**HQ 561326**

**April 26, 1999**

**CLA-2** RR:CR:SM 561326 BLS

**CATEGORY:** Classification

**TARIFF NO.:** Subheading 3213.10.0000

Port Director

P.O. Box 1490

St. Albans, VT 05478

**RE:** Application for Further Review of Protest No. 0201-98-100034;
subheading 3213.10; Eligibility for NAFTA preference of childrens'
washable paint set;

Article 509

Dear Sir:

This is in reference to an Application for Further Review of the
above-captioned protest, timely filed on behalf of Maison Battat,
concerning the eligibility for NAFTA preference of a childrens' paint
set.

**FACTS:**

The merchandise is a childrens' paint set, consisting of 6 plastic
bottles of washable paint, 6 plastic paint pots, 6 plastic funnels and 6
plastic lids, all of Canadian origin, and 6 artists' brushes which are a
product of Hong Kong.

The broker entered the merchandise under subheading 3213.10.0000,
Harmonized Tariff Schedule of the United States (HTSUS), free of duty
under the North American Free Trade Agreement Act (NAFTA). Subheading
3213.10.0000 provides for \"Artists', students' or signboard painters'
colors, modifying tints, amusement colors and the like, in tablets,
tubes, jars, bottles, pans or in similar forms or packings: Colors in
sets.\" Although agreeing with this classification of the imported good,
your office determined that the merchandise was not entitled to NAFTA
preferential treatment.

**ISSUE:**

Whether the childrens' paint set is eligible for preferential tariff
treatment under the NAFTA.

\- 2 -

**LAW AND ANALYSIS:**

Article 401 of the NAFTA is incorporated into General Note 12 of the
HTSUS.

General Note 12(b) provides in pertinent part:

For the purposes of this note, goods imported into the customs territory
of the United States are eligible for the tariff treatment and
quantitative limitations set forth in the tariff schedule as \"goods
originating in the territory of a NAFTA party\" only if‑‑

\(ii\) they have been transformed in the territory of Canada, Mexico,
and/or

the United States so that‑‑

\(A\) except as provided in subdivision (f) of this note, each of the
non‑

originating materials used in the production of such goods undergoes

a change in tariff classification described in subdivision (r), (s) and
(t)

of this note or the rules set forth therein, or

\(B\) the goods otherwise satisfy the applicable requirements of
subdivision

(r), (s) and (t) where no change in tariff classification is required,
and

the goods satisfy all other requirements of this note\...

The only non-originating materials of the paint set are the paint
brushes, which are of Hong Kong origin. Thus, we must determine whether
these components of the imported good are transformed in Canada pursuant
to General Note 12(b)(ii)(A), HTSUS. In this regard, we find that the
paint brushes are classifiable as artists\' brushes in headings 9603,
HTSUS. We concur with your office that the paint set is classifiable
under subheading 3213.10.0000, HTSUS. The rule applicable to goods of
subheading 3213.10.0000, HTSUS, is provided for in General Note
12(t)/32.13, HTSUS, which provides the following:

13\. A change to heading 3213 from any other heading.

Accordingly, under this rule, the paint brushes will undergo the
requisite tariff shift. Therefore, pursuant to General Note 12(b),
HTSUS, the imported paint set will be considered an originating good.

In support of the position that the good does not qualify for NAFTA
preference, your office cites to Headquarters Ruling Letter (HRL) 086407
(March 22, 1990) and section 102.17 of the Customs Regulations (19 CFR
102.17).

\- 3 -

In HRL 086407, a case involving the United States-Canada Free-Trade
Agreement (FTA), certain components which were not a product of Canada
or the U.S. were packaged with Canadian and U.S. components creating
\"Arts, Crafts & Activities\" and \"String Art\" craft kits. \[The FTA
was suspended as of the effective date of NAFTA, January 1, 1994.\] The
kits were classified as other toys put up in sets under

subheading 9503.70.80, HTSUS. It was determined that the kits were not
considered "goods put up in sets for retail sale" under GRI 3(b), HTSUS.
(GRI 3(b) defines a \"set\" as goods that: (1) consist of at least two
different articles which are, prima facie, classifiable in different
headings; (2) consist of products or articles put up together to meet a
particular need or carry out a particular activity; and (3) are put up
in a manner suitable for sale directly to users without repacking (e.g.,
in boxes or cases or on boards).)

In HRL 086407, we held that simple packaging or combining in a set of a
component not a product of the U.S. or Canada that results in a required
classification change, will remove the set as a whole from the
definition of \"goods originating in the territory of Canada,\" for
purposes of determining whether the set is eligible for preferential
treatment under the FTA. That determination was based upon General Note
3(c)(vii)(C), HTSUS, (as it existed prior to 1994), which stated, in
pertinent part, that goods shall not be considered to, originate in the
territory of Canada for purposes of the FTA merely by virtue of having
undergone \"simple packaging or, except as expressly provided by the
rules of subdivision (c)(viii)(R) of this note, combining operations.\"

There is no similar language in General Note 12, HTSUS, relating to
NAFTA, which would disqualify a good from originating status by virtue
of merely having undergone simple packaging or combining operations.
Thus, for example, in HRL 560577 dated August 4, 1997, Customs held that
as surgical gloves of Malaysian origin underwent the requisite tariff
shift under General Note (t), HTSUS, when packaged in Mexico with NAFTA
originating items to create a surgical kit, the kit qualified for NAFTA
preferential treatment as an originating good when imported into the
U.S. [See]{.underline} also HRL 559421 dated September 16, 1996.
Moreover, we note that the fact that the paint set in this case is
classified pursuant to General Rule of Interpretation (GRI) 1, rather
than GRI 3(b), is irrelevant to the determination of whether the good
qualifies as an \"originating good\" under General Note 12, HTSUS.

With regard to 19 CFR 102.17, this section provides that a foreign
material shall not be considered to have undergone the applicable change
in tariff classification specified in 102.20 or 102.21 or to have met
any other applicable requirements of those sections merely by reason of
having undergone one or more of certain specified operations,

\- 4 -

which include \"simple packing, repacking or retail packaging without
more than minor processing.\" However, the non-qualifying operations
listed in section 102.17 are applicable only in determining the [country
of origin]{.underline} of an imported good under Part 102. Section
102.17 is not applicable in determining whether an imported good is
entitled to preferential treatment under NAFTA pursuant to General Note
12, HTSUS.

Accordingly, in the instant case, the fact that the paint brushes of
Hong Kong origin are merely packaged with the NAFTA originating items in
Canada to create the paint set will not preclude the imported set from
being considered a \"good originating in the territory of a NAFTA
party.\"

**HOLDING:**

Paint brushes of Hong Kong origin imported into Canada are transformed
in Canada pursuant to General Note 12(b)(ii)(A), HTSUS, when packaged
with a childrens' paint set. Therefore, the paint set is considered an
originating good and is eligible for preferential tariff treatment under
the NAFTA. The protest should be granted in accordance with the
foregoing.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550‑065,
dated August 4, 1993, Subject: Revised Protest Directive, this decision
should be mailed by your office, with the Customs Form 19, to the
protestant no later than 60 days from the date of this letter. Any
reliquidation of the entry in accordance with the decision must be
accomplished prior to mailing of the decision. Sixty days from the date
of the decision the Office of Regulations and Rulings will take steps to
make the decision available to Customs personnel via the Customs Rulings
Module in ACS and the public via the Diskette Subscription Service,
Freedom of Information Act, and other public access channels.

Sincerely,

John Durant, Director

Commercial Rulings Division