OT:RR:NC:N2:220
Lauren Wyszomierski
White & Case LLP
701 Thirteenth Street NW
Washington, DC 20005
RE: The country of origin of an electric motor and the applicability of certain trade remedies under Section 301
Dear Ms. Wyszomierski:
In your letter dated May 1, 2022, you requested a country of origin ruling on behalf of your client, GMCC & Welling Appliance Component (Thailand) Co., Ltd.
The merchandise under consideration is described as an Electronically Commutated Motor (motor) for use in household central air conditioning systems. The motor consists of four main subassemblies, which you identify as the rotor subassembly, the stator subassembly, the structural bracket, and the printed circuit board assembly (PCBA) drive electronics.
In your letter, you provide two scenarios detailing how the motor will be manufactured. In the first scenario, you state that the rotor, the stator, the structural bracket, the bearing, the shaft, the magnets, and various hardware components are sourced from China. The PCBA is manufactured in Thailand by soldering individual components onto a bare PCB to produce a drive electronics PCBA of Thai origin. The final assembly occurs in Thailand and is described as machine pressing the bearing onto the shaft, inserting the rotor into the stator, magnetizing the rotor, inserting the rotor/stator assemblies into the structural bracket, oiling, cleaning, testing, and packing.
In the second scenario, you state that the stator, the structural bracket, the bearing, the shaft, the magnets, and various hardware components are sourced from China. The rotor is said to be manufactured in Thailand by stamping sheet steel into individual laminations, pressing the laminations, inserting the shaft, gluing the magnetic tiles, and magnetizing. The PCBA is also manufactured in Thailand by soldering individual components onto a bare PCB to produce a drive electronics PCBA of Thai origin. The final assembly occurs in Thailand by machine pressing the bearing onto the shaft, inserting the rotor into the stator, magnetizing the rotor, inserting the rotor/stator assemblies into the structural bracket, oiling, cleaning, testing, and packing.
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; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin.”
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).
In our view, the rotor and stator are the dominant components of a finished electric motor. Based on the description provided in the first scenario, the Chinese rotor and stator are not substantially transformed by adding the bearings, gluing the magnets, combining with a controller PCBA, inserting, and attaching to a base, etc. in Thailand. Thus, it is the opinion of this office that the basic assembly process performed in Thailand does not result in a substantial transformation of the Chinese components and the motor under consideration is considered a product of China for origin and marking purposes. As a result, the motor described in the first scenario, is 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.
Regarding the country of origin and applicability of Section 301 remedies under the second scenario the stamping and pressing work performed in Thailand produces a rotor core of Thai origin. The rotor core is then further processed in Thailand and combined with the Chinese stator, the Thai PCBA, etc. as described above.
Based on the facts presented for this motor, we are of the view that the rotor is the more complex component of the finished motor when comparing to the stator. Coupled with the fact the final assembly occurs in Thailand, and the origin of the PCBA, which represents the largest single component cost, is also Thailand, it is the decision of this office that the manufacturing and assembly operations, taken collectively for scenario two, substantially transforms the Chinese stator and the subject motor is considered a product of Thailand for origin and marking purposes. As a result, the motor described in the second scenario is not subject to the additional duties under Section 301 of the Trade Act of 1974, as amended, upon importation.
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