CLA-2-87:OT:RR:NC:N2:201
Mr. David Stepp
Crowell & Moring LLP
515 South Flower Street, 40th Floor
Los Angeles, CA 90071 RE: The tariff classification and country of origin of an electric scooter Dear Mr. Stepp: This is in response to your letter dated May 30, 2021, you requested a classification and country of origin ruling determination on electric scooters on behalf of your client, Neutron Holdings, d/b/a Lime, located in Hayward, California.
The merchandise under consideration has been identified as the Lime “T1” series of seated electric scooters.
The T1 scooter is a seated scooter powered by a 1200- watt rear-wheel hub motor capable of a maximum speed of 20 mph with a range of 30 miles. The T1 weighs 106 lbs. and has a maximum weight of 330 lbs.
You state that while the scooter will be ultimately assembled in China, the scooter frame will be made in Taiwan. You state that these electric scooters contain nearly identical type components to ones found in electric bicycles, and therefore should be classified under the same classification, 8711.60.0090, Harmonized Tariff Schedule of the United States (HTSUS). We agree.
The applicable subheading for the Lime T1 scooter will be 8711.60.0090, HTSUS, which provides for “Motorcycles (including mopeds) and cycles fitted with an auxiliary motor, with or without side-cars; side-cars: With electric motor for propulsion: Other”. The rate of duty will be Free.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at https://hts.usitc.gov/current.
In your request you question the Country of Origin under three (3) scenarios:
In the first manufacturing scenario, the frame of the T1 scooter will be fully manufactured and finished in Taiwan. The metal for the frame will be sourced in sheet form from Taiwan vendors where it will be processed into tubes and other components using extrusion, forging, and additional manufacturing processes. The components then will be welded together into the frame which will be heat treated to strengthen the metal. After the frame is painted in Taiwan, it will be shipped to China where the remaining components (including the handlebar, motor, fork, tires, and seat) of Chinese origin will be assembled to the frame. The finished scooter will be tested, packed, and imported into the United States.
In the second manufacturing scenario, the frame of the scooter also will be fully manufactured in Taiwan. The metal for the frame will be sourced in sheet form from Taiwan vendors where it will be processed into tubes and other components using extrusion, forging, and additional manufacturing processes. The components will be welded together into the frame which then will be heat treated to strengthen the metal. The frame will be shipped to China where it will be painted and assembled to the remaining scooter components (including the handlebar, motor, fork, tires, and seat) of Chinese origin. The finished scooter will be tested, packed, and imported into the United States.
In the third scenario, the frame of the scooter also will be fully manufactured in Taiwan. The metal for the frame will be sourced in sheet form from Taiwan vendors where it will be processed into tubes and other components using extrusion, forging, and additional manufacturing processes. The components then will be welded together to form the frame and shipped to China where it will be heat treated and painted. The finished frame in China will be assembled to the remaining scooter components (including the handlebar, motor, fork, tires, and seat) of Chinese origin. The finished scooter then will be tested, packed, and imported into the United States.
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 courts have held that a substantial transformation occurs when an article emerges from a process with a new name, character or use different from that possessed by the article prior to processing. United States v. Gibson-Thomsen Co., Inc., 27 CCPA 267, C.A.D. 98 (1940); National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff’d, 989 F. 2d 1201 (Fed. Cir. 1993); Anheuser Busch Brewing Association v. The United States, 207 U.S. 556 (1908) and Uniroyal Inc. v. United States, 542 F. Supp. 1026 (1982). However, if the manufacturing or combining process is merely a minor one that leaves the identity of the article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983) (Uniroyal). Substantial transformation determinations are based on the totality of the evidence. See Headquarters Ruling (HQ) W968434, date January 17, 2007, citing Ferrostaal Metals Corp. v. United States, 11 CIT 470, 478, 664 F. Supp. 535, 541 (1987). In Uniroyal case, the court held that an upper was not substantially transformed when attached to an outsole to form a shoe and that the upper was "the very essence of the completed shoe".
It has continually been the opinion of CBP that the frame, which in this case is a product of Taiwan, is the part of the scooter that imparts its “essence”. Based on the information provided, the culmination of production processes performed in China to the Taiwanese frame does not substantially transform the frame. Accordingly, the merchandise will remain a product of Taiwan, and the Section 301 measures will not apply.
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 Matthew Sullivan at [email protected]. Sincerely, Steven A. Mack Director National Commodity Specialist Division