CLA-2 OT:RR:CTF:VS H303864 EGJ

Thomas M. Keating
Rock Trade Law LLC
134 N. LaSalle St., Suite 1800

RE: Country of origin of an Automobile Windshield Washer Pump; Section 301 trade remedy; 9903.88.01, HTSUS

Dear Mr. Keating:

This is in response to your request, dated April 4, 2019, filed on behalf of your client the importer, regarding the country of origin of an automobile windshield washer pump. In your letter, you request a binding ruling on the applicability of Section 301 trade remedies to proposed transactions involving a windshield washer pump.

FACTS:

The subject merchandise is a centrifugal pump assembly, part number 1999-1WP0055EN. The pump assembly is designed for use in automotive windshield washer systems. The pump's function is to deliver washing fluid to the windshield sprayer. The pump consists of the pump housing, a seal, a terminal connector housing, an impeller and an electric motor. The electric motor is manufactured in China and then shipped to Mexico to be assembled together with the remaining parts, all of which are manufactured in Mexico. The cost of the motor constitutes approximately half of the total value of the finished merchandise, while the remaining parts constitute the other half of the total value.

The assembly process takes place at a factory in Mexico. Using a pneumatic press, workers press fit the Chinese origin electric motor into the terminal connector housing. Workers prep the rubber seal with a lubricating oil and install it onto the motor by aligning the central hole of the seal over the motor shaft. Workers apply oil to the seal a second time. Next, workers press the impeller from Mexico onto the motor shaft to make a close coupled connection. Workers place the pump housing into a fixture with the motor/connector housing and press fit these components together. The complete pump is then performance and leakage tested. The pump is then cleaned, labeled and visually inspected.

ISSUE:

What is the country of origin of the finished pump assembly for the purposes of applying Section 301 trade remedies?

LAW AND ANALYSIS:

There is no dispute that the instant pump assembly is classified under subheading 8413.70.20 of the Harmonized Tariff Schedule of the United States ("HTSUS"), which provides for "Pumps for liquids, whether or not fitted with a measuring device...: Other centrifugal pumps: Other: Other." The United States Trade Representative ("USTR") has determined that an additional ad valorem duty of 25% will be imposed on certain Chinese imports pursuant to its authority under Section 301(b) of the Trade Act of 1974 ("Section 301 measures"). The Section 301 measures apply to products of China enumerated in Section XXII, Chapter 99, Subchapter III, U.S. Note 20(b), HTSUS. Among the subheadings listed in U.S. Note 20(b) of Subchapter III, Chapter 99, HTSUS, is 8413.70.20, HTSUS.

In accordance with 19 C.F.R. 102.0, the 102 marking rules are applicable for the limited purposes of: "country of origin marking; determining the rate of duty and staging category applicable to originating textile and apparel products as set out in Section 2 (Tariff Elimination) of Annex 300-B (Textile and Apparel Goods); and determining the rate of duty and staging category applicable to an originating good as set out in Annex 302.2 (Tariff Elimination)". Therefore, when determining the country of origin for purposes of applying current trade remedies under Section 301[1], the substantial transformation analysis is applicable. See Headquarters Ruling Letter ("HQ") 563205, dated June 28, 2006. See also HQ H301619, dated November 6, 2018.

The question presented is whether the electric motor is substantially transformed when it is combined with the other parts to form a finished pump assembly in Mexico. In Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308 (2016), the Court of International Trade ("CIT") interpreted the meaning of "substantial transformation." Energizer involved the determination of the country of origin of a flashlight, referred to as the Generation II flashlight. All of the components of the Generation II flashlight were of Chinese origin, except for a white LED and a hydrogen getter. The components were imported into the United States where they were assembled into the finished Generation II flashlight.

The court reviewed the "name, character and use" test utilized in determining whether a substantial transformation has occurred and noted, citing Uniroyal, Inc. v. United States, 3 C.I.T. at 226, 542 F. Supp. at 1031, aff'd, 702 F.2d 1022 (Fed. Cir. 1983), that when "the post-importation processing consists of assembly, courts have been reluctant to find a change in character, particularly when the imported articles do not undergo a physical change." Energizer at 1318. In addition, the court noted that "when the end-use was pre-determined at the time of importation, courts have generally not found a change in use." Energizer at 1319, citing as an example, National Hand Tool Corp. v. United States, 16 C.I.T. 308, 310, aff'd, 989 F.2d 1201 (Fed. Cir. 1993).

In reaching its decision in Energizer, the court expressed the question as one of whether the imported components retained their names after they were assembled into the finished Generation II flashlights. The court found "[t]he constitutive components of the Generation II flashlight do not lose their individual names as a result [of] the post-importation assembly." Also, the court did not find the assembly process to be sufficiently complex as to constitute a substantial transformation. Thus, the court found that Energizer's imported components did not undergo a change in name, character, or use as a result of the post-importation assembly of the components into a finished Generation II flashlight. The court determined that China, the source of all but two components, was the correct country of origin of the finished Generation II flashlights.

In the instant case, the electric motor from China is shipped to Mexico for assembly with the impeller, the seal, and the plastic housing to form the finished pump assembly. The assembly is rather simple - it involves press fitting the parts into each other. Moreover, the electric motor is the most expensive and substantive part of the finished pump assembly. We find that it imparts the "very essence" of the pump assembly, as it turns the impeller and moves the fluid through the pump. See Uniroyal, Inc. v. United States, 3 CIT 220, 225, 542 F. Supp. 1026, 1030 (1982) (Uniroyal) (holding that imported shoe uppers added to an outer sole in the United States were the "very essence of the finished shoe" and thus were not substantially transformed into a product of the United States). For these reasons, we do not find that the electric motor is substantially transformed when it is assembled into the finished pump assembly in Mexico.

As the assembly of the Chinese motor into a pump assembly in Mexico does not result in a substantial transformation of the Chinese motor, the pump assembly remains a product of China. Products of China classified under subheading 8413.70.20, HTSUS, unless specifically excluded, are subject to the additional 25 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.01, in addition to subheading 8413.70.20, HTSUS, listed above.

HOLDING:

The country of origin of the pump assembly for the purposes of the application of subheading 9903.88.01, HTSUS, is China. As the merchandise will be a product of China, Section 301 measures will apply.

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy of this ruling, it should be brought to the attention of the CBP officer handling the transaction.

Sincerely,

Monika R. Brenner, Chief
Valuation and Special Programs Branch


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[1] See Notice of Action and Request for Public Comment Concerning Proposed Determination of Action Pursuant to Section 301: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 28710 (Jun. 20, 2018).