported in separate shipments as furniture parts under HTSUS 9403.90.70 (duty-free) rather than as finished beds under HTSUS 9403.50.9045 (duty-free). CBP affirms the reasoning in a previous ruling that unassembled components imported in separate shipments are not classified as the assembled article, particularly when they may be imported in unequal quantities, as is the case here. Ruling NY N277888 would be revoked to reflect this change.

Encapsulated Fish Oil

In ruling NY N287514 CBP determined that China is the country of origin of encapsulated fish oil that is refined, bleached, cold filtrated, deodorized, and blended with other ingredients in Peru and then shipped to China, where it is filled into soft gelatin capsules. CBP is reversing its determination that the processing in China effected a substantial transformation, stating that this processing results in no change in the product’s name, use, or chemical or physical properties. CBP is therefore revoking ruling NY N287514 to hold that the country of origin of the fish oil is Peru.

Origin for Marking Purposes

In ruling NY N153956 CBP determined that the ultimate purchaser of a plastic pill case is the consumer who receives the case with the pills because the cases are of durable construction and suitable for repetitive use. As a result, CBP held that each pill case must be marked with the country of origin.

However, CBP now states that the pill cases are of a thin, flimsy nature; have no lasting value or decorative use; and are likely to be discarded after the pills have been consumed. As a result, CBP states that the ultimate purchaser of the pill cases is the pharmaceutical company and it is acceptable to mark the country of origin on the outermost container of the pill cases that will be packed and sold to that company. Ruling NY N153956 would be revoked to reflect this change.

Origin for Trade Remedy Purposes

CBP is proposing to revoke ruling NY N298549, which applied the NAFTA marking rules to determine the country of origin of steel tubing subject to Section 232 tariffs. This tubing is manufactured in the U.S. and then exported to Mexico, where it is painted, passed through an iron phosphate treatment to inhibit rust, and then chemically etched before being imported back into the U.S.

CBP initially used the NAFTA marking rules to determine that the U.S. is the country of origin for marking and duty purposes and the tubing is therefore not subject to Section 232 tariffs. However, CBP now states that the NAFTA marking rules are only applicable in limited circumstances and that the substantial transformation analysis must be used when determining origin for purposes of Section 201, 232, and 301 tariffs. Using this analysis, CBP again finds that the tubing is a product of the U.S. and is not subject to the Section 232 tariffs.

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