MAR-2-05 CO:R:C:V 734292 ER

Mark N. Bravin, Esq.
Roger C. Wilson, Esq.
Morgan, Lewis & Bockius
1800 M Street, NW
Washington, DC 20036

RE: Country of Origin Marking for Components and Sub- assemblies of Electric RAM Motors and Controls; Ultimate Purchaser; Substantial Transformation; 19 U.S.C. 1304; 19 CFR 134.1(d); 19 CFR 134.35; United States v. Friedlaender & Co, 17 C.C.P.A. 297, 302, C.A.D. 104 (1940); United States v. Gibson-Thomsen Co., 2 Cust. Ct. 172 (1939), aff'd 27 C.C.P.A. 267, C.A.D. 98 (1940); HQ 732201; HQ 709570.

Dear Messrs. Bravin and Wilson:

This is in response to your letters of August 13, 1991, December 16, 1991, and March 23, 1992, in which you request a binding ruling concerning the country of origin marking requirements for components and sub-assemblies of electric RAM motors and controls.


In your letters you state that RAM manufactures approximately 60 different types of electric motors, including 2, 4, 6, and 8 pole motors (the number of poles relates to motor speed), with various output ratings up to 600 horsepower. RAM plans to import from Brazil all of the parts of the motors (collectively referred to as "unwound motors") except for the bearings and the stator winding.

The stator is one of two major components of the electric motor. RAM manufactures the stator from copper wire, varnish, and insulating paper, all of which are of U.S. origin. The primary source of the bearings will be a U.S. manufacturer.

The manufacturing process of the stator involves winding unwound copper wire into coil and inserting paper insulating material. Coils are made to precise specifications. These specifications identify the correct wire size, insulation, number of turns, connection sequence and external connection scheme. The coils can be designed and treated to withstand severe operating conditions (e.g., water, acids, other chemicals and temperature extremes). An automatic winding machine is used to wind the stator. When the stator is wound, it is placed in a vacuum pressure impregnation (VPI) machine, where a varnish insulating material is made to adhere to the copper on the coil. The stator is then baked in a curing oven for six hours.

The manufacturing operations are completed by installing the winding in the stator within the frame (one of the imported components). Temporary wood bearings, attached for shipping purposes, are removed from the imported articles and are replaced with the domestically purchased bearings. The imported sub- assemblies and components, including the rotor and shaft, fan cover, fan outer, brackets, caps, metering plate, keys, conduit box, conduit box gasket and conduit box cover are assembled with the stator to create the electric motor. The motor is hand- painted and a name plate is engraved (using a computerized engraving machine) and affixed with bolts to indicate the specifications of the motor. Testing is performed to check for noise in the bearings and correct power output.

The degree of skill required to wind the stator and operate the sophisticated machinery varies from that of a high school graduate with three years of on-the-job training to operate the winding machine, to that of an electrical engineer for designing and testing the coils used for the winding. The typical "apprentice" program for a motor winder at RAM lasts seven years. The test panel used to load and test the motors is a computerized system that is fully programmable by persons with an undergraduate-level university degree in computer programming. RAM's apprentices are closely supervised by departmental shop leaders who typically have an average experience of eighteen years or more.

Extensive confidential data was provided regarding the various categories of costs, nature of processing and equipment.


Whether the manufacturing operations performed in the U.S. using imported and domestic components and sub-assemblies to create an electric motor, effectuate a substantial transformation within the meaning of section 134.35, Customs Regulations (19 CFR 134.35), and accordingly, whether the imported articles are excepted from individual country of origin marking.


Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that every article of foreign origin (or its container) imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit, in such a manner as to indicate to an ultimate purchaser in the U.S. the English name of the country of origin of the article. Part 134, Customs Regulations (19 CFR Part 134), implements the requirements and exceptions of 19 U.S.C. 1304.

Section 134.35, Customs Regulations (19 CFR 134.35), implements the principle of U.S. v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 C.A.D. 98 (1940) which is that an article used in the U.S. in manufacture which results in an article having a name, character, or use differing from that of the imported article will be considered substantially transformed, and therefore the manufacturer or processor in the U.S. who converts or combines the imported article into the different article will be considered the ultimate purchaser of the imported article within the meaning of 19 U.S.C. 1304(a). Accordingly, the article is excepted from marking. However, in accordance with 19 U.S.C. 1304(b) and section 134.22, Customs Regulations (19 CFR 134.22), the outermost container of the imported article must be marked to indicate the country of origin of the article.

It is your position that RAM's manufacturing operations in the U.S. effect a substantial transformation of the imported components and sub-assemblies which result in the creation of a new and different article of commerce, an electric motor. These assembly operations plus the manufacture and integration of a major component of U.S. origin, the stator, you maintain, give the final product its essential character and commercial identity as an electric motor, separate and apart from the imported articles. Accordingly you believe that RAM is the ultimate purchaser within the meaning of 19 U.S.C. 1304 and that pursuant to 19 CFR 134.35, only the outermost containers in which the imported articles are imported must be marked with the country of origin.

As support for your position, you cite to HQ 732201 (October 17, 1989) where the country of origin marking requirements for sub-assemblies of electric motors were considered. There the issue of country of origin arose with respect to imported motors whose raw materials and components were purchased in Hong Kong from various third country vendors. In Hong Kong, the raw materials were fabricated into components. The fabricated and purchased components were then shipped to the facility in the Peoples Republic of China ("PRC") where the components were constructed into sub-assemblies and finished motors. These sub- assembly and assembly operations were, on occasion, performed entirely in Hong Kong. Customs determined that the commercial identity of the motor was attained only after the components were assembled. Where the operations were performed in the PRC, Customs determined that the motors were finished products of the PRC, even though no components of the motor originated there. Where the operations were performed in Hong Kong, the country of origin would be designated as Hong Kong. Thus, the assembly operations were considered to effect a substantial transformation of the product in the country where those operations were performed.

In HQ 709570 (November 24, 1978), cited to in HQ 732201 (discussed above), Customs held that a domestic manufacturing process which included enclosing an imported electric motor in U.S. origin housing and adding the other essential components to form an abrasive belt machine, was a substantial transformation. There Customs was mindful that the U.S. origin housing was an essential component of the belt machine and that its addition to the electric motor, along with the other lesser components, substantially transformed all the separate components into a single new article of commerce. (Also see, HQ 734259 (April 13, 1992) where Customs found that a change in character of the imported articles, amounting to a substantial transformation, was in part effected by the domestic installation of a significant U.S. component.)

As in our previous rulings, Customs finds that the imported articles will lose their commercial identity through the manufacturing operations performed in the U.S. which include the sub-assembly and assembly of imported and domestic articles to create a new and different article of commerce. In reaching this decision, Customs takes particular note that a major component of U.S. origin, the stator, is used. Therefore, Customs is of the opinion that a substantial transformation occurs and that RAM is the ultimate purchaser of the imported articles within the meaning of 19 CFR 134.35. Accordingly, the imported components and sub-assemblies are excepted from individual country of origin marking so long as the outermost containers in which the articles are imported are properly marked with the country of origin and customs officials at the port of entry are satisfied that these articles will be used in the manner described above and will reach RAM in the original, unopened and properly marked containers.


Imported components and sub-assemblies manufactured into electric motors by RAM in the U.S. with a stator of U.S. origin are substantially transformed into new articles of commerce. Accordingly, subject to the conditions set forth above, these imported articles are excepted from individual country of origin marking pursuant to 19 CFR 134.35.


John Durant, Director