OT:RR:NC:N1:105
Matthew Bock
Bock Trade Law
53 State Street, Suite 500
Boston, Massachusetts 02109
RE: The country of origin of a Diesel Emissions Fuel Sensor and a Diesel Emissions Fuel Sensor with Urea Quality Sensor
Dear Mr. Bock:
In your letter dated June 1, 2022, on behalf of your client, KUS Auto (Dongguan Zhengyang Electronic Mechanical Ltd.), you requested a country of origin ruling determination on a Diesel Emissions Fuel (DEF) Sensor and a DEF Sensor with Urea Quality Sensor (UQS).
DEF is a non-hazardous solution used within a selective catalytic reduction (SCR) system to break down harmful pollutants generated by a diesel engine. The fluid is sprayed and then spread into the exhaust gas via a mixer before entering the SCR catalyst. As DEF enters the SCR catalyst, it evaporates into ammonia and water. The ammonia sticks on the SCR catalyst and binds with the nitrogen oxides as they pass over the catalyst. Once bound, the nitrogen oxides combine with the ammonia to create a chemical reaction resulting in nitrogen and water. This process reduces harmful emissions and increases fuel efficiency.
The first item under consideration is described as a Diesel Emissions Fuel Sensor. The DEF level sensor measures the level of fluid remaining in the DEF tank. When the liquid level is low, the DEF level sensor sends a signal to the vehicle’s electronic control unit (ECU), which then triggers the warning light on the gauges or panel. The DEF sending unit, which incorporates the DEF level sensor, mounts to the DEF tank. It integrates liquid level and temperature measurement functions, and it also regulates DEF temperature via a heating function that utilizes the engine’s coolant. At its core, the sensor has a simple circuit/device for measuring level (using a reed-switch level sensor) and temperature (using a negative temperature coefficient temperature sensor). The DEF sensor operates by taking input from the sensors, converting it, reading/analyzing it, and exporting it, via the CAN Controller and Handler, to the vehicle.
The second item under consideration is described as a Diesel Emissions Fuel Sensor with Urea Quality Sensor. A UQS can also be integrated into the DEF sender to measure DEF concentration, as well as to perform a multitude of other functions such as DEF level, DEF temperature, DEF concentration, DEF quality/presence of contaminants, unacceptable scenarios (e.g., sensor being out of liquid urea solution), and hardware failure status related to quality measurement. All of these components work together to ensure SCR system efficiency.
For both sensors, all of the printed circuit board assembly (PCBA) hardware and software that is required to 1) convert information from the external sensors 2) read and analyze such information, and 3) export information/data to an external connector, will be manufactured in Taiwan. Beyond these core elements, the DEF sensor consists of stainless-steel tubing, injection molded plastic parts, and certain brackets and fasteners which are manufactured in China. Final assembly is also completed in China. To manufacture the PCBA hardware, the workers solder electronic components, such as integrated circuits, resistors, capacitors, diodes, transistors, encoders, etc. onto a bare printed circuit board (PCB). Additionally, the software is completely developed and installed in Taiwan.
Once complete, the PCBA hardware with installed software is sent to China where the following steps are completed: 1) Stainless steel tube making and bending 2) Injection molding of plastic parts 3) manufacturing of brackets 4) final assembly of the sensors and 5) testing, quality control, packaging and shipping. The assembly process includes various steps including placing O-rings onto connectors, screwing components into place (such as the cover and plastic head), welding pipe fittings, welding the metal cover, gluing various components, curing the e-poxy, soldering wire and cable to the metal parts housing and heat shrinking the tube around the wires. Testing includes leakage testing, functional testing and temperature testing. With regard to your request for the appropriate country of origin of the sensors, 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. For tariff purposes, 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). Further, in Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308 (2016), the Court of International Trade (“CIT”) interpreted the meaning of “substantial transformation” as used in the Trade Agreements Act of 1979 (“TAA”) for purposes of government procurement. In Energizer the court reviewed the “name, character and use” test in determining whether a substantial transformation had occurred in determining the origin of a flashlight, and reviewed various court decisions involving substantial transformation determinations. The court noted, citing Uniroyal, Inc. v. United States, 3 C.I.T. 220, 226, 542 F. Supp. 1026, 1031, aff’d, 702 F.2d 1022 (Fed. Cir. 1983), that when “the post-importation processing consists of assembly, courts have been reluctant to find a change in character, particularly when the imported articles do not undergo a physical change.” Energizer at 1318. In addition, the court noted that “when the end-use was pre-determined at the time of importation, courts have generally not found a change in use.” Energizer at 1319, citing as an example, National Hand Tool Corp. v. United States, 16 C.I.T. 308, 310, aff’d 989 F.2d 1201 (Fed. Cir. 1993). Furthermore, courts have considered the nature of the assembly, i.e., whether it is a simple assembly or more complex, such that individual parts lose their separate identities and become integral parts of a new article. Regarding the country of origin of the subject sensors, in our opinion, the Taiwanese PCBA and associated software provides the essence of the finished sensor and the assembly operations performed in China, which consists of stainless steel tube making and bending, injection molding of plastic parts, manufacturing of certain brackets and final simple assembly (including screwing, gluing, soldering and welding), is not complex. Furthermore, the addition of the Chinese components does not effect a change to the PCBA’s primary purpose of providing measurements. Finally, the PCBA functionality was predetermined when leaving Taiwan and does not undergo a physical change as a result of the assembly process described.
Therefore, based upon the facts presented, it is the opinion of this office that the assembly process performed in China does not result in a substantial transformation of the Taiwanese PCBA and software. The components themselves are not transformed in China into a new and different article of commerce with a name, character, and use distinct from the articles exported from Taiwan. Consequently, the country of origin of the Diesel Emissions Fuel Sensor and the DEF Sensor with Urea Quality Sensor is Taiwan.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 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 of 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 Jason Christie at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division