CLA-2 OT:RR:NC:N1:102
Robert D. Stang
Husch Blackwell LLP
750 17th Street, NW, Suite 900
Washington, DC 20006
RE: The country of origin of an incomplete oil beam pumping unit and the applicability of certain trade remedies under Section 301
Dear Mr. Stang:
In your letter dated February 25, 2021, on behalf of Liberty Lift Solutions LLC, you requested a ruling on the country of origin of an incomplete oil beam pumping unit. A description of the assembly process was submitted for our review.
The merchandise under consideration is an incomplete oil beam pumping unit, model number HE 912-365-192, HP. The pumping unit consists of a horsehead assembly, a walking beam assembly, a wireline assembly, a bearing assembly, a post assembly, a caged ladder assembly, a pitman and equalizer assembly, a sub-base and frame assembly, high prime extension assembly, a brake handle assembly, a belt guard assembly, a mesh crank guard assembly, a gear reducer, motor rails, and a crank arm assembly. The oil beam pumping unit is imported without counterweights, sucker rods, a motor, and a belt that connects the motor to the gear reducer. In some instances, the oil beam pumping unit may also be imported without a gear reducer, also referred to as a speed reducer that transmits power. The incomplete, above-ground pumping unit in both instances consists of various sub-assemblies, and once connected with rods, a motor, and other connections, the unit moves downward and upward to displace oil from the bottom of an oilwell to the surface.
In your letter, you mention that Liberty Lift Solutions LLC has obtained two rulings confirming the incomplete beam pumping units are classified within subheading 8413.50.0010, Harmonized Tariff Schedule of the United States (HTSUS), and reference New York rulings N299594, dated August 27, 2018, and N302966, dated March 28, 2019. We agree, as the incomplete oil beam pumping unit, with and without the gear reducer, has the essential character of a complete pumping unit at the time of importation.
In accordance with GRI 2a, the applicable subheading for the subject oil beam pumping unit, model number HE 912-365-192, HP, in both scenarios, will be 8413.50.0010, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Pumps for liquids, whether or not fitted with a measuring device; liquid elevators; Other reciprocating positive displacement pumps; Oil well and oil field pumps. The rate of duty is Free.
In regard to the country of origin, two scenarios were submitted for our review. As previously mentioned, in one scenario, the oil beam pumping unit is imported with a gear reducer and in another scenario, the pumping unit is imported without a gear reducer. Nevertheless, in both scenarios, the oil beam pumping unit is assembled in Mexico from sub-assemblies that originate from China and Mexico.
The sub-assemblies manufactured in Mexico are the walking beam assembly, the frame and sub-base assembly, the high-extension assembly, the post assembly, the horsehead assembly, the belt guard assembly, the crank guard assembly, the caged ladder assembly, and the equalizer beam assembly. The manufacturing process of these sub-assemblies begins by forming Mexican or U.S. steel into flange beams, angle irons, channels, arm castings, sheet metal, angles, irons, square tubing, flat bars, round bars, a horse head, wire mesh and flat plates. The surfaces of these metal shaped components are cleaned, blasted, and machined accordingly, e.g., drilling holes, straightening, cutting to size, etc. The components are then welded and fitted to each other to form the various sub-assemblies. Afterwards, the completed sub-assemblies are inspected and painted. It is noted that the horsehead cradle used in the walking beam assembly is from China.
During the final assembly of the oil beam pumping unit, which also occurs in Mexico, the sub-base and frame assembly are set up and leveled. Afterwards, the high prime extension assembly and the motor rails from China are bolted to the sub-base and frame assembly. If included, the Chinese gear reducer assembly is installed, aligned, and bolted to the top of the sub-base and frame assembly.
The post assembly is connected to the sub-base and frame assembly. Center clamps and a bearing assembly from China are then installed and bolted into place. The equalizer beam assembly is assembled to the center clamps and the pitman arms are bolted to the equalizer beam assembly. The pitman arms are connected to the wrist pins on the Chinese crank arms. Alignments are completed throughout the various assembly processes.
The final assembly continues by bolting a steel bar to the horsehead assembly. A bar is inserted in the horsehead bracket, which is welded to the walking beam assembly. A Chinese wireline assembly is connected to the horsehead assembly. The ladder assembly is then connected to the post assembly. If the gear reducer is included, the belt guard assembly is connected to the gear reducer assembly and the high prime extension assembly. The brake assembly from China and crank guard assembly are then connected. Alignments and inspections are completed throughout the various steps. Upon completion, the oil beam pumping unit is partially disassembled for transportation purposes.
With regards to your request for the appropriate country of origin of the oil beam pumping unit, 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. As stated in HQ 735009, dated July 30, 1993, “The country of origin is the country where the article last underwent a “substantial transformation” that is, processing which results in a change in the article's name, character, or use.”
The test for determining whether a substantial transformation will occur is whether an article emerges from a process with a new name, character, and 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 both scenarios, components from Mexico and a horsehead cradle from China are connected to form subassemblies in Mexico. The sub-assemblies formed in Mexico consist of Mexican or U.S. steel being formed into flange beams, angle irons, channels, arm castings, sheet metal, angles, irons, square tubing, flat bars, round bars, a horse head, wire mesh and flat plates. The metal shaped components are machined accordingly, e.g., drilling holes, straightening, cutting to size, etc. The Mexican machined components and the Chinese horsehead cradle are then welded and fitted to each other to form the various sub-assemblies. The sub-assemblies manufactured in Mexico are the walking beam assembly, the frame and sub-base assembly, the high-extension assembly, the post assembly, the horsehead assembly, the belt guard assembly, the crank guard assembly, the caged ladder assembly, and the equalizer beam assembly.
Afterwards, the various Mexican produced subassemblies are joined or assembled to components and subassemblies from China during the final assembly in Mexico. The foreign components and subassemblies, which consist of a wireline assembly, a brake assembly, crank arms, center clamps, motor rails, a bearing assembly and, in some instances, a gear reducer, are integrated into an oil pumping unit in Mexico.
Therefore, it is our view that the nature of the processing performed in Mexico in both scenarios is one in which the foreign components lose their separate identities to become a new and different article of commerce with a new name, character, and use, i.e., an incomplete Oil Well Pumping Unit. As such, the country of origin of the incomplete oil well pumping unit, model number HE 912-365-192, HP, in both scenarios will be Mexico and therefore, not subject to the Section 301 trade remedies.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. Part 177).
The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in Title 19, Code of Federal Regulations (CFR), Section 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all the information furnished in the ruling letter, whether directly, by reference, or by implication, is accurate and complete in every material respect. In the event that the facts are modified in any way, or if the goods do not conform to these facts at time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and submit a request for a new ruling in accordance with 19 CFR 177.2. You should also be aware that the material facts described in the foregoing ruling may be subject to periodic verification by CBP.
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