CLA-2-84:OT:RR:NC:N1:102
Kristina Barry
GDLSK LLP
599 Lexington Avenue, FL 36
New York, New York 10022
RE: The country of origin of wine preservation systems for marking purposes and the purposes of Section 301 Trade Remedies
Dear Ms. Barry:
In your letter dated August 29, 2022, on behalf of Coravin, Inc., you requested a country of origin ruling on two wine preservation systems. Descriptive information was provided.
The products under consideration are two Coravin wine preservation systems: the Model Six Plus, and the Model Six Plus Premium. It is noted that New York ruling N325952, dated June 2, 2022, previously ruled on the classification of the Model Three SL and the Model Three Plus wine preservation systems. Like the Model Three SL and Model Three Plus systems, the components of the Model Six Plus and Model Six Plus Premium systems are packaged complete, and ready for retail sale at the time of importation. It is also said that the Model Six hand-held device is structurally similar to the Model Three hand-held device, but also features an outer spray finish, a rubber grip on the handle and two plastic side plates on the clamp body. The systems allow users to enjoy and preserve wine.
The Model Six Plus is packaged in a cardboard box in a device box sleeve and primarily consists of a Coravin Model Six hand-held device with a silica bag, a carry case, three argon gas capsules, six screw caps with a screw cap polybag, an aerator with an aerator polybag, a bottle sleeve with a bottle sleeve polybag, a needle cleaner, and a cardboard needle cover.
The Model Six Plus Premium is packaged in a cardboard box in a device box sleeve and primarily consists of a Coravin Model Six hand-held device with a polybag, a needle, a needle tube, two cardboard needle covers, a classic base, two screw caps with a screw bag polybag, an aerator with a polybag, a needle cleaner, a carry case, eight argon gas capsules contained in a gas box held in a box holder and a bottle sleeve with a bottle sleeve polybag.
The hand-held device of the Coravin Model Six Plus and Model Six Plus Premium wine preservation systems compress argon gas to allow a user to pour wine from a wine bottle. In operation, the user aligns the SmartClamps™ over the neck of the bottle and pushes down on the handle in one fluid motion, manually inserting a needle through the cork and into the wine bottle. The needle, when inserted into an unopened wine bottle, facilitates the flow of argon gas from the device into the bottle, and wine flows out of the bottle for serving when the bottle is upturned. The user depresses a hand-operated trigger that activates a valve, which is designed to regulate the flow of compressed argon gas through a pressure regulator valve and into the wine bottle. Argon gas is then sent into the bottle, forcing the pressurized wine to flow up the needle to the pouring spout. Releasing the trigger stops the flow of argon gas into the bottle, and the bottle is returned to an upright position to stop pouring.
The aerator packaged in both Models aerates the wine. The aerator is from Indonesia.
The stainless-steel needle clearing tool is used to clear cork. The needle clearing tool is from China.
The screw cap seals the bottles. The screw cap is assembled in Indonesia, starting with a Chinese silicone plug being pressed into the Indonesian body. The liner is placed, followed by the Indonesian insert being pressed on top.
The bottle sleeve protects the bottle and prevents contamination of glass should the bottle break. The bottle sleeve is from China.
The support base, which features the Coravin logo, is a stand designed to integrate with the hand-held device. It holds the hand-held device on flat surfaces and serves as a wine drip tray. The base is from China.
The carry case is U-shaped, and is designed to store, and transport the Model Six device, an aerator and gas capsule(s). The case, which is of nylon and faux leather, is also designed to protect the surface of the device and prevent its exposure to contaminants, as it has contact with food items. The carry case, which is sourced from Vietnam or China, features the Coravin logo and has specifically contoured pockets.
The argon gas capsules contain gas that is released by the hand-held device.
In your letter, you suggest both Model Six wine preservation systems are classified in accordance with General Rule of Interpretation 3(b), as a set, and the applicable subheading will be 8481.80.5090, 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: Hand operated: Of other materials: Other. We agree. The general rate of duty will be 3 percent ad valorem.
Additionally, you request an origin determination for the two Coravin wine preservation systems: the Model Six Plus, and the Model Six Plus Premium. You explain that the assembly processes described for the subassemblies of the Model Six hand-held device applies to the device packaged in both wine preservation systems.
The hand-held device primarily consists of the body assembly, the clamp assembly, the capsule cup assembly, and the needle assembly. The body assembly is made-up of key structural components, a regulator subassembly, a capsule cup assembly, and a valve subassembly.
The valve assembly, which regulates the flow of compressed argon gas and controls the flow of wine, is assembled in Indonesia. The assembly of the valve sub-assembly is completed in Indonesia. The Chinese O-rings are assembled to the stem. The Chinese spout is pressed to the Indonesian valve body. The stem with O-rings is inserted into the Indonesian valve body with spout. Springs are placed over the Chinese stem; an Indonesian spring retainer is screwed in place and an Indonesian stem coupling is attached.
The regulator assembly is assembled in Indonesia. First, the lance subassembly is constructed by assembling a U.S. filter and Chinese O-ring to a Chinese lance. The process goes on by assembling and press-fitting a Chinese O-ring, a seal retainer, a Japanese ball, a Chinese ball spring to each other, which is followed by adding an Indonesian piston with a Chinese depressor and Chinese O-ring. Afterwards, a Chinese O-ring seal, a Japanese Ball, a Chinese ball spring, O-ring, washer, and steel cap are pressed in place. The piston with the O-ring, spring, and Chinese cap are then pressed on. The components are screwed in place. The second stage regulator components are then joined together. The components consist of an Indonesian retainer, a Chinese piston spring, an Indonesian piston, an Indonesian body, a Japanese ball, O-rings, washers, and ball springs.
The clamp assembly is assembled in Indonesia. It begins by adhering a Chinese clamp back pad to an Indonesian clamp body with heat and pressure. The left and right clamp arms are assembled to the clamp body using heat. Springs and bearings are then positioned into the clamp bodies. The pivot tubes of Chinese origin are then positioned and screwed into place.
The capsule cup assembly is assembled in Indonesia. This assembly process begins by manually adding the Chinese load cell disc and cup to the Indonesian capsule cup. The components are screwed in place. The right and left deco plates are then installed.
An Indonesian needle guide insert, and lock-out plunger are assembled to each other to from the needle guide assembly.
During the final assembly of the hand-held device, which occurs in Indonesia, a U.S. manufactured gas hose and lock ring are assembled to the regulator. In sequence, a regulator seal, regulator, sleeve, and Indonesian platform are installed. The gas hose is then connected to the valve assembly and interconnected to an Indonesian trigger and coupling. The Indonesian head and nose covers are installed on the assembly and screwed in place. A friction stop and spring are assembled and inserted. The assembly process continues by sliding the clamp assembly onto the body assembly and then, the capsule cup assembly is screwed in place. Afterwards, the needle guide assembly is screwed to the clamp body. The clamp body is locked to the body assembly and the capsule cup is screwed into place. The needle is added. Amongst the steps, the rail is connected or assembled to the body. Throughout the steps, lubrication is applied. Various tests and inspections are also completed between the assembly processes.
Upon completion, the Model Six hand-held device is packaged together with the aforementioned components to produce the Model Six Plus and the Model Six Plus Premium wine preservation systems.
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.
“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).
In order to determine whether a substantial transformation occurs when components of various origins 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 operations that are minimal will generally not result in a substantial transformation.
With both systems, components from China and Indonesia are assembled to each other in Indonesia to produce a hand-held device, which imparts the essential character of each set. However, as described above, the assembly processes of the hand-held device are rather simple, as the steps consist of pressing, inserting, and screwing components to each other. Instead, the country of origin of the hand-held device should be determined by their essence, which is the valve assembly, as it controls the flow of gas and in turn, the flow of wine. The country of origin of the valve assembly is Indonesia, as the origin of the valve body is Indonesia. Therefore, the origin of the hand-held device is Indonesia. Accordingly, the origin of the Model Six Plus and Model Six Plus Premium wine preservation systems for marking purposes and the purposes of Section 301 Trade Remedies is Indonesia.
With regard to the application of Section 301 Trade Remedies, we note that goods originating from China unless specifically excluded, are subject to the trade remedy duties. As articles of Chinese origin are packaged in the Model Six Plus and Model Six Plus Premium wine preservations systems, we refer to the guidance pertaining to sets packaged for retail sale, which is provided on the CBP website under “CBP Section 301 Trade Remedies Frequently Asked Questions.” The answer to “How are the Section 301 duties assessed in respect to sets packaged for retail sale, which contain components covered by the Section 301 remedy,” reads, in pertinent part, as follows:
When importing goods put up in sets for retail sale (in accordance with General Rule of Interpretation 3) that contain articles subject to the Section 301 remedy, if the product that imparts the essential character to the set (i.e., the HTSUS provision under which the entire set is classified) is covered by the Section 301 remedy, then the entire set will be subject to the additional 25% duties.
Here, we find the hand-held device, which is of Indonesian origin, imparts the essential character of the Models Six Plus and Model Six Plus Premium wine preservation systems. As such, the Models Six Plus and Model Six Plus Premium wine preservation systems are not 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 marking of the system, we would note that Treasury Decision (T.D.) 91-7, published in Volume 25, Customs Bulletin and Decisions, at 6 (January 16, 1991), addressed, among other things, the application of country of origin marking requirements to sets. It states therein, specifically at 16: . . . in most cases, the mere inclusion of an item in a collection will not substantially transform it into an article with a new name, character or use and, therefore, each item must be separately marked with its own country of origin. (Where the marking of the container will reasonably indicate the country of origin to the ultimate purchaser, the container may be marked instead of the individual articles. See 19 U.S.C. 1304(a)(3)(D) and 19 CFR 134.32(d)). This result is consistent with the purpose of the marking statute since the ultimate purchaser’s decision as to whether to buy the set might be influenced by the country of origin of any of the items in the set, whether or not an item gives the set its essential character.
In considering T.D. 91-7, we find that the Chinese origin components packaged in the wine preservation systems are not substantially transformed as a result of being packaged with the Indonesian components, and the individual components and the origin of all items within the systems must be identified. Consequently, each article must be individually marked with their country of origin, provided such marking is visible through the retail packaging of the systems, or the packaging must identify the origin of each of these items.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. Part 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].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division