CLA-2-87:OT:RR:NC:N2:201
Nicolas Guzman
Faegre Drinker Biddle & Reath LLP
320 S. Canal Street
Chicago, IL 60606
RE: The tariff classification and country of origin of a finished motorcycle Dear Mr. Guzman:
This is in response to your letter dated May 10, 2022, you requested a classification and country of origin ruling determination on a finished motorcycle, on behalf of your client, American Honda Motor Company located in Torrance, CA, for purposes of applying trade remedies under Section 301 of the Trade Act of 1974, as amended, from China.
The merchandise under consideration has been identified as the XR-150L Series Motorcycle.
You state in your follow-up e-mail to this office on May 27, 2022, that the motorcycle has a gas-powered engine with a displacement of 149.16 cubic capacity (cc).
In your request, American Honda Motor Company (AHM) asserts that the proposed manufacturing and processing operations performed in Mexico, which include direct manufacturing and extensive complex assembly operations, substantially transform individual components that are sourced in China, Japan, Thailand, and the U.S. into finished motorcycles.
As you have stated, the Mexican origin framing components represent the essential character of the Motorcycles.
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 U.S. Customs and Border Protection (CBP) that the frame, which in this case is a product of Mexico, is the part of the motorcycle that imparts its “essence”. Based on the information provided, the culmination of production processes performed in Mexico on the imported parts of the frame, does substantially transform the frame. Accordingly, the merchandise will remain a product of Mexico, and the Section 301 measures will not apply.
The applicable subheading for the XR-150L Series Motorcycle will be 8711.20.0060, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Motorcycles (including mopeds) and cycles fitted with an auxiliary motor, with or without side-cars; side-cars: With internal combustion piston engine of a cylinder capacity exceeding 50 cc but not exceeding 250 cc: Exceeding 90 cc but not exceeding 190 cc”. The general 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.
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