Vice President of Operations
5600 Timberlea Blvd.
Mississauga, L4W 4M6
RE: The country of origin of a lined brake shoe.
Dear Mr. Roth:
This is in response to your letter, dated November 30, 2021, requesting a ruling on the country of origin of a lined brake shoe for marking purposes and for purposes of applying trade remedies under Section 301 of the Trade Act of 1974, as amended, from China.
The article under review is a motor vehicle lined brake shoe, which consists of brake lining FMSI block segments (friction material) from China, a bare steel shoe core from Turkey, and rivets from Canada. You state that these components are further manufactured in Canada by affixing the friction materials to the steel shoe.
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.”
19 CFR Part 102.11(a) provides that the country of origin of a good is the country in which:
The good is wholly obtained or produced;
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.
The brake shoe 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 brake shoe, and paragraph (a)(3) must be applied next to determine the origin of the finished article. The brake shoe is classified under subheading 8708.30, Harmonized Tariff Schedule of the United States (HTSUS). The tariff shift requirement in Part 102.20 for the brake shoe at issue states:
A change to mounted brake linings and pads from any other heading, except from brake linings and pads of subheading 6813.20 or 6813.81.
The Chinese brake lining FMSI block segments do not meet the tariff shift. As a result, 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…
The Chinese friction material is the single component classified in a tariff provision from which a change in tariff classification is not allowed. Accordingly, the country of origin of the lined brake shoe for marking purposes is China.
Nevertheless, the substantial transformation analysis is applicable when determining the country of origin for purposes of applying Section 301 trade remedies. The courts have held that a substantial transformation occurs when an article emerges from a process with a new name, character or use different from that possessed by the article prior to processing. United States v. Gibson-Thomsen Co., Inc., 27 CCPA 267, C.A.D. 98 (1940); National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff’d, 989 F. 2d 1201 (Fed. Cir. 1993); Anheuser Busch Brewing Association v. The United States, 207 U.S. 556 (1908) and Uniroyal Inc. v. United States, 542 F. Supp. 1026 (1982).However, if the manufacturing or combining process is merely a minor one that leaves the identity of the article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983) (Uniroyal). Substantial transformation determinations are based on the totality of the evidence. See Headquarters Ruling (HQ) W968434, date January 17, 2007, citing Ferrostaal Metals Corp. v. United States, 11 CIT 470, 478, 664 F. Supp. 535, 541 (1987). In the Uniroyal case, the court held that an upper was not substantially transformed when attached to an outsole to form a shoe and that the upper was "the very essence of the completed shoe".
You provided pictorial diagrams showing the friction material and the steel shoe in the condition they are imported into Canada. It appears that both articles are intact and do not need any further manufacturing. You state that the manufacturing process of affixing the friction materials to the core results in substantial transformation and cite HQ Ruling 733979, dated June 17, 1991.
In the HQ ruling it states that “The manufacture consists of cleaning and painting the core, bonding an asbestos brake lining to it in a bonding oven using dry cement, and smooth finishing the brake shoe assembly.” Further it states, “Compared with the manufacture of the cores, the process which results in the finished brake assembly is extensive and costly. The steel core is permanently attached to the friction lining, and is of secondary importance to the lining. The steel core has no independent function, but rather loses its separate identity by incorporation in the brake shoe assembly. This finding is reinforced by the relative costs to manufacture and prices of the cores and assemblies.”
In the instant case, the combination of the friction materials to the core does not involve a bonding oven or dry cement. The components are bonded together by rivets. In addition, the relative costs of riveting the components are significantly less than the components themselves. The components are ready for assembly without further processing, unlike the components in the cited ruling. As a result, it is the opinion of this office that no substantial transformation occurs in this case.
Since we stated in HQ 733979 that the cores are of secondary importance to the lining, the country of origin of the entire brake shoe will be the country of origin of the lining. Therefore, the lined brake shoe is considered a product China for purposes of applying trade remedies under Section 301, of the Trade Act of 1974, as amended.
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a Customs and Border Protection field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.”
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].
Steven A. Mack
National Commodity Specialist Division