Archives for December 2019

Here is a case study of “CTC” & “VA” method combined pattern.

Company A manufactures Industrial fans (HS Heading 84.14)

Industrial fans of heading 84.14 are manufactured from the
following non-originating materials:

Final product	non-originating materials	HS code	Value
Industrial fans HS:84.14 EXW € 200.	Fan hub	84.14	€ 14.-
	Motor	85.01	€ 40.-
	Bolts	73.18	€ 20.-

Example PSR for goods of heading 84.14 (Industrial fans ) is:

*This rule (PSR) varies depending on the agreement

There are two alternative rules:
Either of them need to be fulfilled in order to be considered as originating goods.

 

The first condition (Column 4)

“Manufacture in which the value of all the materials used does not
exceed 25 % of the ex-works price of the product”.

This condition is not satisfied since the total value of the non-originating
material used is 74 € which means 37 % of the ex-works price of one fan (200 €).

The second condition (Column 3)

“Manufacture:
• from materials of any heading, except that of the product, and
• in which the value of all the materials used does not exceed 40 % of the ex-works
price of the product”.

This rule contains 2 conditions which must be satisfied.

(i) The change of tariff requirement of the first part of the rule is not satisfied for
the fan hub(84.14).
The general tolerance rule allowing the use of non-originating material, provided
that their value does not exceed 10 % of the ex-works price (fun hub 14 € versus
value of the final (200 €) can help to fulfill the requirement.
The limitation in the general tolerance rule saying that any of the percentages
given in the list for the maximum value of non-originating materials must not be
exceeded through the application of the general tolerance rule is also fulfilled.

(ii) The second condition in column 3 is that the total value of the non-originating
materials used must not exceed 40 % of the ex-works price of the product. This
condition is also fulfilled as the total value of the non-originating materials used is
only 37 % of the ex-works price of the fan.

The fans are considered as originating products.

Here is a case study of “CTC” & “VA” method combined pattern.

Company A manufactures Letter boxes of copper plate (HS Heading 74.19)

Letter boxes of heading 74.19 are manufactured from the
following non-originating materials:

Final product	non-originating materials	HS code	Value
Letterboxes HS:74.19 EXW € 6.-	Copperplate	74.09	€ 1.80.-
	Rivets	74.15	€ 0.12.-
	Soldering material	83.11	€ 0.12.-
	Insert of plastics	39.26	€ 0.60.-
	Box of paperboard	48.19	€ 0.15.-

The origin rule for letter boxes of heading 74.19 is covered by “ex Chapter
74 – copper and articles thereof; except for: …”. Since heading 74.19 does
not appear in the list of exceptions, it is the specific rule for Chapter 74
which must be fulfilled:

Example PSR for goods of heading 74.19(Letterboxes ) is:

“Manufacture:
• from materials of any heading, except that of the product, and
• in which the value of all the materials used does not exceed 50 % of
the ex-works price of the product”.

*This rule (PSR) varies depending on the agreement

The rule contains two conditions. Both of them must be fulfilled. If not, the
product does not acquire originating status.

The first condition (CTC)

As the letterboxes are classified in heading 74.19 and none of the
materials used are classified in that heading, the first condition is satisfied.

The second condition (VA)

Since the total value of the non-originating material used (€ 2.79) is less
than 50 % of the ex-works price (€ 6.-), the second condition is also satisfied
and the boxes can be regarded as originating products.

 

Here is a case study of Value Added (VA) method.

Company A manufactures Nitrobenzoyl chloride (HS Heading 2916)

Nitrobenzoyl chloride of Heading 2916 are manufactured from the
following non-originating materials:

Final product	non-originating materials	HS code	Value
Nitrobenzoyl chloride HS:2916 EXW € 100.-	Benzoic acid	29.16	€ 17.-
	Hydrochloric acid	28.06	€ 23.-
	Nitric acid	28.08	€ 2.-

The final product of heading 29.16 is covered by the list rule of “ex Chapter 29
– organic chemicals, except for:…”

the following Example PSR rules in columns 3 and 4 will be applied for goods
of heading 29.16(Nitrobenzoyl chloride)

*This rule (PSR) varies depending on the agreement

The rules in column 4

The rules in column 4 stipulate that the working or processing that needs to be
carried out on non-originating material is the following: “Manufacture in which
the value of all the materials used does not exceed 40 % of the ex-works price of
the product”.
The condition in this rule is not fulfilled as the total value of the non-originating
The materials used are 42 %.

The rules in column 3

The rule in column 3 consists of 2 requirements:
(i) “Manufacture from materials of any heading, except that of the product”.
The hydrochloric acid and the nitric acid are classified in headings 28.06 and 28.08
(other than the nitrobenzoyl chloride of heading 29.16) and therefore fulfill the
change of heading requirement. The benzoic acid, on the contrary, is classified as nitrobenzoyl chloride of heading 29.16 and does not comply with the tariff shift rule.

(ii) The second requirement, however, stipulates that : “However, materials of the
same heading as the product may be used, provided that their total value does not
exceed 20 % of the ex-works price of the product”.
As the value of the benzoic acid (17€) is only 17 % of the ex-works price of the
nitrobenzoyl chloride (100 €) the requirement of column 3 is fulfilled.
As it is sufficient that the requirement of either column 3 or column 4 is fulfilled,
the nitrobenzoyl chloride can be regarded as an originating product.

 

Here is a case study of Change in classification(CTC) and DMI method.

Company A manufactures Door locks (HS Heading 8301)

Retrieved from:CCI du Luxembourg belge

 

Door locks of Heading 8301 are manufactured from the following non-originating materials:

Final product	non-originating materials	HS code	Value
Door locks HS:8301 EXW € 20.-	Steel plate	72.19	€ 0.20
	Rivets	73.18	€ 0.10
	Screws	73.18	€ 0.11
	Nuts	73.18	€ 0.13
	Steel bar	72.15	€ 0.30
	Varnish	32.08	€ 0.02
	Lock   mechanism	83.01	€ 1.50

The specific origin rule for door locks of heading 83.01 is found in
“ex Chapter 83 – miscellaneous articles of base metal; except for : ….”

Example PSR for goods of heading 8301(Door locks) is:

“Manufacture from materials of any heading, except that of the product”.
*This rule (PSR) varies depending on the agreement

Using steel plates, rivets, screws, nuts and varnish which are classified within
headings other than heading 83.01, the tariff shift rule would be fulfilled.

Another way of saying: “Change of Tariff Heading” (CTH)
A product is considered to be sufficiently worked or processed when it is classified in a
4-digit level of the Harmonized System, i.e. heading, which is different from those in
which all the non-originating materials used in its manufacture are classified.

However, lock mechanisms of heading 83.01 are also used in the manufacture
of the locks, so for that material the change of tariff heading is not fulfilled.

 

Retrieved from:CCI du Luxembourg belge

According to the “De Minimis/tolerance(DMI) rule” the use of non-originating
materials may however be allowed when the value of these does not exceed
10 % of the ex-works
*This rule (DMI) varies depending on the agreement

price of the product. The value of the lock mechanisms (€ 1.50) is only 7,5 % of
the exworks price of the lock (€ 20.-).
Thus, the use of the lock mechanisms does not prevent the final product from
acquiring originating status.

Consequently, the locks can be regarded as originating products.