Case study of “CTC” & “VA” method combined pattern(Letter boxes)

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.