Bray International, Inc.
13333 Westland East Blvd
Houston, Texas 77041
RE: The classification and country of origin of butterfly valves
Dear Mr. Hopkins:
In your letter dated July 14, 2020, you requested a ruling on the country of origin of butterfly valves. A description of the manufacturing and assembly processes was submitted for our review.
The items in question are referred to as S3X butterfly valves. Each valve primarily consists of a valve body, a valve seat, a disc, and a valve stem. The butterfly valves are imported bare stem and once installed and actuated, the valve stem can be rotated from zero degrees to 90 degrees or any intermediate position. The butterfly valves are used in power plants, pulp and paper facilities, water filtration, chemical plants, food processing, irrigation, refineries, and cement production to control the flow of gases, liquids and solid flowing media. The S3X valves are rated to withstand pressures ranging from 75 pounds per square inch to 300 pounds per square inch.
In your letter you indicate that the S3X valves are imported with a bare stem and should be classified under subheading 8481.80.9050. We agree.
The applicable subheading for the S3X butterfly valves imported with a bare stem will be subheading 8481.80.9050, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Taps, cocks, valves and similar appliances, for pipes, boiler shells, tanks, vats or the like, including pressure-reducing valves and thermostatically controlled valves; parts thereof: Other appliances: Other: Other: Other. The general rate of duty is 2 percent ad valorem.
In regards to country of origin, seven scenarios were submitted for review. The same steps occur in the final assembly of the valves in all seven scenarios, except for the machining processes of the stem and disc flat connections.
The final assembly process of each S3X valve begins by cleaning the components from debris, oil and grease. Silicon is then applied to the inner section of the valve body and the outer portion of the valve seat. Next, the valve stem is inserted into disc’s stem hole in order to examine the fitting and measurements. The valve parts are then positioned for assembly and the stem seal, bushing and bearings are installed into the stem opening. The valve seat is then compressed into the inter diameter of the valve body and afterwards, the valve seat is shaped to align with the valve stem opening and the corresponding valve body opening. Afterwards, the disc is inserted into the valve seat by applying pressure and aligning the stem opening of the valve body and ensuring the appropriate machined connections are placed at the bottom of the valve. The stem and disc are then rotated to a closed valve position and the front of the valve body is faced in an upward direction. In smaller size valves, a thrust washer is installed onto the stem and the packing chamber and split rings and a stem retainer are installed into the packing retainer. For larger size valves, a blowout ring and a gland ring are installed onto the stem and inserted into the packing chamber. Certain valve sizes, require the installation of a lower stem retainer that are screwed onto the stem. At this point of the process, the smaller valves are sent forward to undergo testing and certification processes.
With the larger valves that have a one piece shaft, the disc is drilled to correspond to an opening in the valve stem. The valve stem and the disc are secured to each other using taper pins and in some instances, a lock washer and nut are secured to the packing stud that is placed against the gland retainer. The disc is then opened and closed various times and the complete valve is then tested for leakage and certified to withstand certain pressures and other application requirements.
In your request you provide seven country of origin scenarios, in which the aforementioned assembly processes occur in either China or Malaysia.
For scenario one, the valve stem is manufactured in Malaysia and the valve body, the disc, the seat, seals, and bearings are manufactured in China. The assembly process, including the machining of the stem’s flats connections, the testing processes and the certification processes are completed in Malaysia.
For scenario two, the valve stem is manufactured in Malaysia and the valve body, the disc, the seat, seals, and bearings are manufactured in China. The assembly process of the valves, including the machining for the stem’s flat connections, the testing processes and the certification processes are completed in China.
For scenario three, the valve disc is manufactured in Malaysia and the valve body, the stem, the seat, seals and bearings are manufactured in China. The assembly process of the valves, including the machining for the flats of the disc, the testing processes and the certification processes are completed in Malaysia.
For scenario four, the valve disc is manufactured in Malaysia and the valve body, the stem, the seat, seals and bearings are manufactured in China. The assembly process of the valves, including the machining for the flats of the disc, the testing processes and the certification processes are completed in China.
For scenario five, the valve stem and disc are manufactured in Malaysia and the valve body, the stem, the seat, seals and bearings are manufactured in China. The assembly process of the valves, including the machining for the corresponding male and female flat connections of the stem and disc, the testing processes and the certification processes are completed in Malaysia.
For scenario six, the valve stem and disc are manufactured in Malaysia. The assembly process of the valves, including the machining for the corresponding male and female flat connections of the stem and disc, the testing processes and the certification processes of the complete valve are completed in China.
For scenario seven, all of the valve components, including the valve body, are manufactured in China. The assembly process, testing processes and certification processes of the complete valves are completed in Malaysia.
Pursuant to Part 134, Customs Regulations (19 CFR §134) implements the country of origin marking requirements and exceptions of 19 USC 1304. Section 134.1(b), Customs Regulations (19 CFR § 134.1(b)), defines “country of origin” as: “[t]he 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 this part.” A substantial transformation occurs when an article emerges from a process with a new name, character or use different from that possessed by the article prior to processing. A substantial transformation will not result from a minor manufacturing or combining process that leaves the identity of the article intact. See National Hand Tool Corp. v. United States, 16 C.I.T. 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993).
In order to determine whether a substantial transformation occurs when components are assembled into completed products, all factors such as the components used to create the product and manufacturing processes that these components undergo are considered in order to determine whether a product with a new name, character, and use has been produced. No one factor is decisive, and assembly/manufacturing operations that are minimal will generally not result in a substantial transformation.
Based upon the facts presented, the assembly processes as described above in the seven scenarios do not result in a substantial transformation of the components. The components themselves are not transformed in China or Malaysia into a new and different article of commerce with a name, character, and use distinct from the article exported. Furthermore, it is our opinion that the valve body, which is produced in China in all seven scenarios, provides the essence of the butterfly valves. In view of these facts, the country of origin of the S3X valves in all seven scenarios is China.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8481.80.9050, HTSUS, unless specifically excluded, are subject to an additional 25 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.03, in addition to subheading 8481.80.9050, HTSUS, listed above. The HTSUS is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Note cited above and the applicable Chapter 99 subheading. For background information regarding the trade remedy initiated pursuant to Section 301 of the Trade Act of 1974, you may refer to the relevant parts of the USTR and CBP websites, which are available at:https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions https://www.cbp.gov/trade/remedies/301-certain-products-chinaDuty 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 the World Wide Web at https://hts.usitc.gov/current.
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 Sandra Martinez at [email protected]
Steven A. Mack
National Commodity Specialist Division