MAR-2:OT:RR:NC:N2:206
Mike Kim
K&G Customs Service, Inc.
5935 Buford Highway, Suite 300
Norcross, GA 30071
RE: The country of origin of front and rear caliper brake assemblies.
Dear Mr. Kim:
This is in response to your letter dated January 29, 2021, requesting a ruling on the country of origin for front and rear brake assemblies, which you filed on behalf of your client, Hyundai Mobis, Co. Ltd.
The items under consideration are automotive Front and Rear Caliper Brake Assemblies, which are assembled in Korea from Korean and Chinese components. The function of the calipers is to slow the car's wheels by creating friction with the rotors.
The brake calipers fit over the rotors like a clamp. Inside each caliper is a pair of metal plates bonded with friction material that are called brake pads. The outboard brake pads are on the outside of the rotors (toward the curb) and the inboard brake pads are on the inside (toward the vehicle). When the driver steps on the brake pedal, these brake calipers squeeze the brake pads, forcing the pads against the surface of the rotor. The brake pads have high-friction surfaces and serve to slow down or stop the rotor and consequently, the vehicle.
The rear caliper works the same as the front caliper for brake functions, except that rear caliper additionally contains an actuator to allow the electronic parking brakes (EPB) to function. When the driver presses the EPB button located in the cabin, the actuator in the rear caliper receives electric signals and generates force on the brake pads onto the rotor to hold the vehicle in place (parking).
The "country of origin" is defined in 19 CFR 134.1(b) 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 this part.
The courts have held that 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. United States v. Gibson-Thomsen Co., Inc., 27 CCPA 267, C.A.D. 98 (1940); National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff’d, 989 F. 2d 1201 (Fed. Cir. 1993); Anheuser Busch Brewing Association v. The United States, 207 U.S. 556 (1908) and Uniroyal Inc. v. United States, 542 F. Supp. 1026 (1982).
However, if the manufacturing or combining process is merely a minor one that leaves the identity of the article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983) (Uniroyal). Substantial transformation determinations are based on the totality of the evidence. See Headquarters Ruling (HQ) W968434, date January 17, 2007, citing Ferrostaal Metals Corp. v. United States, 11 CIT 470, 478, 664 F. Supp. 535, 541 (1987). In Uniroyal case, the court held that an upper was not substantially transformed when attached to an outsole to form a shoe and that the upper was "the very essence of the completed shoe".
You state that most components of the front and rear calipers are sourced from Korea, with the exception of the brake pad assembly and electronic actuator, which are purchased from China. The assembly process in Korea appears to be a minor one and does not result in a substantial transformation of the articles. Therefore, we need to determine the “essence” of the caliper. Since the brake pads cause the rotors to stop spinning by friction, the most essential component of both calipers is the brake pad assembly. Therefore, the country of origin of the front and rear caliper brake assemblies will be China for marking and tariff purposes.
You also provide a scenario, where only the electronic actuator for the rear caliper is made in China, while the rest of the components are made in Korea, including the pad assembly. In this scenario, the country of origin will be Korea, as the actuator only provides the secondary function for the rear brake caliper.
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, please contact National Import Specialist Liana Alvarez at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division