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.
LAW AND ANALYSIS:
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
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
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
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
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