OT:RR:NC:N1:105
Robin Cowen
Roser & J. Cowen Logistical Services, LTD.
4695 Towerwood Dr. Brownsville, TX 78521
RE: The country of origin of a pressure washer
Dear Ms. Cowen:
In your letter dated February 8, 2023, on behalf of your client, FNA Group, you requested a country-of-origin ruling.
The item under consideration is described as a gas-powered pressure washer (model 61255). The 3000 PSI pressure washer is designed to be attached to a truck or cart or can also be used in a stationary position in a wash bay. Wheels and other small items can be added in the U.S. if required by the customer. The high-pressure nozzle is assembled onto the discharge side of the pressure outlet to create the required water pressure. This setup replaces a typical tube and gun found on residential pressure washers. The finished pressure washer measures 22 inches long by 16 inches wide by 17 inches deep and weighs 25 pounds. The 61255 commercial pressure washer is only sold through pressure washer distributors, chemical and sanitation supply companies, maintenance supply companies and construction supply companies and is not sold in retail stores or the internet.
As you suggested in your letter, the applicable subheading for the gas-powered pressure washer (model 61255) is 8424.30.9000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Mechanical appliances (whether or not hand operated) for projecting, dispersing or spraying liquids or powders; fire extinguishers, whether or not charged; spray guns and similar appliances; steam or sand blasting machines and similar jet projecting machines; parts thereof: Steam or sand blasting machines and similar jet projecting machines: Other.” The general rate of duty is free.
Regarding the country of origin of the pressure washer, the processing in Mexico involves the assembly of several components of Chinese and U.S. origins. This includes a Chinese engine and pump along with U.S. fasteners, a mounting plate and a nozzle, which are all assembled in Mexico. The engine provides 55% of the overall cost while the pump provides 22% of the overall cost. In Mexico, the engine shaft spacer is attached to the engine shaft key. An anti-seize is then applied prior to the base plate being screwed onto the engine mounting plate. The installer will then verify the shaft key installation before installing the pump onto the engine shaft with four bolts. After testing the engine and pump, the remaining items are attached and packaged for retail sale.
The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. 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; however, for a good of a NAFTA or USMCA country, the marking rules set forth in part 102 of this chapter (hereinafter referred to as the part 102 Rules) will determine the country of origin.” Pursuant to section 102.0, interim regulations, related to the marking rules, tariff-rate quotas, and other USMCA provisions, published in the Federal Register on July 6, 2021 (86 FR 35566), the rules set forth in §§ 102.1 through 102.18 and 102.20 determine the country of origin for marking purposes with respect to goods imported from Canada and Mexico. Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes, with the exception of textile goods which are subject to the provisions of 19 C.F.R. § 102.21. See 19 C.F.R. § 102.11. Applied in sequential order, 19 CFR Part 102.11(a) provides that the country of origin of a good is the country in which: (1) The good is wholly obtained or produced; (2) The good is produced exclusively from domestic materials; or (3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in Part 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
The pressure washer is neither “wholly obtained or produced” nor “produced exclusively from domestic materials.” Therefore, paragraphs (a)(1) and (a)(2) cannot be used to determine the country of origin of the pressure washer, and paragraph (a)(3) must be applied next to determine the origin of the finished article. The pressure washer is classified under subheading 8424.30, HTSUS. The tariff shift requirement in Part 102.20 for the pressure washer at issue states: A change to subheading 8424.10 through 8424.89 from any other subheading including another subheading within that group.
As the non-originating Chinese engine is classified in 8407 and the Chinese origin pump is classified in 8413 and undergo the processing in Mexico to turn it into an article of heading 8424, the tariff shift requirement of section 102.11(a)(3) is met. Accordingly, the country of origin of the pressure washer for marking purposes is Mexico. The United States Trade Representative has determined that an additional ad valorem duty of 25% will be imposed on certain Chinese imports pursuant to its authority under Section 301(b) of the Trade Act of 1974 (Section 301 measures). When determining the country of origin for purposes of applying current trade remedies under Section 301, the substantial transformation analysis is applicable. The test for determining whether a substantial transformation will occur is whether an article emerges from a process with a new name, character, or 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). To determine whether a substantial transformation has occurred, CBP considers the totality of the circumstances and makes such determinations on a case-by-case basis. CBP has stated that a new and different article of commerce is an article that has undergone a change in commercial designation or identity, fundamental character, or commercial use.
Regarding the applicability of Section 301 trade remedies, in our view, the foreign components are not substantially transformed into a new and different article of commerce by the manufacturing process performed in Mexico. The essence of the finished pressure washer continues to be the Chinese engine and pump which both maintain their identity. The Chinese engine and pump are in complete working order and only require simple assembly to be combined and attached to the base plate and other components. The engine and pump account for 77% of the overall cost of the pressure washer. Additionally, the engine and pump are the primary components by weight and volume of the finished pressure washer. The essence of the finished pressure washer is provided by the ability to spray pressurized water, which is provided by the Chinese engine and pump. In view of these facts, the country of origin for Section 301 trade remedies is China.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8424.30.9000, HTSUS, unless specifically excluded, are subject to an additional 25 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.03, in addition to subheading 8424.30.9000, HTSUS, listed above.
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a [CBP] field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.”
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 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 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 Jason Christie at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division