Amphenol Interconnect Products Inc.
20 Valley Street
Endicott, NY 13760
RE: The classification and country of origin of electrical bus bars from Mexico
Dear Mr. McHale:
In your letter dated October 29, 2018 you requested a tariff classification and country of origin ruling.
There are three Power Distribution Assemblies (bus bars) under consideration which are identified as Part Numbers 633860001, 633970001, and 63320001. Each of the bus bar assemblies consist of two 40" copper conductors which are recognized as the power conductor and the return conductor. Both conductors are affixed to an insulating base with adhesive strips and each has a single multi-pin electrical connector. The conductors, adhesive strips, and insulating base have predrilled holes which are aligned prior to assembly and are used with threaded fasteners to screw the assembly together and presumably to make electrical connections. With the exception of the fasteners for Part Numbers 633860001 and 633970001, the country of origin for all of the individual components is China. You state that the bus bars will be assembled in Mexico.
The assembly process involves arranging the copper conductors and adhesive strips onto the top and bottom of the insulating base. Using applied heat and pressure, the conductors are adhered to the base to form a single dual conductor bus bar. Once the lamination process is complete, two multi-pin connectors are installed onto the newly laminated conductors and personnel perform quality inspection, testing, and packing.
In your request you suggest the three Power Distribution Assemblies are correctly classified under 8537.10.9170, Harmonized Tariff Schedule of the United States (HTSUS). As the bus bars consist of a base equipped with two or more electrical connectors for the purpose of distributing electricity, we agree with your suggested classification.
The applicable subheading for the Power Distribution Assemblies, Part Numbers 633860001, 633970001, and 63320001 will be 8537.10.9170, HTSUS, which provides for "Boards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of 8535 or 8536, for electric control or the distribution of electricity...: For a voltage not exceeding 1,000 V: Other: Other: Other". The general rate of duty will be 2.7 percent ad valorem.
With regard to the appropriate country of origin marking of the bus bar assemblies, Section 304 of the 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 container) will permit in such a manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article. The regulations implementing the requirements and exception to 19 U.S.C. 1304 are set forth in Part 134, Customs and Border Protection Regulations (19 C.F.R. Part 134).
19 C.F.R. 134.1(b) provides 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; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin.
Since Mexico is a NAFTA country, the NAFTA Marking Rules must be applied in this case for purposes of determining the country of origin for purposes of marking.
Part 102, Customs and Border Protection Regulations (19 C.F.R. Part 102), sets forth the NAFTA Marking Rules. Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes. See 19 C.F.R. 102.11. Applied in sequential order, the required hierarchy establishes that the country of origin of a good is the country in which:
(a)(1) The good is wholly obtained or produced;
(a)(2) The good is produced exclusively from domestic materials; or
(a)(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in Section 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because the imported controller is neither wholly obtained nor produced exclusively from "domestic" materials. Because the analysis of sections 102.11(a)(1) and 102.11(a)(2) does not yield a country of origin determination, we look to section 102.11(a)(3). "Foreign material" is defined in 19 C.F.R. 102.1(e) as "a material whose country of origin as determined under these rules is not the same country as the country in which the good is produced." The applicable rule for subheading 8537.10.9170, HTSUS, in section 102.20 requires:
A change to heading 8537 from any other heading.
All of the components that make up the bus bars, excluding the fasteners which you state are of U.S. origin, are imported into Mexico from China and are therefore designated as foreign material. Consequently, in order to meet the tariff shift requirement, the components must be classifiable outside of heading 8537, HTSUS. In our assessment, all of the components that make up the bus bars are classifiable outside of heading 8537, noting that the conductors and multi-pin connectors are classifiable in heading 8536. Thus, for purposes of marking, the country of origin of the Power Distribution Assemblies, Part Numbers 633860001, 633970001, and 63320001, is Mexico.
Effective July 6, 2018, the Office of the United States Trade Representative (USTR) imposed an additional tariff on certain products of China classified in the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(b), HTSUS. The USTR imposed additional tariffs, effective August 23, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(d), HTSUS. Subsequently, the USTR imposed further tariffs, effective September 24, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(f) and U.S. Note 20(g), HTSUS. For additional information, please see the relevant Federal Register notices dated June 20, 2018 (83 F.R. 28710), August 16, 2018 (83 F.R. 40823), and September 21, 2018 (83 F.R. 47974). Products of China that are provided for in subheading 9903.88.01, 9903.88.02, 9903.88.03, or 9903.88.04 and classified in one of the subheadings enumerated in U.S. Note 20(b), U.S. Note 20(d), U.S. Note 20(f) or U.S. Note 20(g) to subchapter III shall continue to be subject to antidumping, countervailing, or other duties, fees and charges that apply to such products, as well as to those imposed by the aforementioned Chapter 99 subheadings.
When considering a product that may be subject to antidumping, countervailing, or other safeguard measures, the substantial transformation analysis is applied to determine the country of origin. See 19 C.F.R. 102.0; HQ 563205, dated June 28, 2006; see also Belcrest Linens v. United States, 741 F.2d 1368, 1370-71 (Fed. Cir. 1984) (finding that "the term 'product of' at the least includes manufactured articles of such country or area" and that substantial transformation "is essentially the test used...in determining whether an article is a manufacture of a given country"). In accordance with 19 C.F.R. 102.0, the 102 marking rules are applicable for the limited purposes of: "country of origin marking; determining the rate of duty and staging category applicable to originating textile and apparel products as set out in Section 2 (Tariff Elimination) of Annex 300-B (Textile and Apparel Goods); and determining the rate of duty and staging category applicable to an originating good as set out in Annex 302.2 (Tariff Elimination)." The 102 marking rules do however continue to be applicable for purposes of country of origin marking of NAFTA goods, as defined in 19 C.F.R. 134.1.
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. Energizer involved the determination of the country of origin of a flashlight, referred to as the Generation II flashlight, under the TAA. All of the components of the Generation II flashlight were of Chinese origin, except for a white LED and a hydrogen getter. The components were imported into the United States where they were assembled into the finished Generation II flashlight.
The court reviewed the "name, character and use" test in determining whether a substantial transformation had occurred, 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.
In reaching its decision in Energizer, the court expressed the question as one of whether the imported components retained their names after they were assembled into the finished Generation II flashlights. The court found "[t]he constitutive components of the Generation II flashlight do not lose their individual names as a result [of] the post-importation assembly." The court also found that the components had a pre-determined end-use as parts and components of a Generation II flashlight at the time of importation and did not undergo a change in use due to the post-importation assembly process. Finally, the court did not find the assembly process to be sufficiently complex as to constitute a substantial transformation. Thus, the court found that Energizer's imported components did not undergo a change in name, character, or use as a result of the post-importation assembly of the components into a finished Generation II flashlight. The court determined that China, the source of all but two components, was the correct country of origin of the finished Generation II flashlights under the government procurement provisions of the TAA.
In this case, the foreign subassemblies are imported into Mexico from China where they will be assembled into the bus bars. The foreign subassemblies had a pre-determined end-use and did not undergo a change in use due to the assembly process in Mexico. Based on the information provided, the production process performed in Mexico does not substantially transform the foreign subassemblies.
As the assembly of the Chinese parts into bus bars in Mexico does not result in a substantial transformation of the Chinese parts, the Power Distribution Assemblies, Part Numbers 633860001, 633970001, and 63320001, remain a product of China. Products of China classified under subheading 8537.10.9170, HTSUS, unless specifically excluded, are subject to the additional 10 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 8537.10.9170, HTSUS, listed above.
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 Karl Moosbrugger at firstname.lastname@example.org.
Steven A. Mack
National Commodity Specialist Division