CLA-2-85:OT:RR:NC:N2:220
TARIFF: 8501.31.4000; 9903.88.02
Janet Reiner
OEC Logistics Inc.
2200 Lind Ave SW
Renton, WA 98057
RE: The tariff classification and country of origin of a gear motor
Dear Ms. Reiner:
In your letter dated January 7, 2020 you requested a country of origin ruling on behalf of your client, Mach Motion Products Inc.
The merchandise under consideration is identified as a DC Gear Motor, Item 57# BLDC, which you describe as a DC electric motor having a maximum power output of 78.5 Watts. The Gear Motor subassemblies consist of the stator, the rotor, the gear box, the housing, end covers, and an electrical connector.
You state that the motor is assembled in India from components sourced from India and China. Specifically, the stator, the rotor, and the gear box are said to be of Chinese origin, while the housing, the end covers, and the electrical connector are of Indian origin. The assembly process consists of bolting the gear box onto the assembled rotor/stator, making the electrical connection, inserting the subassembly into the housing, and attaching the end covers. Once the Gear motor is assembled, it is tested for proper sealing and for electrical performance.
In your request, you suggest the subject Gear Motor is classified under subheading 8501.31.4000, Harmonized Tariff Schedule of the United States (HTSUS). We agree.
The applicable subheading for the DC Gear Motor, Item 57# BLDC will be 8501.31.4000, HTSUS, which provides for "Electric motors…: Other DC motors…: Of an output not exceeding 750W: Motors: Exceeding 74.6 W but not exceeding 735 W." The general rate of duty will be 4%.
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 Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308 (2016), the Court of International Trade (“CIT”) interpreted the meaning of “substantial transformation” as used in the Trade Agreements Act of 1979 (“TAA”) for purposes of government procurement. In Energizer the court reviewed the “name, character and use” test in determining whether a substantial transformation had occurred in determining the origin of a flashlight, and reviewed various court decisions involving substantial transformation determinations. The court noted, citing Uniroyal, Inc. v. United States, 3 C.I.T. 220, 226, 542 F. Supp. 1026, 1031, aff’d, 702 F.2d 1022 (Fed. Cir. 1983), that when “the post-importation processing consists of assembly, courts have been reluctant to find a change in character, particularly when the imported articles do not undergo a physical change.” Energizer at 1318. In addition, the court noted that “when the end-use was pre-determined at the time of importation, courts have generally not found a change in use.” Energizer at 1319, citing as an example, National Hand Tool Corp. v. United States, 16 C.I.T. 308, 310, aff’d 989 F.2d 1201 (Fed. Cir. 1993). Furthermore, courts have considered the nature of the assembly, i.e., whether it is a simple assembly or more complex, such that individual parts lose their separate identities and become integral parts of a new article.
Regarding the country of origin of the Gear Motor, we would note that the finished machine consists of a number of discrete subassemblies, namely the rotor, the stator, and the gearbox, that are previously manufactured in China. Each of the Chinese subassemblies are dedicated for use with the Gear Motor, such that they have no other purpose other than as the principal components of the motor. In our view, the assembly operation performed in India, which consists of fastening the motor subassemblies, is not complex. The Gear Motor is produced by joining these subassemblies together to form a motor, but the Chinese subassemblies do not undergo a physical change as a result of assembly operations performed.
Therefore, based upon the facts presented, it is the opinion of this office that the assembly process performed in India does not result in a substantial transformation of the Chinese goods. The components themselves are not transformed in India into a new and different article of commerce with a name, character, and use distinct from the articles exported from China. Therefore, the DC Gear Motor, Item 57# BLDC, is considered a product of China for origin and marking purposes at time of importation into the United States.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8501.31.4000, HTSUS, unless specifically excluded, are subject to an additional 25 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.02, in addition to subheading 8501.31.4000, HTSUS, listed above.
The articles in question may be eligible for an exclusion from the Section 301 tariffs, however, that determination will be made independently of the tariff classification ruling. For further information on admissibility, please contact your assigned Customs Center of Excellence & Expertise office prior to importation of the goods.
The HTSUS is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Note cited above and the applicable Chapter 99 subheading. For background information regarding the trade remedy initiated pursuant to Section 301 of the Trade Act of 1974, you may refer to the relevant parts of the USTR and CBP websites, which are available at:
https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions https://www.cbp.gov/trade/remedies/301-certain-products-china
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