OT:RR:CTF:VS H346979 RRB
Lynlee Brown
Ernst & Young LLP
18101 Von Karman Ave, #100
Irvine, CA 92612
RE: Country of Origin of EcoSyntane; Substantial Transformation; Section 301; IEEPA
Dear Ms. Brown:
This is in response to your correspondence, dated April 5, 2025, on behalf of
your client (“Company”), requesting a ruling concerning the country of origin of
EcoSyntane, a Company-branded product used in spark-ignition internal combustion
engines, for purposes of applying trade remedies under Section 301 and the
International Emergency Economic Powers Act (“IEEPA”).
You have requested that certain information submitted in connection with this
ruling request be treated as confidential. On May 1, 2025, our office communicated with
you via e-mail regarding the broad scope of your confidentiality request. On May 16,
2025, and June 6, 2025, you sent revised ruling requests that narrow the parameters of
your confidentiality request. Inasmuch as the amended scope of your confidentiality
request conforms to the requirements of 19 C.F.R. § 177.2(b)(7), the request for
confidentiality is approved. The information contained within brackets in this ruling or in
the attachments to the ruling request, forwarded to our office, will not be released to the
public and will be withheld from published version of this ruling.
FACTS:
The Company is a leading petroleum and petrochemical trading company,
specializing in the supply and distribution of crude oil, refined products, and
petrochemicals. The product at issue is EcoSyntane, a Company-branded product
meeting Key Specifications as defined by the [ ] (“Key Specifications”). In the instant
matter, the Company will produce various grades of EcoSyntane that meet Key
Specifications using imported blendstocks (“Primary Input Components”) of both U.S.
and non-U.S. origin, in St. Croix Island in the U.S. Virgin Islands (“USVI”) through a
controlled and precise formulation process in storage tanks.
EcoSyntane is used in spark-ignition internal combustion engines. It is primarily
used in automobiles, motorcycles, and small engines to provide efficient combustion
and reliable engine operation.
Regarding the manufacturing process to produce EcoSyntane, you state that the
facts and circumstances of the Company’s manufacturing operations are similar to
those reviewed by U.S. Customs and Border Protection (“CBP”) in CBP ruling
Headquarters Ruling Letter (“HQ”) 563303, dated September 30, 2005, where CBP held
that the finished product was of USVI origin because the manufacturing operations
performed in USVI resulted in a substantial transformation of the imported Primary Input
Components. You further explain that the Company will manufacture EcoSyntane in the
same terminals, with the same methodology, and using many of the same Primary Input
Components as in the cited ruling. In particular, you state that the Company will
manufacture EcoSyntane with two or more of the Primary Input Components listed in
HQ 563303 at the same terminal in USVI. In the instant matter, different formulations of
the Primary Input Components are used to produce various grades of EcoSyntane,
depending on the desired volatility and the properties and availability of the individual
Primary Input Components. You assert that irrespective of the formulations used, the
resulting EcoSyntane will meet Key Specifications.
You also explain that in some cases, two or more of the Primary Input
Components are first used to produce EcoSyntane, while in other cases, two or more of
the Primary Input Components are first combined to produce an intermediate
blendstock (“Intermediate Input Component”), which you state is a common industry
practice to manage storage and shipping constraints by storing and transporting similar
products together. The Intermediate Input Component is then processed with other
Primary Input Components or other Intermediate Input Components to produce
EcoSyntane. With respect to the Primary Input Components and Intermediate Input
Components used in the production of EcoSyntane, they may be of U.S. or non-U.S.
origin, including but not limited to Chinese, Korean, Japanese, Indian, Turkish,
Canadian and European Union origin.
More specifically, you state that the Company will manufacture EcoSyntane with
two or more of the following Primary Input Components in USVI:
• Butane
• Pentane/C5
• Light Naphtha
• Heavy Naphtha
• Whole Naphtha
• Alkylate
• Light Raffinate
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• Heavy Raffinate
• Light Cat Naphtha
• Heavy Cat Naphtha
• Reformate
• Toulene
• Xylene
• Heavy Aromatics
As part of your ruling request, you provided a detailed specification analysis of
the Primary Input Components to be used in the production of EcoSyntane, as well as
detailed Certificates of Analysis for the Primary Input Components. 1 You assert that all
Primary Input Components fail at least one Key Specification. You also state that all
Primary Input Components are classified in a different subheading of the Harmonized
Tariff Schedule of the United States (“HTSUS”) than EcoSyntane. In addition, you
provided a detailed specification analysis for Intermediate Input Components that could
be created from mixtures of the Primary Input Components for manufacture into
EcoSyntane. Similar to the Primary Input Components, you state that all Intermediate
Input Components fail at least one Key Specification and that all Intermediate Input
Components are classified in a different subheading of the HTSUS than EcoSyntane.
You argue that the country of origin of EcoSyntane will be USVI because the
Company’s manufacturing operations in USVI to produce EcoSyntane from imported
Primary Input Components and/or Intermediate Input Components result in a product
with a new name, character and use.
ISSUE:
What is the country of origin of EcoSyntane for purposes of applying trade
remedies under Section 301 and the IEEPA?
LAW AND ANALYSIS:
The United States Trade Representative (“USTR”) has determined that an
additional ad valorem duty will be imposed on certain Chinese imports pursuant to
USTR’s 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, Harmonized Tariff Schedule of
the United States (“HTSUS”).
When determining the country of origin for purposes of applying current trade
remedies, the substantial transformation analysis is applicable. See, e.g., Headquarters
Ruling Letter (“HQ”) H301619, dated November 6, 2018. The test for determining
1 Although not dispositive to our decision in this ruling, we note that while relatively pure Certificates of
Analysis were provided as examples for toluene and xylene, the distillation values for toluene and xylene
set forth in the detailed specification analysis in Table 1 of your ruling request did not reflect the
Certificates of Analysis.
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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, 681 F.2d 778
(C.C.P.A. 1982). 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).
To determine whether a substantial transformation occurs, CBP considers the
totality of the circumstances and makes such determinations on a case-by-case basis.
The country of origin of the item’s components, extent of the processing that occurs
within a country, and whether such processing renders a product with a new name,
character, and use are primary considerations in such cases. Additionally, factors such
as the resources expended on product design and development, the extent and nature
of post-assembly inspection and testing procedures, and worker skill required during the
actual manufacturing process will be considered when determining whether a
substantial transformation has occurred. No one factor is determinative.
CBP has generally held that the mere mixing of two substances in another
country, not involving a chemical reaction and without additional processing, does not
result in a product of such other country. See HQ 561986, dated August 21, 2001.
However, certain types of blending operations where the finished product could be
considered to have a new name, character, or use over its constituent inputs may lead
to a finding of substantial transformation. See HQ 562468, dated October 4, 2002. CBP
also reached a similar finding in New York Ruling Letter (“NY”) N127337, dated
November 2, 2010, where we determined that the ingredients of a fluid loss cement
additive blended in Canada underwent a substantial transformation as the finished
product had a distinct identity over its ingredients.
In HQ H340257, dated December 5, 2024, CBP examined whether mixing
operations in the production of an herbicide in Taiwan resulted in a substantial
transformation. There, CBP determined that although the production process did not
result in a chemical reaction where two active ingredients were mixed together, such
processing yielded a final product that was distinct from the constituent components.
Accordingly, CBP held in HQ H340257 that the country of origin of the herbicide was
where the processing operations took place in Taiwan.
In determining whether a substantial transformation has occurred as a result of
manufacturing operations to produce EcoSyntane in USVI, we apply the “name,
character, and use test.” See National Hand Tool Corp. Here, there is a change in
name subsequent to processing because the individual Primary Input Components and
Intermediate Input Components as identified in your ruling request undergo a change in
name once they are manufactured into EcoSyntane.
Based on the Certificates of Analysis for the Primary Input Components and the
specifications for EcoSyntane, we asked CBP’s Laboratories and Scientific Services
Division (“LSSD”) to assist with assessing whether the submitted information is
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sufficient to demonstrate that EcoSyntane exhibits different qualities and uses from the
individual Primary Input Components and Intermediate Input Components. In a
memorandum, dated September 29, 2025, LSSD confirmed that through the Company’s
manufacturing operations, the different Primary Input Components will produce a new
and different article of commerce if two conditions are met via testing that must be
conducted on each batch of Primary and Intermediate Input Component and the final
product. First, each of the Primary Input Components must not satisfy Key Specification
[****]. Second, Ecosyntane must satisfy Key Specification [****].
LSSD explained that there is a change in character as a result of the
manufacturing operations if the Primary Input Components and Intermediate Input
Components are confirmed via batch testing to not meet a specific Key Specification
[****], while the final EcoSyntane is confirmed via batch testing to meet the same Key
Specification [****]. LSSD further explained that each Primary Input Component brings
to the finished EcoSyntane essential characteristics which it would not otherwise have.
According to LSSD’s examination of the Certificates of Analysis for the Primary Input
Components and the specifications for the final product, the individual Primary Input
Components change the characteristics of the final product even though no chemical
reaction takes place in the manufacture of the final product. LSSD also pointed out that
in cases involving similar final products such as certain fuel products, the final product is
typically made of over 100 different chemical compounds, making it practically
impossible to extract back the individual compounds once the final product is
manufactured. The same applies in the instant circumstances. Therefore,
manufacturing operations to produce EcoSyntane from the Primary Input Components
and Intermediate Input Components also result in a change in character.
Lastly, as you point out, EcoSyntane is specifically formulated to comply with Key
Specifications and is suitable for use in automobiles. Further, without the essential
characteristics imparted by the Primary Input Components and Intermediate Input
Components to the final product, EcoSyntane could not be used as intended. Morever,
all of the Primary Input Components and Intermediate Input Components do not have
the same use as the final product, as they do not meet the same Key Specifications that
are met by EcoSyntane for use in automobiles. Accordingly, we find that the
manufacturing operations to produce EcoSyntane also result in a change in use of the
Primary Input Components and Intermediate Input Components. Therefore, we find that
a substantial transformation results from manufacturing operations in USVI to produce
EcoSyntane from the Primary Input Components and Intermediate Components.
Based on the foregoing, we find that the country of origin of EcoSyntane will be
USVI for purposes of Section 301 and IEEPA duties.
HOLDING:
The country of origin of EcoSyntane will be USVI for purposes of Section 301
and IEEPA duties.
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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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