CLA-2-85:OT:RR:NC:N2:209
Diana Musa Khalil
Philadelphia Solar
Jordan Al Qastal Industrial Area 2
Airfreight Road
Amman, 11814
Jordan
RE: The country of origin of solar modules from Jordan; Section 201 trade remedy; 9903.45.25, HTSUS
Dear Ms. Khalil:
In your letter dated May 28, 2019, you requested a country of origin determination as it pertains to the applicability of certain trade remedies under Section 201 for solar panels. Presidential Proclamation 9693, imposed safeguard measures on imports of crystalline silicon photovoltaic (CSPV) cells and certain products incorporating CSPV cells.
There are three types of PV modules concerned, (1) PV Module Type: PS-M60 (Black or Silver)
Mono-Crystalline Module Power Range: 300-320W, (2) PV Module Type: PS-M72 Mono-Crystalline Module Power Range: 365-380W, and (3) PV Module Type: PS-P72 Poly-Crystalline Module Power Range: 330-340W.
The solar modules/panels under consideration are manufactured in Jordan from solar cells manufactured in either Thailand or Vietnam, and various other components manufactured in numerous other countries (i.e. China, Germany, Untied States, Austria, Saudi Arabia, Malaysia, and Jordan). The submission describes the assembly process that takes place in Jordan and provides the country of origin for each component.
When considering whether a product 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”).
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 imported into the United States 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 the ultimate purchaser in the United States the English name of the country of origin of the article. Congressional intent in enacting 19 U.S.C. § 1304 was “that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will.” United States v. Friedlaender & Co. Inc., 27 CCPA 297, 302, C.A.D. 104 (1940).
Part 134, Customs Regulations (19 C.F.R. Part 134), implements the country of origin marking requirements and the exceptions of 19 U.S.C. § 1304. 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” within the meaning of the marking laws and regulations.
In determining whether the combining of parts or materials constitutes a substantial transformation, the determinative issue is the extent of the operations performed and whether the parts lose their identity and become an integral part of the new article. Belcrest Linens v. United States, 6 C.I.T. 204, 573 F. Supp. 1149 (1983), aff’d, 741 F.2d 1368 (Fed. Cir. 1984). If the manufacturing or combining process is a minor one that leaves the identity of the imported article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 C.I.T. 220, 542 F. Supp. 1026 (1982).
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.” Energizer involved the determination of the country of origin of a flashlight, referred to as the Generation II flashlight. 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 utilized in determining whether a substantial transformation has occurred and noted, citing Uniroyal, Inc. v. United States, 3 C.I.T. at 226, 542 F. Supp. at 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).
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 HQ H261693, dated September 16, 2015, CBP reviewed the issue of solar panels that were manufactured in Korea and Poland from solar cells (product of Malaysia or Korea). In addition to considering the country of origin of all of the components, CBP stated that the most important aspect of the case was the fact that the solar cells were produced in Malaysia or Korea and not in the countries where the solar panels were put together. CBP found that assembling solar cells into finished solar panels did not result in a product with a new name, character, and use. CBP opined that solar cells imparted the essential character of the solar panels. Accordingly, where Malaysian solar cells were used, the country of origin was Malaysia, and in the scenario where Korean solar cells were used, the country of origin was Korea.
In H298653, dated November 19, 2018, CBP reviewed the issue of solar panels assembled in China using both Chinese and non-Chinese components. The polycrystalline solar cells, which constitute the very essence of the solar panels, were entirely manufactured in Germany. CBP held that solar cells do not lose their identity and become an integral part of the solar panels when they are combined with other components during the processing in China. The end-use of the solar cells and other components was pre-determined before the components were imported into China, and the solar cells (and other components) remained solar cells during processing in China. Therefore, in accordance with CBP’s decision in HQ H261693 and the judicial precedent cited above, we found that the solar cells and other components are not substantially transformed by the processing in China, and thus the country of origin of the solar panels is Germany.
Based on the facts provided, for purposes of the application of subheading 9903.45.25, HTSUS, (Section 201 for solar panels - Presidential Proclamation 9693), the solar cells from Thailand and Vietnam are not substantially transformed by the processes that take place in Jordan. Accordingly, where Thai solar cells are used in the manufacture of the solar panels the country of origin of the finished solar module/panel will be Thailand, and in the case where Vietnamese solar cells are used the country of origin will be Vietnam. Neither Thailand nor Vietnam are listed in Chapter 99, Note 18 (b), HTSUS, as being exempt from the additional trade remedy duties.
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).
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 Steven Pollichino at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division