OT:RR:NC:N2:220
Thomas Keating
Rock Trade Law, LLC
134 N. LaSalle St
Chicago, IL 60602
RE: The country of origin of an electric motor and the applicability of certain trade remedies under Section 301
Dear Mr. Keating:
In your letter dated Nov 30, 2020 you requested a country of origin ruling on behalf of your client, Johnson Electric North America, Inc., and request a confirmation that Section 301 remedies do not apply to the electric motor upon importation.
The merchandise under consideration is identified as the Shaded Pole Synchronous AC Motor (motor), PN SP61k16-120-01, (also notated as Johnson part number V-C09019EP), which you describe as a single phase AC induction motor that has an input voltage of 120 VAC and an output of 7.93 W. You state the motor is typically used in household ventilation fans, are valued under $4 each, and suggest a tariff classification of subheading 8501.10.2000, Harmonized Tariff Schedule of the United States (HTSUS). We agree.
The subject motor consists of three subassemblies that are identified as the bobbin coil subassembly, the stator subassembly, and the rotor subassembly. The bobbin coil subassembly is produced at your client’s Mexican facility by forming the bobbin through from injection molded thermoplastic resin into a plastic bobbin, wrapping winding wire around the plastic bobbin, and applying an insulating covering. Based on the information provided, the plastic resin is sourced from the United States and the winding wire is sourced from China.
Likewise, the stator subassembly is produced at your client’s Mexican facility by stamping individual laminations from slitted silicon steel sheet, stacking and pressing the laminations to form a stator stack and a yoke stack. The two lamination stacks are joined together with the bobbin coil subassembly and machine pressed, then annealed copper wire is wrapped around the laminations to form a shaded coil for the stator. Based on the information provided, the steel sheet and the wire are sourced from Japan.
Next, the rotor subassembly is assembled at your client’s Mexican facility by machine pressing the shaft into the rotor, and adding washers and a sleeve to the shaft. We would note that the shaft and the rotor are of Chinese origin.
Lastly, the assembly operation is stated to occur at your client’s Mexican facility and begins with pressing a bearing and retainer onto a bracket frame. You state that the bearing, retainer, and frame are of Chinese origin. The frame subassembly, the rotor subassembly, and stator subassembly are then fitted together and secured with two screws. The assembled motor is tested and anti-rust oil is applied.
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.”
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).
To allow for a more seamless transition period, at this time, CBP continues to utilize the marking rules set forth in 19 C.F.R. Part 102, with the exception of 19 C.F.R. § 102.19, for purposes of country of origin marking with respect to goods from Canada and Mexico. Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes, with the exception of textile goods which are subject to the provisions of 19 C.F.R. § 102.21. See 19 C.F.R. § 102.11. Applied in sequential order, the required hierarchy establishes that the country of origin of a good is the country in which:
(1) The good is wholly obtained or produced;
The good is produced exclusively from domestic materials; or
Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in § 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because the subject motors are neither wholly obtained or produced or produced exclusively from “domestic” materials. Because the analysis of sections 102.11(a)(1) and 102.11(a)(2) does not yield a country of origin determination, we look to section 102.11(a)(3). “Foreign material” is defined in section 102.1(e) as “a material whose country of origin as determined under these rules is not the same country as the country in which the good is produced.”
The applicable tariff shift requirement in section 102.20 for the electric motor of heading 8501, HTSUS, is:
A change to subheading 8501 from any other heading.
The foreign material in this case consists of the rotor, the shaft, the wire, the steel sheet, the bracket frame, the bearing, and the plastic resin. As the none of the components that make up the motor are classified under heading 8501, HTSUS, the tariff shift requirement of section 102.11(a)(3) is met. As such, we find that the motors meet the marking rule and may be marked as products of Mexico.
With regard to the applicability of Section 301 remedies, in our view, the rotor and stator are the dominant components of a finished electric motor. Although the shaft and the rotor originate from China, the insertion of the shaft into the rotor occurs in Mexico. Furthermore, the manufacturing of the stator subassembly is significant, where lamination plates are stamped and pressed together, two individual subassemblies are joined together, and they are further processed by winding wire, etc. In our view, these stator assembly operations transform the individual components into stators of Mexican origin. Additionally, the bobbin is injection molded in Mexico. Based on the facts presented, it is the decision of this office that the manufacturing and assembly operations, in sum, substantially transform the individual components into a new and different article of commerce with a changed name, character, and use. It is the opinion of this office that the manufacturing and assembly processes performed in Mexico result in a substantial transformation of the non-Mexican components and the motor is a product of Mexico. Therefore, the motor will not be 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