MAR-2 OT: RR: NC: N4:410
Ms. Jessica Lynd
White & Case LLP
701 13th Street NW Suite 600
Washington, DC 20005
RE: The country of origin and Section 301 trade remedy of vacuum cleaners from Vietnam
Dear Ms. Lynd:
This is in response to your letter dated March 29, 2019, on behalf of your client Midea American Corporation, requesting a country of origin determination for purposes of Section 301 duties for vacuum cleaners.
The merchandise under consideration is identified as "vacuum cleaners, the NEU18 Series". This model series includes upright, electric-powered vacuum cleaners designed for household use rated 960W with dust receptacle (dust cup) capacity of 4.1 L. The vacuum cleaners are packaged for sale to individual consumers. Each unit is sold in a single package together with its corresponding accessories. Depending on the model within the series, the accessories may include a handle, dusting brush, upholstery tool, crevice tool, turbo brush, flexible telescoping crevice tool, and/or a 2-in-1 upholstery tool. The models within the series vary slightly because they are sold into different markets with different color schemes, different accessories, or slightly different features. However, the models all use the same platform, with only one or two parts that might vary between models in the series.
You propose in your letter, and this office concurs, that the Harmonized Tariff Schedule of the United States (HTSUS) classification of the finished goods is 8508.11.00, which provides for "Vacuum cleaners; parts thereof: With self-contained electric motor: Of a power not exceeding 1,500 W and having a dust bag or other receptacle capacity not exceeding 20 l......".
You also request a determination of whether the merchandise is covered by additional ad valorem duties on certain Chinese imports that the United States Trade Representative ("USTR") has imposed pursuant to its authority under Section 301(b) of the Trade Act of 1974 ("Section 301 measures"). As of the date of this ruling, USTR has published three lists of Chinese-origin products covered by the Section 301 measures.
On July 6, 2018, USTR implemented Section 301 measures on products of China listed in U.S. Note 20(b) of Subchapter III, Chapter 99, HTSUS, which are subject to an additional 25% ad valorem rate of duty. On August 23, 2018, USTR implemented Section 301 measures on products of China listed in U.S. Note 20(d) of Subchapter III, Chapter 99, HTSUS, which are subject to an additional 25% ad valorem rate of duty. On September 24, 2018, USTR implemented Section 301 measures on products of China listed in U.S. Note 20(f) of Subchapter III, Chapter 99, HTSUS, which are subject to an additional 10% ad valorem rate of duty.
Among the subheadings listed in U.S. Note 20(f) of Subchapter III, Chapter 99, HTSUS, is 8508.11.00, HTSUS. Accordingly, if the merchandise is a product of China, it will be subject to the additional 10% ad valorem duty.
You present a processing scenario for the entire NEU18 Series for the country of origin determination. Under the scenario, the product's materials and components are sourced from China and Vietnam and its final processing occurs in Vietnam. The NEU18 Series is made from roughly over 30 components and sub-assemblies. Approximately 30% of the listed components and sub-assemblies, such as brushes, pedals, crevice tubs, motor assembly, power cords and switches, are imported from China.
The production of the completed vacuum cleaners at Midea's facility in Vietnam consists of both the production of several of the product's key sub-assemblies and the unit's final assembly.
The laborers involved in the production of the vacuum cleaners in Vietnam include electricians, product engineers, test engineers and workers who are specially trained to ensure the product's quality and specifications. Key sub-assemblies assembled in the Vietnamese factory include Dust Cup Sub-Assembly, Brush Sub-Assembly and Body Sub-Assembly. The final assembly is conducted in main assembly line which includes assembly/manufacture of the sub-assemblies, testing and packing.
Section 134.1(b), Customs Regulations (19 C.F.R. 134.1(b)), defines "country of origin" 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".
Based on the information submitted, the materials/components (e.g. brushes, pedals, crevice tubs, motor assembly, power cords and switches) imported into Vietnam where they are manufactured into different subassemblies, which are ultimately assembled into the subject NEU18 Series vacuum cleaners.
We find that the processing performed in Vietnam with respect to the NEU18 Series vacuum cleaners in the scenario does constitute a substantial transformation of all the imported materials/components into "products of" Vietnam. The manufacturing process in Vietnam transforms the Chinese originating components/materials to produce the finished vacuum cleaners. It creates a new and different article of commerce with a distinct character and use that is not inherent in the components imported into Vietnam. Therefore, the "product of" requirement has been satisfied. For tariff purposes, it is of the opinion of this office that the country of origin for the vacuum cleaners will be Vietnam. Accordingly, the merchandise will be a product of Vietnam and the Section 301 measures will not apply.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 CFR Part 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 Michael Chen at email@example.com.
Steven A. Mack
National Commodity Specialist Division