CLA-2-85:OT:RR:NC:N4:415
Ms. Holly M. Valk
Gentex Corporation
600 North Centennial Street
Zeeland, MI 49464
RE: The classification and country of origin of two types of automotive heater pads from Germany and Hungary.
Dear Ms. Valk:
In your letter dated January 28, 2019, you requested a classification and country of origin ruling.
The products under consideration are heater pads for an automotive side-view mirror. Two of these pads are the constant wattage (CW) type (SKU numbers 626-0368-000 and 626-0960-000) and the other two are the positive temperature coefficient (PTC) type (SKU numbers 626-0392-000 and 626-0406-000). After importation, these heater pads will be adhered to the back of an automotive side-view mirror. They are used to heat the mirror to melt ice or snow and allow for a clearer field of view.
The first type of pad under consideration is the CW heater pad. In its imported condition, the CW heater pad consists of a standard flexible printed circuit (FPC) between a double-sided adhesive on the front side and double-sided adhesive polyethylene foam tape on the back side. Both adhesives include a release liner on their exposed side. The heater pad includes two terminals on the back side of the heater which are riveted to the underlying trace. It functions when an electrical current is passed from positive to negative along a single resistive metal trace. Resistance remains constant with temperature differences.
The second type of pad under consideration is the PTC heater pad. In its imported condition, the PTC heater pad consists of a flexible polyethylene terephthalate (PET) substrate with copper traces on it. It is a FPC and is coated with a carbon-based polymer paste. The coated heater pad is between a double-sided adhesive on the front side and double-sided adhesive polyethylene foam tape on the back side. Both adhesives include a release liner on their exposed side. The heater pad includes two terminals on the back side of the heater which are riveted to the underlying traces of the FPC.
A PTC heater functions by the carbon-based paste reacting when an electrical current is passed through the copper traces between two parallel conductive traces of opposite polarity. This causes the paste to increase in temperature. The resistance is variable with temperature. The ambient temperature affects the initial startup resistance. As the temperature of the carbon-based paste increases, the resistance of the paste increases thereby decreasing heat output. As such, when the ambient temperature is lower at initial startup, the initial resistance of the paste is lower, thereby increasing heat output.
After importation into the United States, the heater pads are assembled into a sub-assembly. The subassembly consists of a heater pad between a side-view mirror and a plastic carrier plate. The front side adhesive serves as a protective layer and a mechanism to attach to the side-view mirror. The back side foam adhesive serves as a protective layer, an insulator, and as the mechanism to attach to a plastic carrier plate. The sub-assembly is sold and then will be connected to a vehicle’s side-view mirror housing, which includes an electrical connection.
In your request, you proposed that both types of heater pads were appropriately classified under subheading 8516.80.4000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for electric heating resistors assembled only with simple insulated former and electrical connections, used for anti-icing or deicing. We disagree on the PTC heater pads. It is in this office’s opinion that the layer of carbon-based polymer paste, which per your submission directly impacts the thermal properties of this product, would exclude it from heading 8516 and make heading 8545 appropriate.
The applicable subheading for the CW heater pads, SKU numbers 626-0368-000 and 626-0960-000, will be 8516.80.4000, HTSUS, which provides for “[e]lectric instantaneous or storage water heaters and immersion heaters; electric space heating apparatus and soil heating apparatus; electrothermic hairdressing apparatus (for example, hair dryers, hair curlers, curling tong heaters) and hand dryers; electric flatirons; other electrothermic appliances of a kind used for domestic purposes; electric heating resistors, other than those of heading 8545; parts thereof: [e]lectric heating resistors: [a]ssembled only with simple insulated former and electrical connections, used for anti-icing or deicing.” The general rate of duty will be Free.
The applicable subheading for the PTC heater pads, SKU numbers 626-0392-000 and 626-0406-000, will be 8545.90.4000, HTSUS, which provides for “[c]arbon electrodes, carbon brushes, lamp carbons, battery carbons and other articles of graphite or other carbon, with or without metal, of a kind used for electrical purposes: [o]ther: [o]ther.” The general rate of duty will be Free.
Duty 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 at https://hts.usitc.gov/current.
The second part of your submission was to request a country of origin determination on the two types of pads.
Per your submission, the manufacturing process is as follows:
Process 1. A custom FPC is created by selectively etching some of the copper off a PET substrate using an acid etch process, leaving only the copper traces on the front side of a sheet of PET. There are normally two to ten circuits per PET sheet; each representing an individual heater pad. For CW heater pads, a resistance test is performed on each heater pad circuit on the first etched sheet at start-up, again at specific intervals during the manufacturing process, and again on each heater pad circuit on the last sheet at the end of a production run. At this point the PTC heater pads are not technically a complete circuit at this stage.
Process 1 takes place in Germany. The PET substrate (without the copper traces) has a country of origin of Germany or United Kingdom.
Process 1a. (PTC type only) A carbon-based polymer paste is screen printed onto the front surface of the etched copper PET sheet. A resistance test is performed on PTC heater pads after the paste is applied. This process takes place in Hungary and is only applicable to the PTC heater pads. CW heater pads do not have paste applied.
Process 2. Each individual FPC profile is die cut into the final shape of the heater from each sheet.
Process 3. The front side adhesive is die-cut into the final shape of the heater from each sheet. These adhesive sheets have a country of origin of Ireland.
Process 4. The back-side foam adhesive is die-cut into the final shape of the heater from sheets. These adhesive sheets have a country of origin of United States.
Process 5. Two terminals are riveted to each heater. This process takes place in China. These terminals have a country of origin of Germany.
Process 6. The front side adhesive and back-side foam adhesive are adhered to the heater. This process takes place in China.
Process 7. A sealant is applied to the base of the terminals and UV cured. Although the terminals end up on the protected back side of the side-view mirror assembly on a vehicle after import, the sealant provides extra protection from potential corrosive fluids or materials that could possibly jeopardize circuit integrity. This process takes place in China. The sealant has a country of origin of Germany.
Process 8 (when applicable). Some finished heater pad SKU numbers may have holes die cut in them. These holes do not have any relevance to the heater pad’s function. When this process is applicable, it takes place in China.
Process 9: A final electrical resistance check is performed on each heater pad to ensure the resistance is within tolerance. At the same time, pogo pins check for the presence of the sealant described in process 7 and check for the presence of the holes (when applicable) described in process 8. This process takes place in China.
The following applies for 626-0368-000:
Process 1: Germany
Process 2: Germany
Process 3: China
Process 4: China
Process 5, 6, 7, 9: China
The following applies for 626-0960-000:
Process 1: Germany
Process 2: China
Process 3: Hungary
Process 4: Hungary
Process 5, 6, 7, 9: China
The following applies for 626-0392-000:
Process 1: Germany
Process 1a: Hungary
Process 2: Hungary
Process 3: Hungary
Process 4: Hungary
Process 5, 6, 7, 9: China
The following applies for 626-0406-000:
Process 1: Germany
Process 1a: Hungary
Process 2: Hungary
Process 3: Hungary
Process 4: China
Process 5, 6, 7, 8, 9: China
With regard to the appropriate country of origin marking of the heater pads, 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.”
For tariff purposes, 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). 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).
Based upon the facts presented and the pertinent authorities, it is in the opinion of this office that for the CW heater pads, SKU numbers 626-0368-000 and 626-0960-000, they obtain the essential character of the finished electric heating resistor when they are complete enough to be resistance tested, which is during Process 1. The steps that follow would constitute simple assembly steps that do not change the heating pad resistor element into a new and different article of commerce. As such, it is in the opinion of this office that the country of origin for this type of heater pad would be Germany.
Based upon the facts presented and the pertinent authorities, it is in the opinion of this office that when the carbon-based polymer paste is screen printed onto the front surface of the etched copper PET sheet, it is at this point that the essential character of the finished carbon-based heating element is created for the PTC heater pads, SKU numbers 626-0392-000 and 626-0406-000. This is the process that creates a carbon resistive heating element. The steps that follow would constitute simple assembly steps that do not change the heating pad resistor element into a new and different article of commerce. As such, it is in the opinion of this office that the country of origin would be Hungary.
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 Kristopher Burton at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division