HQ 954055: Photocopier Accessories; Copiers; parts; Canadian Free- Trade Agreement (CFTA); "50 Percent Value-Content Test"; General Note 3(c)(vii)(G)(2); HQ 950005; HQ 951024

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            HQ 954055

                         August 25, 1993

CLA-2 CO:R:C:M 954055  RFA

CATEGORY: Classification

TARIFF NO.: 9009.90.00


Mr. John M. Peterson
Neville, Peterson & Williams
39 Broadway
New York, NY  10006

RE:  Photocopier Accessories; Copiers; parts; Canadian Free-
     Trade Agreement (CFTA); "50 Percent Value-Content
     Test"; General Note 3(c)(vii)(G)(2); HQ 950005; HQ
     951024


Dear Mr. Peterson:

     This is in response to your letter dated April 29, 1993, in
which you inquired, on behalf of Xerox Corporation, as to the
eligibility of certain photocopier accessories under the United
States-Canada Free Trade Agreement (CFTA).

FACTS:

     The merchandise consists of various input and output devices
for electrostatic photocopiers.  The input devices consist of
automatic document feeders and conveyors.  The output devices
consist of sorters, collators, staplers and finishers.  The input
and output devices are major accessories used with copiers, and
are designed to accept documents from a user, move them to a
position within the copier system where they can be photocopied,
and then return the originals to a position where they can be
retrieved by the user.  

     The input and output devices must be specially designed to
work with particular models of copiers/processors, and may have
processing speeds varying from 28 to 100 pages per minute, and
widely differing capabilities.  While these devices are sometimes
sold in configuration with electrostatic photocopiers, they are
also commonly offered for sale and sold as discrete articles of
commerce (i.e., for copier upgrades, repair, and replacements).  

     The input and output devices are assembled in Canada with
the use of "originating" (United States and Canadian-origin) and
non-originating  (third country) copier parts which are imported
into Canada.  All of the operations performed in Canada are in
the nature of assembly.  Various components are positioned to
specifications and assembled using fasteners, adhesives, force
fitting and other assembly methods.  All of the constituent parts
and components, when received at the Canadian facility are ready
for assembly without further fabrication.  According to the
information provided, we will assume that the majority of the
non-originating parts used in the manufacture of the input and
output devices are classifiable under subheading 9009.90.00,
HTSUS, as parts of photocopiers.

ISSUE:

     Whether the photocopier accessories, with third-country
parts, qualify for duty-free treatment under the CFTA if more
than 50 percent of the value of the product is added in Canada?

LAW AND ANALYSIS:

     The CFTA was approved and implemented by the Implementation
Act of 1988, Pub. L. 190-449, 101 Stat. 1851, September 28, 1988
(the Act).  Chapter 3 of the CFTA sets forth the rules of origin
for determining whether goods qualify for the tariff preferences
under the CFTA.  Section 202 of the Act refers to Chapter 3 of
the CFTA, and paragraph (d) of Section 202 refers specifically to
the Annex Rules (Annex 301.2 of the CFTA) and authorizes the
President to proclaim the rules.  The rules of origin, including
the specific rules of the Annex, were implemented by Presidential
Proclamation 5923, December 14, 1988, as General Note 3(c)(vii),
HTSUS.  

     To be eligible for tariff preferences under the CFTA, goods
must be "originating goods" within the rule of origin in General
Note 3(c)(vii)(B), HTSUS.  There are two primary means in General
Note 3(c)(vii)(B), HTSUS, by which articles imported into the
United States may be "goods originating in the territory of
Canada."  The first method is if the goods are "wholly obtained
or produced in the territory of Canada and/or the United States." 
General Note 3(c)(vii)(B)(1), HTSUS.  The second method is if the
goods are transformed in the territory of Canada and/or the
United States." General Note 3(c)(vii)(B)(2), HTSUS.

     The subject merchandise is not wholly obtained or produced
in Canada nor does it undergo a transformation as described in
General Note 3(c)(vii)(B), HTSUS.  However, you argue that the
value-content test is applicable because the work performed in
producing the photocopier accessories in Canada results in more
than 50 percent of the value of the merchandise.  General Note
3(c)(vii)(H) states the value-content test as follows:

     [N]otwithstanding subdivision (c)(vii)(G), goods
     described in that paragraph shall be considered to have
     been transformed in the territory of Canada and be
     treated as goods originating in the territory of Canada
     if--

     (1)  the value of materials originating in the territory of
          Canada and/or the United States that are used or
          consumed in the production of the goods plus the direct
          cost of assembling the goods in the territory of Canada
          and/or the United States constitute not less than 50
          percent of the value of the goods when exported to the
          territory of the United States, and 

     (2)  the goods have not subsequent to assembly undergone
          processing or further assembly in a third country and
          they meet the requirements of subdivision (c)(vii)(E)
          of this note.

     In order to qualify under the statutory provision of
subdivision (c)(vii)(H), the goods must fall within one of the
criterion in subdivision (c)(vii)(G) which provides as follows:

     [w]henever the assembly of goods in the territory of Canada
     fails to result in a change of tariff classification
     because--

     (1)  the goods were imported into the territory of Canada in
          an unassembled or a disassembled form and were
          classified as unassembled or disassembled goods
          pursuant to General Rule of Interpretation(GRI) 2(a),
          or

     (2)  the tariff provision for the goods provides for both
          the goods themselves and their parts,

     such goods shall not be treated as goods originating in the
     territory of Canada.

     The proper interpretation of the 50 percent value test is
that it applies only in the two specific contexts described in
subdivision (c)(vii)(G).  The issue here turns on whether the
photocopier accessories meet one of the two criteria set out in
subdivision (c)(vii)(G).  

     The first criterion is where the importation is of goods
which are unassembled or disassembled but nonetheless are
classified as if they were assembled pursuant to General Rules of
Interpretation 2(a).  According to the information provided, the
parts for the input and output devices are imported from a third
country and are assembled with other components from Canada to
make the photocopier accessories.  Because the parts for the
input and output devices are not imported with the other
components to turn them into usable photocopier accessories, they
are not classifiable as unassembled or disassembled goods
pursuant to GRI 2(a).  Therefore, they do not meet the first
criterion of subdivision (c)(vii)(G).

     The second criterion of subdivision (c)(vii)(G) is when the
imported goods meet the tariff provision which describes both the
goods and their parts from which they were assembled.  Heading
9009, HTSUS, provides for: "[p]hotocopying apparatus
incorporating an optical system or of the contact type and
thermocopying apparatus; parts and accessories thereof. . . ." 
Because heading 9009, HTSUS, provides for both photocopying
apparatus and the parts and accessories thereof, we find that the
subject merchandise meets the second criterion of subdivision
(c)(vii)(G).  

     No documentation was submitted to determine whether or not
the photocopier accessories meet the 50% value-content test.  If
documentation is provided which satisfies the value-content
requirement at the time of entry, then the subject merchandise
will be eligible for duty-free treatment under CFTA. See HQ
951024, dated March 5, 1992; HQ 950005, dated January 9, 1992.
     
HOLDING:

     The subject merchandise is eligible for duty-free treatment
under the CFTA, provided that documentation can be provided
regarding the 50% value-content rule.  The photocopier
accessories are classifiable under subheading 9009.90.00, HTSUS,
which provides for parts and accessories of photocopying
apparatus.  The column 1, general rate of duty is 3.9 percent ad
valorem.

                              Sincerely,



                              John Durant, Director
                              Commercial Rulings Division