Ms. Deborah B. Stern
Sandler, Travis & Rosenberg, PA
1000 NW 57th Court (Suite 600)
Miami, FL 33126
RE: The tariff classification and country of origin of marine thrust assemblies from Germany
Dear Ms. Stern:
In your letter dated October 4, 2010 you requested a tariff classification and country of origin ruling on behalf of your client, GKN Driveline North America Corporation.
The articles in question are described as the “Moduline B10 Series” and the “Heavy Duty Line HDL780” marine thrust assemblies. Marine thrust assemblies are used in anti-vibration systems in boat engines to reduce noise and vibration. The anti-vibration system eliminates the need for stiff, hard mounts and for careful engine alignment to the propeller shaft.
The B10 Series of thrust bearing anti-vibration equipment comprises an enclosed ball bearing from Italy inside a base unit housing from Sweden that, once combined with special bolts used to attach the assembly to a cross-brace in the hull of the boat, becomes the base unit for the B10. Attached to the bearing and base unit is a Swedish constant velocity (CV) flange for attaching to a CV joint. The thrust assembly serves as a mechanical coupling between a boat’s propeller and a CV joint attached to a boat’s engine.
Model HDL780 is part of the “Heavy Duty Line” of thrust bearing anti-vibration equipment and is comprised of a bearing housing, a bearing input flange, front and rear cover(s) and bearing shaft, two tapered roller bearings and several general components (screws, nuts, bolts and washers). Like the B10 Series thrust assembly, the Model HDL780 assembly serves as a mechanical coupling between a boat’s propeller and a boat’s engine.
The applicable subheading for the marine thrust assemblies will be 8483.60.8000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for other clutches and shaft couplings. The rate of duty will be 2.8 percent ad valorem.
In your request you also inquire as to the country of origin of the completed marine thrust assemblies.
The B10 is assembled in Germany from Swedish, Italian and German components. The base unit is assembled first by inserting the Italian bearing into the Swedish housing and then assembling to it ten minor Swedish components (clamp, spacers etc.) and one German bushing. The base unit is then combined through a second stage assembly process with the Swedish CV flange, six other Swedish components and one German washer to yield the complete B10 assembly. The entire assembly process takes approximately one-half hour. The base unit and CV flange are the components that effect the mechanical coupling within the completed thrust assembly and are the components visible upon examination of the final assembly.
The HDL780 is assembled in Germany from Swedish and German components. The five specialized, made-to-order components of the HDL780 thrust assembly (bearing housing, a bearing input flange, front and rear covers, and bearing shaft), and several general components (screws, nuts, bolts and washers) are of Swedish origin. The two tapered roller bearings are of German origin. The time necessary to assemble each HDL780 assembly is approximately one hour. The components are first painted, and then dried, cleaned and assembled. The Swedish components are the components that effect the mechanical coupling within the completed trust assembly and are the components visible upon examination of the final assembly.
Section 134.1(b), CBP Regulations (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". A substantial transformation is said to have occurred when an article emerges from a manufacturing process with a name, character, or use that differs from the original material subjected to the process.
In this case, we do not find that the assembly in Germany of foreign coupling components constitutes a substantial transformation of the Swedish components. The extent of operations performed in Germany is relatively simple requiring only a limited number of assembly operations. Further, the Swedish components, which are the components that give the thrust assemblies their character as mechanical couplings, do not lose their identity as a result of the operations performed. No new article is created which possesses a different name, character or use than that of the original Swedish components. The assembly process does not result in the substantial transformation required to allow the merchandise to be considered a product of Germany. Since the assembled product cannot be considered of German origin, the country of origin of the thrust assemblies would remain the country of origin of the Swedish components.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at http://www.usitc.gov/tata/hts/.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Kenneth T. Brock at (646) 733-3009.
Robert B. Swierupski
National Commodity Specialist Division