Newly Released CBP HQ Rulings May 28-29

May 31, 2024 by Noah Garfinkel|Customs Rulings

The Customs Rulings Online Search System (CROSS) was updated May 28-29 with the following headquarters rulings (ruling revocations and modifications will be detailed elsewhere in a separate article as they are announced in the Customs Bulletin):

H332638: USMCA eligibility; Country of origin of aluminum billets for Section 232 and Section 301 duties; Marking; de Minimis

Ruling: (1) The aluminum billets produced under scenario 1 are eligible for preferential tariff treatment under the USMCA. The aluminum billets produced under scenarios 2 and 3 are not eligible for preferential tariff treatment under the USMCA. (2) The country of origin of the aluminum billets for purposes of Section 232 and Section 301 trade remedies under all three proposed production scenarios will be Mexico. (3) The country of origin marking for aluminum billets produced under scenario 1, where the non-alloyed aluminum materials are of Canadian origin, will be Canada. The country of origin marking for aluminum billets produced under scenario 1 will be determined on the basis of an inventory management method in accordance with 19 C.F.R. § 102.11(b)(2). The country of origin marking for aluminum billets produced under scenario 2 will be South Korea, Australia, and China. The country of origin marking for aluminum billets produced under scenario 3 will be either South Korea and Canada or Australia and Canada (depending on the final sourcing of the 60% portion by weight of non-alloyed aluminum materials from South Korea or Australia).

Issue: (1) Are the aluminum billets produced under three different manufacturing scenarios eligible for preferential tariff treatment under the USMCA? (2) What is the country of origin of the aluminum billets for purposes of Section 232 and Section 301 trade measures? (3) What is the country of origin of the aluminum billets produced under three different manufacturing scenarios for marking purposes?

Item: Alloyed aluminum billets made with 0.5% by weight of silicon, which will be sold to manufacturers of commercial buildings and construction, trucks, trailers, and military motor vehicles. The aluminum billets will be produced in Mexico under three different manufacturing scenarios at their factory in Mexico. Under scenario 1, non-alloyed aluminum materials in ingot form that are either domestic products of Mexico, foreign products of Canada, or commingled products of Mexico and Canada will be melted and mixed with other materials, consisting of silicon and copper from Korea, and iron, magnesium, manganese, titanium, and chromium from China, to create a newly alloyed aluminum billet. Under scenario 2, non-alloyed aluminum materials in ingot form with the relative portions (by weight) likely to be 60% from China, 20% from South Korea, and 20% from Australia will be melted and mixed with other materials, consisting of silicon and copper from Korea, and iron, magnesium, manganese, titanium, and chromium from China, to create a newly alloyed aluminum billet. Under scenario 3, non-alloyed aluminum materials in ingot form with the relative portions (by weight) likely to be 60% from South Korea or Australia, 10% from Canada, and the remaining 30% from alloyed aluminum scrap generated as a result of production in Mexico will be melted and mixed with other materials, consisting of silicon and copper from Korea, and iron, magnesium, manganese, titanium, and chromium from China, to create a newly alloyed aluminum billet.

Reason: (1) The alloying materials that undergo the requisite tariff shift meet the definition of product costs that are associated with the production of the aluminum billets. Calculating such product costs associated with production of the aluminum billets for purposes of applying the 10% de minimis threshold under the total cost method set forth in GN 11(e)(i)(A)(2) includes the value of the alloying materials, even if they meet the requisite tariff shift rule. (2) The processing performed in Mexico to manufacture newly alloyed aluminum billets from non-alloyed aluminum ingots and alloying materials, including silicon, copper, iron, magnesium, manganese, titanium, and chromium, result in a substantial transformation. (3) (Scenario 1) Where the non-alloyed aluminum materials are products of Canada, the only materials used in producing the aluminum billets from which a change in tariff classification is not allowed under the requisite tariff shift rule are the Canadian origin non-alloyed aluminum materials. (Scenario 2) The non-alloyed aluminum materials from China, South Korea, and Australia are fungible materials used in the production of the aluminum billets and will be commingled prior to manufacturing such that direct identification of the input aluminum will not be practical. (Scenario 3) Sections 102.11(a)(1) and 102.11(a)(2) do not apply because the aluminum billets will neither be wholly obtained or produced nor produced exclusively from “domestic” (Mexican, in this case) materials.

Ruling Date: May 13, 2024

H335140: Instruments of International Traffic; 19 U.S.C. § 1332(a); §§ 10.41a(a)(1), 10a(a)(3); Tive Inc.

Ruling: The devices qualify for entry-free and duty-free treatment pursuant to 19 C.F.R. § 10.41a(a)(3).

Issue: Do the subject devices qualify for consideration as an Instrument of International Traffic within the meaning of 19 U.S.C. § 1322(a) and 19 C.F.R. § 10.41a(a)(1)?

Item: Tive is a supplier of tracking devices which allow for visibility, location, condition, and monitoring of intermodal containers in transport worldwide. Once the subject devices are installed on a shipping container, the subject devices collect, analyze and report in real-time regarding the location and condition of the container from the point of origin to ultimate destination.

Reason: The subject devices are substantial, suitable for and capable of repeated use with IITs. The subject devices qualify for designation as accessories to IITs.

Ruling Date: May 17, 2024

H329725: Internal Advice Request; Classification of a BYD Coach and Bus Class 8 Battery-Electric Terminal Tractor

Ruling: By application of General Rules of Interpretation 1 and 6, the subject terminal tractor is classified under heading 8701, specifically under subheading 8701.95.50, HTSUS which provides for: “Tractors (other than tractors of heading 8709): Other, of an engine power: Exceeding 130 kW: Other.” The column one, general rate of duty is free.

Issue: Whether the subject terminal tractor is properly classified in heading 8701, which provides for, “Tractors (other than tractors of heading 8709),” or in heading 8709, which provides for, “Works trucks, self-propelled, not fitted with lifting or handling equipment, of the type used in factories, warehouses, dock areas or airports for short distance transport of goods; tractors of the type used on railway station platforms; parts of the foregoing vehicles.”

Item: A Class 8 battery-electric terminal tractor from China, with model number Q1M. The terminal tractor is “the world’s first commercially available all-electric class 8 yard tractor that can easily work a 24/7 shift schedule with opportunity charging.” The requestor states that the terminal tractor “is principally designed and adapted to be used within the confines of warehouses, dock areas, and other locations listed in HTSUS heading 8709,” and that generally “these types of tractors ‘are mostly used at sea ports for material handling, such as loading and unloading of materials.’”

Reason: The subject terminal tractor is disqualified from heading 8709 because it is fitted with an elevating fifth wheel.

Ruling Date: March 29, 2024

H314368: Protest and Application for Further Review No 4501-20-101593; Classification of Proximity Sensors

Ruling: Pursuant to General Rule of Interpretation 1, the subject merchandise is classified in heading 8543, and specifically in subheading 8543.70.45, which provides for Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof: Other machines and apparatus: Other.” The 2019 column one, general rate of duty for merchandise of this subheading is 2.6 % ad valorem. Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, products of China classified under subheadings 8543.70.45, HTSUS, unless specifically excluded, are subject to an additional 25 percent ad valorem rate of duty. As such, the subject merchandise is classified under subheading 9903.88.02, in addition to subheading 8543.70.45 listed above.

Issue: Whether the subject merchandise is classified in heading 8536, HTSUS, as an electronic switch or in heading 8543, HTSUS as an electrical machine and apparatus, having individual functions, not specified or included elsewhere.

Item: Inductive proximity sensors/switches (IPS) that employ a non-contact inductive sensor that use a magnetic field to sense distance to metallic objects. The IPS is said to be used in outrigger applications by creating a magnetic field, sensing a response from a nearby metallic object, and sending a signal. The subject IPS detects and does not open or close electrical contacts for the purpose of switching or protecting electrical circuits. The IPS is a solid-state device that generates an output signal when metal objects are either inside or entering into its sensing area. The unit creates an electromagnetic field that, when changed by the presence of a metal object, sends an electrical impulse that connects or disconnects an electrical terminal.

Reason: The subject merchandise doesn't satisfy the text of heading 8536 because it doesn't make electrical connections or provide electrical protection. Moreover, CBP has classified sensors that function similar to the IPS in heading 8543. The IPS is also not covered by any other heading in Chapter 85 or elsewhere in the Nomenclature, and therefore is properly classified in heading 8543, and specifically in subheading 8543.70.45.

Ruling Date: March 29, 2024