MAR-2 OT: RR: NC: N4:424
Mr. Juan Moreno
Zisser Customs Law Group, PC
9355 Airway Road, Suite 1
San Diego, CA 92154
RE: The Country of Origin of Golf Clubs assembled in Vietnam or Mexico and the Applicability of Section 301 Trade Remedies
Dear Mr. Moreno:
In your letter dated August 13, 2019, on behalf of Callaway Golf Company, you requested a ruling on the country of origin and application of Section 301 additional duties for golf clubs.
The merchandise under consideration is identified as “Epic Flash Series” golf clubs. This model series offers customer options for gender, left vs. right hand, loft degree, shaft material and grip. The golf club components consist of a golf club head, a shaft, and a grip.
As an initial matter, we would note that the applicable subheading for the subject golf clubs will be 9506.31.0000, Harmonized Tariff Schedule of the United States HTSUS, which provides for "Articles and equipment for general physical exercise…athletics, other sports…parts and accessories thereof: Golf clubs, complete" The rate of duty will be 4.4% ad valorem.
In your request you provide three assembly scenarios for the various foreign components, discussed hereafter, and assert that in each scenario the golf clubs produced are not subject to Section 301 measures for products of China because in each scenario the golf club heads are fully manufactured in Taiwan with only minor finishing processes in China. You further state that the Taiwanese golf club heads represent the essential character of the finished golf clubs and that the country of origin is controlled by the country of origin of the golf club head which in all three scenarios would be Taiwan. We disagree in part.
Please note that the first scenario presents a new and novel issue and will be forwarded to our Headquarters office for consideration under ruling number N306219.
In the second scenario, you state the golf club heads are fully manufactured in Taiwan (with only minor finishing processes in China), the country of origin of the shaft will be Vietnam and the grip is said to be sourced from China. The assembly of the golf club components into a functional golf club is performed in Vietnam through operations such as bonding the golf club head body to the shaft, molding the rubber grip to the upper portion of the shaft, polishing and painting to give the clubs a finished appearance.
In the third scenario provided, you state the golf club heads are fully manufactured in Taiwan (with only minor finishing processes in China), the country of origin of the shaft will be Mexico and the grip is said to be sourced from China. You state that the assembly process will take place in Mexico. The assembly of the golf club components into a functional golf club is performed through operations such as bonding the golf club head body to the shaft, molding the rubber grip to the upper portion of the shaft, polishing and painting to give the clubs a finished appearance.
With regard to your request for the appropriate country of origin of the golf clubs, 19 C.F.R. § 134.1(b) provides in pertinent part as follows:
Country of origin means 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.
Nonetheless, while the NAFTA marking rules contained in 19 C.F.R. Part 102 will determine the country of origin for marking purposes, the substantial transformation test will determine the country of origin for purposes of the Section 301 measures. See, e.g., Headquarters Ruling Letter (“HQ”) H301619, dated November 6, 2018. Similarly, for purposes of determining the origin in Scenario 2, we apply the substantial transformation test.
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.
In our view, and consistent with HQ 560803, we find that in scenario 2, the golf club heads and Chinese grips are substantially transformed in Vietnam by the addition of the Vietnamese shaft and assembly of the golf clubs in Vietnam. Similarly, we find that in Scenario 3, the golf club heads and Chinese grips are substantially transformed in Mexico by the addition of the Mexican shaft and assembly of the golf clubs in Mexico. Thus the country of origin for the golf clubs described in scenario 2 will be Vietnam and the country of origin for the golf clubs described in scenario 3 will be Mexico. Therefore, Section 301 trade remedies are not applicable.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 CFR 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 Roseanne Murphy at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division