CLA-2-73:OT:RR:NC:N5:117
Claudia E. Ibarra
Richard L. Jones Calexico Inc.
1778 Zinetta Rd., Suite A
Calexico, CA 92231
RE: The country of origin of a wind turbine internal steel structure
Dear Ms. Ibarra:
In your letter dated March 28, 2024, you requested a country of origin ruling on behalf of your client, Grupo Industrial Persal SA de CV. The product to be imported consists of part numbers 1290826051 and 1291109131, which are described as an internal steel structure for a wind turbine. Part number 1290826051 is the front assembly of the structure and part number 1291109131 is the rear assembly of the structure. The complete structure measures 40' length x 8' width x 9' height.
In your request, you suggest that the internal steel structure is properly classified under subheading 8503.00.9570, Harmonized Tariff Schedule of the United States (HTSUS).We disagree. In noting that the subject merchandise consists of structural components that machinery is mounted to or within, they are not an integral component to the generator without which the wind generator could not function.As such, they are not considered parts of the generator and subheading 8503.00.9570, HTSUS, is not applicable.
The applicable subheading for the internal steel structure will be 7308.90.9590, HTSUS, which provides for Structures (excluding prefabricated buildings of heading 9406) and parts of structures (for example, bridges and bridge sections, lock gates, towers, lattice masts, roofs, roofing frameworks, doors and windows and their frames and thresholds for doors, shutters, balustrades, pillars and columns) of iron or steel; plates, rods, angles, shapes, sections, tubes and the like, prepared for use in structures, of iron or steel: Other: Other: Other: Other: Other. The rate of duty will be free.
The wind turbine steel structure is composed of front and rear subassemblies, H-beams, and plates, which are assembled in Mexico by drilling and welding. The production process begins in China where the lower frame subassemblies for the front and rear of the structure are manufactured. The Chinese front and rear subassemblies are finished components that are imported into Mexico unassembled and then tack welded together. These subassemblies make up the lower frame for the entire structure. Essentially, they create the support for the wind turbine structure. Next, H-beams which are sourced from South Korea, are drilled, and fitted to the top of the front and rear subassemblies. Then, small plates sourced from Mexico are laser cut, welded, and joined to sections of the structure. Lastly, the completed structure is hot-dipped galvanized and then exported disassembled, in one shipment to the United States.
You assert that the assembly operations in Mexico effect a substantial transformation of the foreign components.
With regard to your request for the appropriate country of origin of the internal steel structure, 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.
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. See National Hand Tool Corp. v. United States, 16 C.I.T. 308 (1992), aff'd, 989 F.2d 1201 (Fed. Cir. 1993). 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.
The courts have emphasized 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 Battery, Inc. v. United States, 190 F. Supp. 3d 1308, 1318 (2016) (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)). Courts look to the nature of such assembly, i.e., whether it is simple or complex, to determine whether the individual parts or components lose their separate identities and become integral parts of a new article.
Furthermore, the nature or character of particular components being assembled into an article is relevant to whether the article undergoes a substantial transformation through such assembly.See Uniroyal 3 C.I.T. at 225, 542 F. Supp. at 1030 (holding that because the shoe's upper component imparted the shoe's defining character, its minor assembly into a shoe did not result in a substantial transformation).
Based on the totality of evidence, it is the opinion of this office that the manufacturing process in China renders the end-use of the front and rear subassemblies predetermined as they could not be used for any other purpose. The front and rear subassemblies are substantive components of the internal steel structure, which create the entire lower frame of the structure and largely impart the character of the internal steel structure. Further, the addition of the H-beams and the plates performed in Mexico would not substantially transform the internal steel structure into a new and different article of commerce with a name, character, and use distinct from that of the exported good; nor are the assembly operations complex enough to transform the internal steel structure into a new article. Therefore, the country of origin of the internal steel structure will be China.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 7308.90.9590, 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., 9903.88.02, in addition to subheading 7308.90.9590, HTSUS, listed above.
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 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 Denise Hopkins at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division