OT:RR:NC:N2:206
Minseok Choi
Onestop Customs Corporation
D-706-ho, 700, Pangyo-ro Bundang-gu, Seongnam-si, Gyeonggi-do 13516 South Korea
RE: The country of origin of a manual rack and pinion gear
Dear Mr. Choi:
In your letter dated February 14, 2024, you requested a country of origin ruling on a rack and pinion assembly, which you filed on behalf of your client HL Mando Corporation.
The article under consideration has been identified as a Manual Rack and Pinion Gear (MRP), which is mounted to the bottom of the vehicle and connected to the car's wheel and the driver's seat handle. The rotational motion that occurs when the driver operates the steering wheel is transmitted to the pinion gear and converted into the left/right motion of the rack gear connected to the pinion gear. The power transformed into the left and right motion is transmitted to the wheels of the vehicle by the inner ball joint (IBJ) and the outer ball joint (OBJ) assemblies.
According to the bill of materials (BOM) supplied with your request, the components comprising the MRP are purchased from China, South Korea, Indonesia, Mexico, and Poland. The final product is assembled in Mexico and exported to the United States.
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.
TheMRP 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 MRP, and paragraph (a)(3) must be applied next to determine the origin of the finished article. The MRP is classified under subheading 8708.94, Harmonized Tariff Schedule of the United States (HTSUS). The tariff shift requirement in Part 102.20 for subheading 8708.94 states:
A change to parts for steering systems of tractors suitable for agricultural use, parts for steering systems of other tractors (except road tractors), parts of cast-iron or to other parts for steering systems from any other good of subheading 8708.94 or from any other subheading, except from parts or accessories of the goods of subheading 8708.40, 8708.50, 8708.80, 8708.91, 8708.92, or 8708.95 through 8708.99; or
A change to any other good of subheading 8708.94 from parts for steering systems of tractors suitable for agricultural use, parts for steering systems of other tractors (except road tractors), parts of cast-iron or from other parts for steering systems of subheading 8708.94, except when the change is pursuant to General Rule of Interpretation 2(a), or from any other subheading, except from parts or accessories of the goods of subheading 8708.40, 8708.50, 8708.80, 8708.91, 8708.92, or 8708.95 through 8708.99, when that change is pursuant to General Rule of Interpretation 2(a).
Since the MRP is a part of steering systems, and not a complete steering system, only the first rule applies. Based on the manufacturing flowcharts submitted with your request, the rack module purchased from China, as well as the pinion and ball joint modules purchased from South Korea and Poland are classified in the same tariff provision as the finished product, subheading 8708.94.
As a result, the tariff shift is not met. Therefore, 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
There are two components that do not undergo the applicable tariff shift rule in Part 102.20 for subheading 8708.94, the rack module, and the pinion module with IBJ and OBJ. Both of these components are essential for the functioning of the rack and pinion assembly that assists in the steering of a vehicle. Since we are unable to determine which of these two components plays the more significant role in how the product is used, we find there is not a single material that imparts the essential character to the finished rack and pinion assembly. As the rack module and the pinion module are sourced from two separate countries, 102.11(b) also does not apply.
Section 102.11(c) states:
Where the country of origin cannot be determined under paragraph (a) or (b) of this section and the good is specifically described in the Harmonized System as a set or mixture, or classified as a set, mixture or composite good pursuant to General Rule of Interpretation 3, the country of origin of the good is the country or countries of origin of all materials that merit equal consideration for determining the essential character of the good.
The MRP is not a set, nor a composite good pursuant to GRI 3. It is a part of steering systems classifiable in a single subheading, pursuant to GRI 1. As a result, 102.11(c) does not apply.
Section 102.11(d) states:
Where the country of origin of a good cannot be determined under paragraph (a), (b), or (c) of this section, the country of origin of the good shall be determined as follows:
(1) If the good was produced only as a result of minor processing, the country of origin of the good is the country or countries of origin of each material that merits equal consideration for determining the essential character of the good; or
(2) If the good was produced by simple assembly and the assembled parts that merit equal consideration for determining the essential character of the good are from the same country, the country of origin of the good is the country of origin of those parts; or
(3) If the country of origin of the good cannot be determined under paragraph (d)1 or (d)2 of this section, the country of origin of the good is the last country in which the good underwent production.
The production of the MRP in Mexico involved the combination of multiple components of different origins to make a new product. This process was more than a minor processing operation or a simple assembly. See 19 C.F.R. 102.1(m) and (o). Therefore, section 102.11(d)(1) or (2) do not apply. Accordingly, the country of origin of the Manual Rack and Pinion Gear for marking purposes is Mexico, the last country in which the rack and pinion assembly underwent production.
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