Derek Polman-Tuin
Invinity Energy Systems (US) Corporation
1633 Broadway, Suite 2
Oakland, CA 94612

RE: The tariff classification, Section 301 measures, and United States-Mexico-Canada Agreement (USMCA) eligibility of a vanadium flow battery

Dear Mr. Polman-Tuin:

In your letter dated January 28, 2022, you requested a tariff classification and country of origin ruling.

The item under consideration is the Invinity VS3-022 Vanadium flow battery. The unit is a rechargeable vanadium battery pack with a nominal voltage of 850 VDC and a capacity of 220 kWh. Each pack is composed of six battery modules assembled inside a custom 20-foot container. Within each battery module are two battery stacks, electrolyte storage tanks, and pumps. The vanadium flow battery stores and supplies energy using a reversible electrochemical reaction.

The applicable subheading for the VS3-022 Vanadium flow battery will be 8507.80.8200, Harmonized Tariff Schedule of the United States (“HTSUS”), which provides for “Electric storage batteries, including separators therefor, whether or not rectangular (including square); parts thereof: Other storage batteries: Other.” The rate of duty will be 3.4 percent ad valorem.

In your letter, you inquire whether Section 301 measures are applicable to the VS3-022 Vanadium flow battery and provide two separate manufacturing scenarios. In the first scenario, the process begins in China where a custom 20-foot container is fabricated. The container holds six battery modules, each with a lower and upper enclosure. The lower enclosure houses the storage tank, which will contain the electrolyte. To produce the tank, a tank lid assembly is combined with a tub, fittings are added, gas management ports are welded, and gaskets are installed. The storage tanks, pump assembly, gas management pre-assembly, and conveyance hose assembly are installed into each battery module. Then, a DC-to-DC converter, power supply, container harness assembly, fan air duct assembly, high voltage block assembly, cabling, and terminals are installed into the container. The tanks are filled with electrolyte before testing and final inspection. All components used to produce the subassembly are sourced from China. The Chinese subassembly is exported to Canada for final assembly.

In Canada, a battery stack is assembled using parts sourced from Canada, Germany, China, and the United States. They include a membrane, electrodes, bipolar plates, manifolds, current collectors, isolators, endplates, and channel covers. The components are stacked in layers, compressed, and secured using threaded rods and washers. Also in Canada, Invinity assembles the reference cell using parts sourced from the United States, China, Austria, Germany, Ireland, and Japan. A frame, membrane, connector housing, isolators, end plates, and O-rings, are assembled to form a reference cell with four fluid connection interfaces plus one electrical interface. The manufacturing operations include crimping connectors, soldering wires, torquing bolts, and testing. Hoses and clamps connect the reference cell to the battery stack.

The final assembly involves the installation of the battery stack and reference cell into the Chinese subassembly. This process begins with removing container covers, removing access panels, and fitting edge protectors. Two battery stacks are placed inside the upper enclosure of each battery module and connected by negative and positive stack cables. Afterwards, the wire harness is connected, and the battery management software is uploaded to the battery management controller. Various testing and inspections are performed before the covers and access panels are reinstalled and final paint is applied.

In the second scenario, the manufacturing steps remain the same as the first scenario except the electrolyte is filled in Canada instead of China. Final assembly of the vanadium flow battery takes place in Canada. You state the electrolyte may be sourced from the United States, United Kingdom, Taiwan, Japan, or China.

As stated in HQ 735009, dated July 30, 1993, “The country of origin is the country where the article last underwent a ‘substantial transformation’, that is, processing which results in a change in the article's name, character, or use.” In addition, the court has held that “A substantial transformation occurs when an article emerges from a manufacturing process with a name, character, and use that differs from the original material subjected to the processing.” This determination is based on the totality of the evidence. See National Hand Tool Corp. v. United States, 16 C.I.T. 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993).

In order to determine whether a substantial transformation occurs when components of various origins are assembled into completed products, all factors such as the components used to create the product and manufacturing processes that these components undergo are considered in order to determine whether a product with a new name, character, and use has been produced. No one factor is decisive. 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). 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 examining assembly operations, Customs and Border Protection has looked to the nature of the assembly, as well as the origin of the component that imparts the “essence” to the end product. The final assembly of Invinity’s vanadium flow battery involves the installation of a battery stack, reference cell, and battery management controller into a Chinese subassembly that includes the balance of components required to produce a battery that is capable of storing and supplying energy. We find that the final assembly operations in Canada are not sufficiently complex as to constitute a substantial transformation. Next, we must determine the component that imparts the essence of the finished vanadium flow battery. While the battery stack cannot function solely on its own and requires the pumps, electrolyte, etc., to store and supply electricity, we find that the battery stack provides the essence of the flow battery. As such, in the first scenario, the country of origin of the Invinity VS3-022 Vanadium flow battery for purposes of Section 301 is Canada.

Regarding the second scenario, in our view the filling of electrolyte in Canada is not complex and meaningful enough to substantially transform the imported components. Therefore, in the second scenario, the country of origin of the Invinity VS3-022 Vanadium flow battery for the purposes of Section 301 is Canada.

Concerning the country of origin marking of the Invinity VS3-022 Vanadium flow battery, the marking statute, section 304, 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 United States shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the United States the English name of the country of origin of the article. Part 134 of the U.S. Customs and Border Protection Regulations (19 C.F.R. Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. § 1304.

Pursuant to section 102.0, interim regulations, related to the marking rules, tariff-rate quotas, and other USMCA provisions, published in the Federal Register on July 6, 2021 (86 FR 35566), the rules set forth in §§ 102.1 through 102.18 and 102.20 determine the country of origin for marking purposes with respect to goods imported from Canada and Mexico. Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes, with the exception of textile goods which are subject to the provisions of 19 C.F.R. § 102.21. 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:

(1) The good is wholly obtained or produced; (2) 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 § 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.

The vanadium flow battery is neither “wholly obtained or produced” nor “produced exclusively from domestic materials.” Therefore, paragraphs (a)(1) and (a)(2) cannot be used to determine its country of origin, and we need to apply paragraph (a)(3).

Under 19 C.F.R. § 102.11(a)(3), any foreign materials of the vanadium flow battery must satisfy the tariff shift requirements of 19 C.F.R. § 102.20.

"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.” As previously noted, the finished vanadium flow battery is classified under subheading 8507.80, HTSUS. The tariff shift requirement in Section 102.20 for a good of subheading 8507.80, HTSUS, requires “a change to subheading 8507.10 through 8507.80 from any other subheading, including another subheading within that group, except for a change to subheading 8507.80 from subheading 8507.50 or 8507.60.” The foreign materials used during production are sourced from Austria, China, Germany, Ireland, Japan, Mexico, and the United States. Based on your submission, they are classified under subheadings: 2833.29; 3506.99; 3904.61; 3917.22; 3917.29; 3917.39; 3919.10; 3919.90; 3920.20; 3921.90; 3926.90; 4016.93; 6815.10; 7318.15; 7318.16; 7318.21; 7318.22; 7318.29; 7326.90; 7415.21; 7606.11; 7606.12; 8310.00; 8507.90; 8535.90; 8536.10; 8536.90; 8544.49; and 8545.19. None of the components are classified in subheading 8507.50, 8507.60, or 8507.80, HTSUS. Since all the foreign components satisfy the tariff shift rules set forth in 19 C.F.R. § 102.20, the country of origin of the Invinity VS3-022 Vanadium flow battery for USMCA marking purposes is Canada.

You inquire whether the Invinity VS3-022 Vanadium flow battery is eligible for preferential treatment under the USMCA. The USMCA was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018. The USMCA was approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act, Pub. L. 116-113, 134 Stat. 11, 14 (19 U.S.C. § 4511(a)). General Note (“GN”) 11 of the HTSUS implements the USMCA. GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA. GN 11(b) states:

For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, is eligible for the preferential tariff treatment provided for in the applicable subheading and quantitative limitations set forth in the tariff schedule as a "good originating in the territory of a USMCA country" only if—

the good is the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries; the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials; the good is a good produced entirely in the territory of one or more USMCA countries using nonoriginating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o)); or

Since the vanadium flow battery contains non-originating materials, it is not considered goods wholly obtained or produced entirely in a USMCA country under GN 11(b)(i) and GN 11(b)(ii). We must next determine whether the vanadium flow battery qualifies under GN 11(b)(iii). Since the finished vanadium flow battery is classified under subheading 8507.80, HTSUS, the applicable rule of origin is in GN 11(o)/85.18(A), HTSUS, which provides “a change to subheading 8507.80 from any other heading, except from tariff items 8548.10.05 or 8548.10.15.” Of the non-originating components, the Chinese subassembly is classified under subheading 8507.90, HTSUS, and does not undergo the requisite tariff shift. Accordingly, the Invinity VS3-022 Vanadium flow battery would not qualify as an USMCA originating good.

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

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 Paul Huang at [email protected].


Steven A. Mack
National Commodity Specialist Division