CLA-2 OT:RR:CTF:VS H303866 EGJ
Thomas M. Keating
Rock Trade Law LLC
134 N. LaSalle St., Suite 1800
Chicago, IL 60602
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 November 7, 2018, 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 the windshield washer pump.
The subject merchandise is a centrifugal pump assembly, part number 1999-1WP0055EP. It is designed for use in automotive windshield washer systems. The finished pump is processed and assembled in Mexico. Approximately half of the pump's components are of Mexican origin, approximately one third are of Chinese origin, and the remaining components are from other countries including Japan and the United States. In Mexico, the pump assembly components are press fitted to the motor subassembly to form the finished pump. The production process for each of the relevant assemblies and subassemblies is set forth below.
The Motor Housing (Stator) Production
To begin production of the motor housing, workers feed steel strip from Japan into a high speed press. Then, a progressive die blanks, pierces, and deep draws the steel into the final circular shape of the motor housing. Next, workers use a pneumatic press to insert a bushing from China into the motor housing. Then, unmagnetized ferrite bars and a spring from China are placed into the housing. A pneumatic press fits the bars to a controlled height and physically deforms the spring against notches in the housing, which then locks the ferrite bars into the housing. Workers then clean the motor housing using suction. Finally, workers place the motor housing subassembly into a machine which produces a magnetic field around the subassembly and magnetizes the ferrite bars. Now the ferrite bars are permanent magnets, which make the motor housing functional.
The Armature (Rotor) Production
To begin, workers feed steel strip from Japan into a high speed press. Then a progressive die blanks and pierces the steel to create a lamination for the rotor's core. Next, workers insert a steel shaft from China into a machine which deforms the shaft's surface to a set pitch. This prepares the shaft to receive a commutator and prevents slippage.
Next, workers place lamination sheets into an automated stacking machine to a set height. A pneumatic press fits the steel shaft through the center of the lamination stack. The steel shaft is pneumatically press fitted through the center of the stack. This subassembly is electrostatically charged and then sprayed with an epoxy powder. After, a machine will heat the subassembly until the epoxy cures on the subassembly, forming permanent electrical insulation around the stack.
Then, a dispensing machine doses the shaft with an epoxy glue. The commutator from China is pneumatically pressed onto the shaft and is secured into position by the epoxy glue. The subassembly is heated again to cure the epoxy glue. Next, workers place the subassembly into a winding machine where insulated copper winding wire from Mexico is spun around the lamination stack into a specific pattern. Then, the wire is hooked to the commutator. Workers then place the subassembly into an electric spot welding machine to permanently fuse the wire to the commutator.
After the wire is fused, workers test the rotor subassembly for electrical resistance. Then, a copper spacer ring is pneumatically press fit onto the rotor shaft at a set height. Workers then place the rotor subassembly into a balancing machine, where a milling cutter removes material from the lamination stack to adjust for balance. Then, workers place the rotor subassembly into a machine which turns and machines the surface of the commutator to improve concentricity, roundness, and surface finish.
After, the rotor subassembly goes through a cleaning and visual inspection. Then, a plastic slinger and washer from China are pneumatically press fitted onto the shaft above the commutator. The slinger prevents oil from the housing bushing from contacting the commutator. Afterwards, the rotor subassembly undergoes a final electrical test.
Motor End Cap Production
To begin production, workers load thermoplastic resin from the United States into a 50 ton injection molding machine. The machine forms the resin into the plastic cap. Next, a bushing and a metal retainer ring are press fitted into the plastic cap. The retainer ring is deformed in the process and locks the bushing into place.
Separately, a carbon brush from China is pneumatically press fitted through an opening in a leaf spring from China. The press fit deforms the leaf spring and locks the brush into place. The metal subassembly is placed into a machine together with a metal terminal from China. The machine subjects the components to a high force and deforms the dimples on the terminal, which rivets the terminal to the leaf spring. This metal subassembly is then pneumatically press fit into the plastic end cap.
Next, a varistor is fitted into the end cap. The varistor is tin soldered to the terminal assemblies inside of the end cap. Finally, workers vacuum clean the end cap to remove all particulate matter. Then, they perform a final visual inspection.
The three aforementioned motor subassemblies are combined together to form the motor assembly. First, workers place the rotor subassembly and the end cap into a fixture where the shaft is aligned and inserted into the end cap. Next, workers place the motor housing into the machine, which crimps the housing to the end cap to form the motor assembly. The motor assembly undergoes several tests such as load testing, a visual inspection, and a final operational test.
To form the finished pump, the motor assembly is combined together with pump components. To make the components, workers load thermoplastic resin from China into a 50 ton injection molding machine. The machine forms the resin into a plastic pump housing. A connector is formed by having two brass terminals from China being molded over with plastics using the injection molding machine. Next, the injection molding machine forms an impeller using plastic resin from Japan.
Using a pneumatic press, workers press fit the motor into the pump connector. A rubber seal from China is installed onto the motor by aligning the central hold of the seal over the motor shaft. The impeller is pressed onto the motor shaft to form a close coupled connection. Workers place the pump housing into a fixture with the motor and press fit them together. Then, workers test the complete pump for performance and leakage. They clean, label, and visually inspect the pump.
What is the country of origin of the finished pump 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.
When determining the country of origin for purposes of applying current trade remedies under Section 301, the substantial transformation analysis is applicable. The test for determining whether a substantial transformation will occur is whether an article emerges from a process with a new name, character or use, different from that possessed by the article prior to processing. See Texas Instruments Inc. v. United States, 69 C.C.P.A. 151 (1982). In order to determine whether a substantial transformation has occurred, CBP considers the totality of the circumstances and makes such determinations on a case-by-case basis. CBP has stated that a new and different article of commerce is an article that has undergone a change in commercial designation or identity, fundamental character, or commercial use. A determinative issue is the extent of the operations performed and whether the materials lose their identity and become an integral part of the new article. This determination is based on the totality of the evidence. See National Hand Tool Corp. v. United States, 16 C.I.T. 308 (1992), aff'd, 989 F.2d 1201 (Fed. Cir. 1993).
The question presented is whether the discrete parts from different countries are substantially transformed when they are assembled into a finished windshield washer pump in Mexico. In determining whether the combining of parts or materials constitutes a substantial transformation, the determinative issue is the extent of operations performed and whether the parts lose their identity and become an integral part of the new article. Belcrest Linens v. United States, 573 F. Supp. 1149 (Ct. Int'l Trade 1983), aff'd, 741 F.2d 1368 (Fed. Cir. 1984). Assembly operations that are minimal or simple, as opposed to complex or meaningful, will generally not result in a substantial transformation. Factors which may be relevant in this evaluation may include the nature of the operation (including the number of components assembled), the number of different operations involved, and whether a significant period of time, skill, detail, and quality control are necessary for the assembly operation. See C.S.D. 80-111, C.S.D. 85-25, C.S.D. 89-110, C.S.D. 89-118, C.S.D. 90-51, and C.S.D. 90-97. If the manufacturing or combining process is a minor one which leaves the identity of the article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026 (1982), aff'd 702 F. 2d 1022 (Fed. Cir. 1983).
In HQ H282391, dated March 16, 2017, CBP determined that the country of origin of a gear motor was the United States because the assembly process in the United States amounted to a substantial transformation. The gear motor was comprised of two subassemblies, a gear box and a motor. The assembly of the gear motor consisted of assembling together 131 unique parts, and at least a total of 200 parts. These parts were imported from various origins and were used to first assemble the gear box and motor subassemblies, and then to assemble the complete gear motor through a complex operation with specialized skill and expertise. CBP noted that the complex operations involved at least 27 steps and took approximately two hours. CBP also considered the worker experience and training, stating that the workers were hired with previous experience and underwent additional training in order to reach proficiency in the assembly process. CBP thereby concluded that the foreign components lost their individual identities and became an integral part of a new article, the gear motor, and possessed a new name, character and use, amounting to a substantial transformation as a result of the assembly operations.
In addition, CBP has held that whether an assembly process is sufficiently complex to rise to the level of substantial transformation is determined upon consideration of all of the operations that occur within that country, including any subassembly processes that take place in that country. For example, in HQ H303529, dated June 6, 2019, the subject merchandise was an incomplete postage meter, which functioned as a specialized printer in a mail handling system. While one of the major subassemblies was made in Malaysia, the remaining subassemblies were made in China, and the final assembly process of connecting the subassemblies also occurred in China. CBP found that the assembly process that occurred in China was sufficiently extensive and complex as to substantially transform the components into a product of China. In doing so, CBP noted that the question of the complexity of the assembly process which occurred in China was not limited to an examination of the assembly of the various subassemblies to one another, but included an examination of all the assembly processes involved in China in the production of the incomplete postage meter. See Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308, 1318 (2016) ("case law...indicates that a determination of substantial transformation must be based on a totality of factors") (citing National Hand Tool Corp. v. United States, 16 C.I.T. 308, 312 (1992), aff'd, 989 F.2d 1201 (Fed. Cir. 1993) and Ran-Paige Co., Inc. v. United States, 35 Fed. Cl. 117, 121 (1996)).
In the instant case, approximately half of the discrete parts from other countries are shipped to Mexico to be combined with components from Mexico into subassemblies. These subassemblies and the plastic pump components are then combined to form the finished centrifugal windshield washer pump. The assembly is complex and involves soldering, fusing, machining, plastic injection molding, and crimping. Therefore, we find that the discrete parts are substantially transformed when they are combined to form a finished centrifugal pump in Mexico.
As the assembly of the parts from different countries into a centrifugal windshield washer pump results in a substantial transformation, the pump is a product of Mexico. Therefore, Section 301 measures will not apply.
The country of origin of the three models of centrifugal pump assemblies for the purposes of the application of subheading 9903.88.01, HTSUS, is Mexico. As the merchandise will be a product of Mexico, Section 301 measures will not 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.
Monika R. Brenner, Chief
Valuation and Special Programs Branch