OT:RR:CTF:VS H316281 RMC
John R. Magnus
TradeWins LLC
1330 Connecticut Ave. NW
Washington, DC 20036
RE: Country of Origin of Solar Modules and Solar Laminate Imported From Mexico
Dear Mr. Magnus:
This is in response to your correspondence of January 25, 2021, on behalf of SunPower Corporation, in which you ask U.S. Customs and Border Protection (“CBP”) to address the country of origin of solar modules and solar laminate for purposes of Block 10 (Country of Origin) of CBP Form 7501 (Entry Summary). Your request refers to two rulings previously issued to SunPower Corporation (Headquarters Ruling (“HQ”) H312425, dated December 31, 2020, and HQ H314110, dated January 6, 2021), which addressed the tariff classification of the solar modules and solar laminate, and eligibility of those products for preferential tariff treatment under the United States-Mexico-Canada Agreement (“USMCA”).
FACTS:
As set forth in HQ H312425, the first two products at issue are residential solar panels and commercial solar panels. The residential units are SunPower model E20-327-C-AC solar panels. The units “include a factory-integrated SunPower microinverter” and “provide a revolutionary combination of high efficiency, with reliability, and module-level DC-to-AC power conversion.” Each finished solar panel consists of a framed sheet of 96 photovoltaic solar cells, a junction box, and a microinverter. The technical specifications indicate that the nominal power of the residential units is 327 watts with a maximum output of 0.420 kilovolt amperes (“kVA”).
The commercial units are SunPower E-Series model E20-435-COM solar panels. Each commercial unit contains a framed sheet of 128 solar cells and a junction box. Unlike the residential units, the commercial units do not include a microinverter to convert the direct current electricity into alternating current. Accordingly, the commercial units are incapable of being connected directly to external devices or a grid. Instead, they are intended to be connected to other solar modules to create a larger panel. The technical specifications indicate that the nominal power of the commercial units is 435 watts with a maximum output of 0.470 kVA.
As set forth in HQ H314110, the third product at issue is solar laminates (also referred to as “solar sheets”) designated as SunPower part number 527935. The units are essentially an interconnected array of either 96 or 128 solar cells. Unlike SunPower’s finished solar panels, however, the solar laminates are not mounted onto a frame or connected to a junction box. In most cases, the units will be transported through the United States in bond for shipment to Europe, where a junction box and aluminum frame will be added to produce fully functional solar modules. However, you also note that the solar laminates may, in some cases, be entered for consumption in the United States. The solar laminates in their condition as imported will not contain a microinverter to convert the direct current electricity generated by the solar cells into alternating current. Accordingly, the unit cannot be connected directly to external devices or to a grid. Instead, the unit is eventually intended to be further manufactured into a solar module that will be connected to other solar modules to create a larger panel. The technical specifications provided indicate that the nominal power of the units is 360 watts with a maximum power of 0.435 kilovolt amperes (“kVA”).
The assembly of all three products will take place at SunPower’s facilities in Mexico, using both Mexican and foreign components (such as Malaysian-origin solar cells in all three cases). The submissions provided include schematics of the assembly operations, including descriptions and photographs of all steps, and complete bills of materials including the country of origin, tariff classification, and value of all materials used in the production of the merchandise.
The assembly of the third product, the solar laminates, in Mexico involves cutting of the encapsulant material, washing and inspection of the anti-reflective glass, assembly of the strings of solar cells, alignment of the strings of solar cells, lamination of the various components to create the solar sheets, and trimming of the product. The assembly of the commercial units includes all steps involved in assembling the solar laminates, plus installation of the frame, installation of the junction box, and testing of the product. The assembly of the residential unit includes all steps involved assembling the laminates and the commercial units, plus the installation of a microinverter.
In HQ H312425, we concluded that the residential solar panels are properly classified in subheading 8501.61.00, Harmonized Tariff Schedule of the United States (“HTSUS”); that the commercial solar panels are properly classified in subheading 8541.40.60, HTSUS; and that both the residential and the commercial solar panels are eligible for USMCA preferential tariff treatment when imported from Mexico to the United States. In HQ H314110, we concluded that the solar laminate is properly classified in 8541.40.60, HTSUS, and that the merchandise is eligible for USMCA preferential tariff treatment when imported from Mexico to the United States and entered for consumption.
ISSUES:
What is the country of origin of the merchandise for purposes of completing Block 10 of CBP Form 7501?
LAW AND ANALYSIS:
The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. § 1304), provides that, unless excepted, 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 its 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. Part 134 of the CBP Regulations (19 C.F.R. Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. § 1304.
To provide a more seamless transition to the USMCA for Canadian and Mexican traders, at this time, CBP continues to apply the North American Free Trade Agreement (“NAFTA”) marking rules in 19 C.F.R. Part 102, with the exception of 19 C.F.R. § 102.19, for purposes of country of origin marking with respect to goods of those countries.
Part 102, Customs and Border Protection Regulations (19 C.F.R. Part 102), sets forth the NAFTA Marking Rules. Section 102.11 provides a hierarchy for determining the country of origin of a good for marking purposes. See 19 C.F.R. § 102.11. Applied in sequential order, the hierarchy establishes that the country of origin of a good is the country in which:
(a)(1) The good is wholly obtained or produced;
(a)(2) The good is produced exclusively from domestic materials; or
(a)(3) Each foreign material incorporated in that good undergoes an applicable change in
tariff classification set out in Section 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
“Foreign material” is defined in 19 C.F.R. § 102.1(e) as “a material whose country of origin as determined under these rules is not the same country as the country in which the good is produced.” Here, sections 102.11(a)(1) and 102.11(a)(2) do not apply because the product will neither be wholly obtained or produced nor produced exclusively from “domestic” (Mexican, in this case) materials. Accordingly, each non-Mexican material must meet the applicable change in tariff classification set out in Section 102.20 in order for the product to qualify to be marked as a product of Mexico.
In this case, for the commercial solar panels and the solar laminates, classified in subheading 8541.40, HTSUS, the relevant tariff shift rule in § 102.20 requires:
A change to multichips of subheading 8542.31 through 8542.39 from any other good of subheading 8542.31 through 8542.39 or from any other subheading, except from subheading 8523.52 or 8543.70; or
A change to a mounted chip, die or wafer classified in heading 8541 or 8542 from an unmounted chip, die, or wafer classified in heading 8541 or 8542; or
A change to a programmed “read only memory” (ROM) chip from an unprogrammed “programmable read only memory” (PROM) chip; or
A change to any other good of heading 8541 through 8542 from any other subheading, including another subheading within that group.
Specifically, with respect to the commercial solar panel and the solar laminate, the applicable rule in § 102.20 requires “[a] change to any other good of heading 8541 through 8542 from any other subheading, including another subheading within that group.” Here, according to the bill of materials provided, neither the commercial solar panel nor the solar laminate contains a foreign material classified in subheading 8541.40. As the products undergo the requisite tariff shift, SunPower should mark them as products of Mexico and report Mexico as the country of origin in Block 10 of CBP Form 7501.
For the residential solar panels, classified under subheading 8501.61, HTSUS, the relevant tariff shift rule in § 102.20 requires: “[a] change to heading 8501 from any other heading.” According to the bill of materials provided, the residential solar panels do not contain foreign materials of heading 8501. As the residential solar panels undergo the requisite tariff shift, SunPower should mark them as products of Mexico and report Mexico as the country of origin in Block 10 of CBP Form 7501.
We note that “[w]hen determining the country of origin for purposes of applying current trade remedies under Section 301, Section 232, and Section 201, the substantial transformation analysis is applicable.” See HQ H301619, dated November 6, 2018. As this ruling applies the NAFTA marking rules for purposes of determining the country of origin to report in Block 10 of CBP Form 7501, it does not address substantial transformation and the country of origin for purposes of Sections 301, 232, and 201.
HOLDING:
Based on the information provided, the merchandise should be marked as products of Mexico, and the importer should note Mexico as the country of origin in Block 10 of CBP Form 7501 when the merchandise is imported from Mexico into the United States.
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 and Special Programs Branch