CLA-2-94:OT:RR:NC:1:130
Mr. Michael Dahm
Cole International USA, Inc.
1775 Baseline Rd.
Grand Island, NY 14072
RE: The classification and country of origin of modular building units
Dear Mr. Dahm:
In your letter, dated December 30, 2020, you requested a binding ruling on behalf of your client, CNTNR Modular Building Solutions. The request was returned to you for additional information, which was received by this office on March 2, 2021. Your current request indicates that you are seeking a ruling on tariff classification and country of origin. Manufacturing information was provided for our review.
The ruling request concerns modular building units. The building units are constructed from steel shipping containers and are designed to be joined with multiple other modules to form a larger building unit. The shipping containers are modified and outfitted to function as housing units. Each is constructed to have several rooms, stairs, and built-in fixtures, such as bathroom and kitchen components. The units will be permanently installed on location in the U.S.
Note 4 to Chapter 94, Harmonized Tariff Schedule of the United States (HTSUS), explains that “prefabricated buildings” are “buildings which are finished in the factory or put up as elements, entered together, to be assembled on site, such as housing or worksite accommodation, offices, schools, shops, sheds, garages or similar buildings.” At time of importation into the U.S., the units are finished in the factory and will be assembled with other modular units and installed on site. As noted, the instant units function as housing.
The applicable subheading for the modular building units will be 9406.90.0030, HTSUS, which provides for Prefabricated buildings: Other: Of metal: Other. The rate of duty will be 2.9 percent ad valorem.
In your letter and subsequent emails, you describe a scenario wherein the steel shipping containers are purchased from China and imported into Canada. The materials used in the manufacture of the building units originate in Canada, the U.S., and China. In Canada, the shipping containers are cut and structurally fortified. Framing, building and installation of walls, decks, and flooring, and installation of plumbing and electrical systems are then completed. Subsequently, the units are insulated and the interiors are finished. All manufacturing is performed in accordance with architectural specifications.
Section 134.1(b) of the Customs Regulations (19 CFR 134.1(b)) provides that the "[c]ountry of origin" means the country of manufacture, production or growth of any article of foreign origin entering the United States. Further work or material a 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 Part 134, Customs Regulations (19 CFR Part 134). Substantial transformation requires that "[t]here must be a transformation; a new and different article must emerge, ‘having distinctive name, character, or use.’" Anheuser-Busch Brewing Association v. United States, 207 U.S. 556, 28 S. Ct 204 (1908). We must therefore determine if or where a substantial transformation of materials occurs in order to determine country of origin.
While the structural container form is manufactured in China, the manufacturing in Canada is extensive. The Canadian manufacturing operations convert the container into a modular, prefabricated building designed specifically for use as housing. We find that the container is substantially transformed into a modular building unit, i.e., a new and different article with a distinctive name or use. Therefore, we find that Canada is the country of origin of the modular building units.
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 Laurel Duvall at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division