OT:RR:CTF:VS H308831 JW
Ms. Laura S. Rabinowitz
Greenberg Traurig, LLP
200 Park Avenue
New York, NY 10166
RE: Country of Origin of Certain Battery Packs
Dear Ms. Rabinowitz:
This is in response to your letter dated September 13, 2019, on behalf of your clients Positec USA, Inc. (“Positec”) and RW Direct, Inc. (“RW”), in which you requested a ruling from U.S. Customs and Border Protection (“CBP”), pursuant to 19 C.F.R. part 177, regarding the country of origin of certain battery packs. In addition, in response to a letter from CBP for additional information, on November 12, 2019, you submitted a revised ruling request.
FACTS:
The articles in question are Worx 20V battery packs; specifically with the following model numbers:
Worx 20V 1.5Ah battery – WA3520;
Worx 20V 2.0Ah battery – WA3525;
Worx 20V 2.0Ah battery – WA3575;
Worx 20V 2.5Ah battery – WA3577;
Worx 20V 4.0Ah battery – WA3578;
Worx 20V 5.0Ah battery – WA3579; and
Worx 20V 6.0Ah battery – WA3671.
Worx 20V battery packs are designed to provide power to Worx 20V Powershare power tools (e.g., cordless drills and cordless saws) with DC power, and other outdoor power equipment (e.g., cordless leaf blowers and cordless grass trimmers). These packs can be recharged using Worx branded chargers.
With the exception of the battery cells of the Model, Worx 20V 6.0Ah battery (WA3671), which are from Singapore; the battery cells of the rest of the Worx 20V batteries are from Malaysia. The remaining components that make up the Worx 20V battery packs are all from China. Among these components is a circuit board that “provides battery pack information to the tool and charger including: maximum discharge current, maximum charging current, operating temperature range and protection, under-voltage reporting and protection, overvoltage reporting and protection, displays the remaining capacity of the battery pack when indicator button is pressed.” Revised Ruling Request at 3.
Final assembly of the Worx 20V battery packs also occurs in China. The assembly process is generally described as follows:
The battery cells are connected by metal connecting pieces such as alloy copper tape or nickel tape. The metal connecting pieces are attached to the outer ends of the battery cells using a mash welding process.
The circuit board is plate welded to the joined battery cells.
Other battery pack components (e.g., positive and negative connection plates) are assembled onto the joint battery cells.
Insulating electronic sealant is applied to the circuit board and wire connections.
The joined battery cells are installed into the outer shell. The outer shell includes the upper and lower housing, gasket, spring, button, screws and labels.
ISSUE:
What is the proper country of origin marking for the battery packs according to 19 C.F.R. Part 134?
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. § 1304), provides that, unless excepted, every article of foreign origin 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 the ultimate purchaser in the United States the English name of the country of origin of the article. The country of origin marking requirements are set forth in Part 134, Customs Regulations (19 C.F.R. Part 134). 19 C.F.R. § 134.1(b) defines “country of origin” as the country of manufacture, production, or growth of any article of foreign origin entering the United States. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the “country of origin” within the meaning of the marking laws and regulations.
The test for determining whether a substantial transformation has occurred 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); see also Belcrest Linens v. United States, 741 F.2d 1368, 1372 (Fed. Cir. 1984). 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).
Positec and RW assert “the battery cells do not undergo a transformation in China.” Revised Ruling Request at 4. Positec and RW conclude that the country of origin of the battery packs should be the country of origin of the battery cells. Ruling Request at 2. For the reasons below, we agree.
First, we find that the components, including the battery cells from either Malaysia or Singapore, do not undergo a change in name when they are assembled into a battery pack in China. The name of each article, as imported, remains the same as that article in the completed battery pack. See e.g., National Hand Tool, 16 C.I.T. at 311. As the constitutive components do not lose their individual names as a result of the post importation assembly in China, no name change has occurred.
Turning to character, we find that there is no change in character as a result of the assembly process in China. For courts to find a change in character, there often needs to be a substantial alteration in the characteristics of the articles or components. See e.g., National Hand Tool, 16 C.I.T. at 311. Courts have not found a change in character when the “form of the components remained the same.” Id. In other cases, courts have looked to the “essence” of a completed article to determine whether an imported article has undergone a change in character as a result of post importation processing. Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308, 1318 (2016) (citing Uniden America Corp. v. United States, 120 F. Supp. 2d 1091, 1095-1098 (2000) and Uniroyal, Inc. v. United States, 3 C.I.T. 220 aff’d, 702 F.2d 1022 (Fed. Cir. 1983)). “The term ‘character’ is defined as ‘one of the essentials of structure, form, materials, or function that together make up and usually distinguish the individual.’” Uniden Am. Corp., 120 F. Supp. 2d at 1096 (citation omitted).
Here, we find that the battery cells from either Malaysia or Singapore impart the “essence” of the finished battery packs. See also e.g., HQ H563045, HQ H561806, and HQ H704711 (finding that the battery cells provide the “essence” of the finished article). While the circuit board provides battery pack information to the tool and charger, the battery packs are used to provide power to tools and outdoor equipment. This “power” is stored in the battery cells. Indeed, as noted, “[w]hen imported to China, each discrete battery cell is complete and operational. Each cell [ ] can store and provide power in its imported condition.” Revised Ruling Request at 3. The assembly process in China does not change the shape or material composition of the battery cells. The battery cells are simply held together as an aggregate product after the assembly process in China; hence we find that there is no change in character as a result of the assembly process in China.
In addition, we find that the battery cells from Malaysia or Singapore do not undergo a change in use as a result of the assembly process in China. In looking at whether there is a change in use, courts have found that a change in use has occurred when the end use of the imported product was no longer interchangeable with the end use of the product after post importation processing; in contrast, when the end use was predetermined at the time of importation, courts have generally not found a change in use. Energizer Battery, 190 F. Supp. 3d at 1319 (citing Ferrostaal Metals Corp. v. United States, 664 F. Supp. 535, 540-41 (1987); National Hand Tool, 16 C.I.T. at 311-12; Ran-Paige Co., Inc. v. United States, 35 Fed. Cl. 117, 121-22 (1996); Uniroyal, 3 C.I.T. at 226). “When articles are imported in prefabricated form with a pre-determined use, the assembly of those articles into the final product, without more, may not rise to the level of substantial transformation.” Id. (citing Uniroyal, 3 C.I.T. at 226). The battery cells have a predetermined end use as parts and components of a battery pack (namely, to provide power) at the time of importation. See e.g., Revised Ruling Request at 4 (“The battery cells remain and operate as the same discrete battery cells.”). Hence, these battery cells do not undergo a change in use due to the assembly process in China.
Finally, we also find that the assembly process in China is not sufficiently complex as to constitute a substantial transformation. The assembly process in China is largely described as “assembl[ing],” “connect[ing],” “attach[ing],” “appl[ying],” and “weld[ing]” various components together followed by “install[ing]” them into a plastic housing. See e.g., Revised Ruling Request at 3-4. This description does not suggest an assembly process that is complex, rather the assembly process in China appears to be no more than the mere simple assembly of the battery cells from either Malaysia or Singapore (each complete and operational, and imported with a predetermined end use) with components from China. In further support, we note that the assembly process described here is relatively similar to the assembly process described in Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308, 1325 (2016). Energizer Battery concerned the government procurement provisions of the Trade Agreements Act of 1979, but the court in looking at the concept of substantial transformation, looked to judicial interpretations of identical language in cases involving country of origin marking, duty drawback, transshipment, voluntary restraint agreements, and the generalized system of preferences. Id. at 1313, 1316. Energizer Battery found plaintiff’s post importation processing was not sufficiently complex as to constitute substantial transformation. Id. at 1323. In doing so, the court noted, “the nature of the assembly is broadly described as assembling, screwing, connecting and soldering approximately fifty components, many of which are simple attaching mechanisms. None of these factors suggest an assembly process that is complex.” Id. at 1324. Similarly here, with respect to the assembly process in China, we do not find that there is anything to suggest that the assembly process is complex and find that the assembly process in China does not constitute a substantial transformation.
HOLDING:
The country of origin, under 19 U.S.C. § 1304 and 19 C.F.R. part 137, for the varying models of the Worx 20V battery packs, produced as described herein, are as follows:
Model
Country of Origin
Worx 20V 1.5Ah battery – WA3520
Malaysia
Worx 20V 2.0Ah battery – WA3525
Malaysia
Worx 20V 2.0Ah battery – WA3575
Malaysia
Worx 20V 2.5Ah battery – WA3577
Malaysia
Worx 20V 4.0Ah battery – WA3578
Malaysia
Worx 20V 5.0Ah battery – WA3579
Malaysia
Worx 20V 6.0Ah battery – WA3671
Singapore
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a Customs Service field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.”
A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Monika R. Brenner, Chief
Valuation & Special Programs Branch