MEMORANDUM FOR: Director, Commercial & Trade Facilitation Division
Regulations & Rulings
Headquarters, Customs & Border Protection
FROM: Chief, Branch 4, Consumer Products and Miscellaneous Merchandise Branch, National Commodity Specialist Division
SUBJECT: Classification, Substantial Transformation, Country of Origin and Trade Remedy Applicability of a desk.
Ruling request NY N308675 dated January 2, 2020, is a classification and country of origin resubmission of N307551, which was rejected for additional information. The U.S. imported article is an unassembled office desk constructed of only two components, a wooden desktop and metal legs. Manufacturing of the metal legs occur in China. Manufacturing of the wooden desktop occur in Vietnam. The Chinese origin metal legs are shipped and exported to Vietnam. In Vietnam the Chinese metal legs are unpacked and repackaged with the Vietnamese origin wooden desktop and is then exported to the United States for retail sale as an unassembled/disassembled desk. Considering General Rule of Interpretation (GRI) 2 no substantial transformation of the metal legs occur in Vietnam, the metal legs should remain country of origin China. However, when sold as an unassembled desk for retail sale the essential character if considering GRI 3 is the Vietnamese wooden desktop. If the Vietnamese wooden desktop is the essence of the article then is the Chinese Section 301Trade Remedy duty on the metal legs forgone? We are seeking constructive insight as to the appropriate classification, substantial transformation, country of origin, and applicability of Section 301 Trade Remedy. Below is the ruling as drafted and sent to HQ on January 21, 2020.
NIS 433 Comments
Item 1, identified as the "Office Desk," is an unassembled, wooden desktop and a pair of black powder-coated steel tube legs (T-legs). The desk will measure approximately 48" in length, 24" in width, and 28" in height when assembled. You state both components will be sold as a set. Assembly into a final desk will take place in the United States.
The Explanatory Notes (ENs) to the Harmonized Tariff Schedule of the United States (HTSUS) constitute the official interpretation of the tariff at the international level.
The office desk fails to satisfy requirements (a), (b), and (c) of EN X to General Rule of Interpretation 3b, HTSUS, as all three requirements of a set are not met. Specifically, the unassembled desk with legs is prima facie, classified not in different, but in the same HTSUS, (9403) heading. Furthermore, as a whole the office desk will not consist of products or articles put up together to meet a particular need or carry out a specific activity. The desktop and T-leg pair are components of a single article. Having failed as a set each component will be classified separately.
The applicable subheading for the desktop will be 9403.90.7080, HTSUS, which provides for "Other furniture and parts thereof: Parts: Other: Of wood: Other." The rate of duty will be free.
The applicable subheading for the T-leg pair will be 9403.90.8041, HTSUS, which provides for "Other furniture and parts thereof: Parts: Other: Other: Other: Of metal: Other." The rate of duty will be free.
Per your submission, manufacturing of the office desk occurs as follows: Chinese sourced steel tubes and plates are cut, welded, sanded, drilled, painted, and packaged. The finished steel tube T-leg pair component materials are shipped and exported to Vietnam. In Vietnam, locally sourced timber is cut, joined, cut to size, polished, treated for condensation, sanded, inspected, cut, edge sanded, holes for bushings are drilled, cut-outs are made, and the desktop is then cleaned, coated, and packed with assembly hardware. No additional manufacturing of the Chinese T-leg pair occur in Vietnam other than unpacking and repacking. In Vietnam, the T-legs and desktop are packaged in separate cartons to be sold as an unassembled desk.
COUNTRY OF ORIGIN
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." A substantial transformation occurs when articles lose their identity and become articles having a new name, character, or use. No one factor is decisive.[1]
A "complex or meaningful" assembly operation may result in a substantial transformation while a "minimal, simple, assembly-type operation" ordinarily will not.[2] The term "simple assembly" is defined in 19 C.F.R. 102.1(o) as "the fitting together of five or fewer parts all of which are foreign (excluding fasteners such as screws, bolts, etc.) by bolting, gluing, soldering, sewing or by other means without more than minor processing."
Further, in determining whether the combining of parts or materials constitutes a substantial transformation, the determinative issue is the extent of operations performed and whether the parts lose their identity and become an integral part of the new article. CBP considers the totality of the circumstances and makes such determinations on a case-by-case basis.
In China, the T-leg pair underwent manufacturing operations and a substantial transformation thereby emerging as a product with a new name, character, or use. In Vietnam, the desktop underwent manufacturing operations and a substantial transformation thereby emerging as a product with a new name, character, or use. In the instant case, other than unpacking and repacking, the T-leg pair did not undergo manufacturing or a substantial transformation in Vietnam.
In view of these facts, the country of origin for the T-leg pair is conferred in China. The country of origin for the desktop is conferred in Vietnam. As a "product of China," the T-leg pair is subject to China Section 301 trade remedy duties.
TRADE REMEDY
Products of China classified under subheading and 9403.90.8041, HTSUS, unless specifically excluded, are subject to the 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 and 9403.80.8041, HTSUS, listed above. See U.S. Note 20 to Subchapter III, Chapter 99, HTSUS.
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 Section 301 trade remedy, 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 on the 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).
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 19 C.F.R. 177.9(b)(1). In the event that the facts or merchandise are modified in any way, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and you should resubmit for a new ruling in accordance with 19 C.F.R. 177.2.
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 Dharmendra Lilia at [email protected].
If you have any further questions regarding heading 9403, HTSUS, please contact National Import Specialist (NIS) 433 Dharmendra Lilia at [email protected]. Please send a copy of your reply to this office.
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Denise Faingar Date
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[1] See Belcrest Linens v. United States, 573 F. Supp. 1149 (CIT 1983), aff'd, 741 F.2d 1368 (Fed. Cir. 1984).
[2] See C.S.D. 80-111, C.S.D. 85-25, C.S.D. 89-110, C.S.D. 89-118, C.S.D. 90-51, and C.S.D. 90-97.