CLA-2-87:OT:RR:NC:N2:206
Victor Gonzalez
Victor Gonzalez LLC
510 Enterprise St. Suite 1
Laredo, TX 78045-0006
RE: The tariff classification and country of origin of a load floor trunk.
Dear Mr. Gonzalez:
In your letter dated October 27, 2023, you requested a tariff classification and country of origin determination ruling for marking purposes and for purposes of applying trade remedies under Section 301 of the Trade Act of 1974, as amended, from China, which you filed on behalf of your client Grupo Antolin Silao, S.A. de C.V.
The product under consideration is an automotive Load Floor Trunk Automotive V & C 167 load floor HL, which consists of a substrate of a load floor with t-nuts from China, fabric from the Netherlands, adhesive, screws, brackets, and labels from the United States, and clips from Canada. You state that all components are imported into Mexico, where it is assembled together into a complete load floor trunk.
The applicable subheading for the Load Floor Trunk Automotive V & C 167 load floor HL will be 8708.29.5160, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Parts and accessories of the motor vehicles of heading 8701 to 8705: Other parts and accessories of bodies (including cabs): Other: Other: Other.” The general rate of duty will be 2.5 percent ad valorem.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8708.29.5160, 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 8708.29.5160, HTSUS, listed above.
The HTSUS is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Note cited above and the applicable Chapter 99 subheading. For background information regarding the trade remedy initiated pursuant to Section 301 of the Trade Act of 1974, you may refer to the relevant parts of the USTR and CBP websites, which are available at https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions and https://www.cbp.gov/trade/remedies/301-certain-products-china respectively.
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 at https://hts.usitc.gov/current.
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 to 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 load floor trunk 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 load floor trunk, and paragraph (a)(3) must be applied next to determine the origin of the finished article. The load floor trunk is classified under subheading 8708.29, HTSUS. The tariff shift requirement in Part 102.20 for subheading 8708.29 states:
A change to subheading 8708.29 from any other subheading, except from subheading 8708.95.
The load floor trunk substrate from China will be classified in subheading 8708.29, HTSUS. Thus, the complete load floor trunk does not meet the tariff shift. As a result, Part 102.11(a) does not apply.
Section 102.11(b) states, in relevant part:
Except for a good that is specifically described in the Harmonized System as a set, or is classified as a set pursuant to General Rule of Interpretation [("GRI")] 3, where the country of origin cannot be determined under paragraph (a) of this section:
The country of origin of the good is the country or countries of origin of the single material that imparts the essential character to the good….
In determining the "essential character" of the finished good, Section 102.18(b)(1) provides, in relevant part:
(b) (1) For purposes of identifying the material that imparts the essential character to a good under Part 102.11, the only materials that shall be taken into consideration are those domestic or foreign materials that are classified in a tariff provision from which a change in tariff classification is not allowed under Part 102.20 specific rule or other requirements applicable to the good … (ii) Materials that may be considered include materials produced by the producer of the good and incorporated in the good. For example, if a producer of a good purchases raw materials and converts those raw materials into a component that is incorporated in the good, that component is a material that may be considered for purposes of identifying the materials that impart the essential character to the good, provided that the component is classified in a tariff provision from which a change in tariff classification is not allowed under the specific rule…
The load floor trunk substrate is the single component classified in a tariff provision from which a change in tariff classification is not allowed. Accordingly, the country of origin of the Load Floor Trunk Automotive V & C 167 load floor HL for marking purposes will be China.
Regarding the applicability of Section 301 trade remedies to the load floor trunk under consideration, CBP relies on the substantial transformation analysis when determining the country of origin for purposes of applying Section 301 trade remedies. 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".
The manufacturing scenario described in your request includes gluing and bonding the fabric with the substrate, laminating, and adding the screws, clips, brackets, and label to the complete load floor trunk. The manufacturing operations described, in sum, do not substantially transform the individual components into a new and different article of commerce with a changed name, character, and use. It is the opinion of this office that the character of the entire load floor trunk is the load floor trunk substrate. Therefore, the country of origin of the complete article will be China and it will be subject to the additional duties under Section 301 of the Trade Act of 1974, as amended, upon importation.
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. Additionally, we note that the material facts described in the foregoing ruling may be subject to periodic verification by CBP.
This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection 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, please contact National Import Specialist Liana Alvarez at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division