OT:RR:NC:N2:220
Lenny Feldman
Sandler, Travis & Rosenberg, P.A.
5385 Blue Lagoon Drive - Suite 200
Miami, FL 33126
RE: The country of origin of an electric motor and the applicability of certain trade remedies under Section 301
Dear Mr. Feldman:
In your letter dated June 26, 2021 you requested a country of origin ruling on behalf of your client, General Transmissions, Inc., and request a confirmation that Section 301 remedies do not apply to the electric motor assembly upon importation.
The merchandise under consideration is referred to as a Brushed Permanent Magnet Direct Current Motor (PMDC motor), PN AEM70166, which is described as a DC electric motor that operates on 36 VDC and has a maximum output of 375 W. The PMDC motor is said to be used in various power tools and lawn/garden appliances.
You state that the PMDC motor is comprised of three main subcomponents: a wound rotor, an unwound magnetized stator, and the brush holder, where each subcomponent is composed of various parts including gears, bearings, magnets, a stator housing, a shaft, a lamination stack, a commutator, and more. The three main subcomponents are manufactured and assembled into the PMDC motor as described below, where you provide two scenarios describing an assembly process that will be the same for each scenario aside from the country location for certain production steps.
In both scenarios, you state that the rotor subassemblies will be manufactured by stamping steel coil into laminations, stacking the laminations, inserting a shaft into the lamination stack, and machine pressing the bushing and commutator onto the shaft. After the rotor is assembled, the core is placed on a winding machine where enameled wire is wound onto the commutator/rotor core assembly. The rotor is further processed, tested, an internal cooling fan blade is added, and the finished rotor subassembly is balanced.
The production of the stator subassembly for both scenarios consists of gluing magnets inside the stator housing, machine pressing a bearing into the rear of the housing, and placing the stator subassembly into a magnetizing machine.
The production of the brush holder subassembly for both scenarios consists of crimping the carbon brushes onto copper leaf springs, and spot welding together the brushes, wire, and a capacitor. The subassembly is riveted into a plastic bracket, electric terminals are crimped and further processed to produce the final brush holder assembly.
The final assembly operation for both scenarios consists of coupling the rotor subassembly and the stator subassembly via a servo-press, inserting the brush holder subassembly into the housing, and riveting an end cap. A worker applies voltage to the PMDC motor and manually adjusts the carbon brush position on the commutator. The PMDC motor is tested, a gear is machine pressed onto the output shaft, and the device is marked and packaged.
In the first scenario, the stamping of steel sheet, stacking of the laminations, and inserting of the shaft/coupling via machine press to produce a rotor core will occur in Vietnam. The rotor core is then shipped to Mexico where the commutator is pressed onto the shaft, the core is wire wound, further processed, tested, a fan blade is added, and the finished rotor subassembly is balanced. For the stator, a housing of Chinese origin is shipped to Mexico where the magnets are glued inside the stator housing and a machine press attaches the bearing to the rear of the housing. Once assembled, the stator subassembly is magnetized. The brush holder subassembly is manufactured in Mexico as described above. The final assembly of the PMDC motor in scenario one occurs in Mexico.
In the second scenario, the stamping of steel sheet, stacking of the laminations, and inserting of the shaft/coupling via machine press to produce a rotor core will occur in Taiwan. The rotor core is then shipped to Mexico where the commutator is pressed onto the shaft, the core is wire wound, further processed, tested, a fan blade is added, and the finished rotor subassembly is balanced. For the stator, a housing of Chinese origin is shipped to Mexico where the magnets are glued inside the stator housing and a machine press attaches the bearing to the rear of the housing. Once assembled, the stator subassembly is magnetized. The brush holder subassembly is manufactured in Mexico as described above. The final assembly of the PMDC motor in scenario two occurs in Mexico.
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 U.S. 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 U.S. the English name of the country of origin of the article.
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 test for determining 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, 69 C.C.P.A. 151 (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).
When the production and assembly occurs in Mexico, CBP continues to utilize the marking rules set forth 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 from Canada and Mexico. Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes, with the exception of textile goods which are subject to the provisions of 19 C.F.R. § 102.21. See 19 C.F.R. § 102.11. Applied in sequential order, the required hierarchy establishes that the country of origin of a good is the country in which:
(1) The good is wholly obtained or produced;
The good is produced exclusively from domestic materials; or
Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in § 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because the subject motors are neither wholly obtained or produced or produced exclusively from “domestic” materials. Because the analysis of sections 102.11(a)(1) and 102.11(a)(2) does not yield a country of origin determination, we look to section 102.11(a)(3). “Foreign material” is defined in section 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.”
The applicable tariff shift requirement in section 102.20 for the finished motor of heading 8501, HTSUS, is:
A change to subheading 8501 from any other heading.
The foreign material in the first scenario consists of the Vietnamese rotor core, the commutator, the stator housing, the magnets, the bearings, and various parts and components. The foreign components are shipped to Mexico where the commutator is pressed onto the rotor shaft, the core is wire wound, and the rotor subassembly is finished and tested. The Chinese stator housing is also shipped to Mexico where the magnets and the bearing are added. The brush holder assembly is manufactured in Mexico from foreign components. In Mexico, the brush holder subassembly, the rotor subassembly, and stator subassembly are assembled into a functioning electric motor. As the none of the components that make up the motors are classified under heading 8501, HTSUS, the tariff shift requirement of section 102.11(a)(3) is met. Therefore, we find that the motors described under scenario one meet the marking rule and may be marked as products of Mexico.
The foreign material in the second scenario consists of the Taiwanese rotor core, the commutator, the stator housing, the magnets, the bearings, and various parts and components. The foreign components are shipped to Mexico where the commutator is pressed onto the rotor shaft, the core is wire wound, and the rotor subassembly is finished and tested. After shipping the Chinese stator housing to Mexico, the magnets and the bearing are added. The brush holder assembly is assembled in Mexico from foreign components. Finally, in Mexico the brush holder subassembly, the rotor subassembly, and stator subassembly are assembled into a functioning electric motor. As the none of the components that make up the motors are classified under heading 8501, HTSUS, the tariff shift requirement of section 102.11(a)(3) is met. Therefore, we find that the motors described under scenario one meet the marking rule and may be marked as products of Mexico.
Regarding the applicability of Section 301 remedies under the first scenario, in our opinion, the stamping and pressing work performed in Vietnam produces a rotor core of Vietnamese origin. In Mexico, the commutator is pressed onto the rotor shaft, the core is wire wound, and the rotor subassembly is finished and tested. Likewise, the stamping and pressing work performed in China produces a stator core of Chinese origin. In Mexico, magnets and the bearing are mounted to the Chinese stator housing to produce a stator subassembly. In Mexico, both the rotor and stator subassemblies are combined with the brush holder subassembly that is manufactured in Mexico and the PMDC motor is tested and packaged.
Regarding the applicability of Section 301 remedies under the second scenario, in our opinion, the stamping and pressing work performed in Taiwan produces a rotor core of Taiwanese origin. In Mexico, the commutator is pressed onto the rotor shaft, the core is wire wound, and the rotor subassembly is finished and tested. Likewise, the stamping and pressing work performed in China produces a stator core of Chinese origin. In Mexico, magnets and the bearing are mounted to the Chinese stator housing to produce a stator subassembly. In Mexico, both the rotor and stator subassemblies are combined with the brush holder subassembly that is manufactured in Mexico and the PMDC motor is tested and packaged.
Based on the description provided for both scenarios, the Chinese stator housing is not substantially transformed as a result of gluing magnets and attaching a bearing in Mexico, and the stator subassembly remains a product of China. However, the assembly of the rotor and brush holder subassemblies, which are not products of China, coupled with the final manufacturing operations in Mexico, when considered in totality, overshadow the simplicity of the stamped stator housing. In our view, the manufacturing and assembly processes performed in Mexico results in a substantial transformation of the Chinese components and the PMDC motor will not be subject to the additional duties applicable to products of China under Section 301 of the Trade Act of 1974, as amended, upon importation 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.”
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 Karl Moosbrugger at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division