OT:RR:NC:N2:212
Michael Capuzzi
101 North Riverside Drive
Pompano Beach, FL 33062
RE: The country of origin of a vehicle cable assembly.
Dear Mr. Capuzzi:
In your letter dated November 26, 2019, you requested a country of origin ruling determination on vehicle cable assemblies on behalf of your client, Molex Inc.
The merchandise under consideration is identified as the HSAL1 Low Voltage Differential Signaling (LVDS) Cable Assembly, part number 1006880122. The subject cable is a high-speed data cable used exclusively as a part of Molex’s “HSAutoLink” Interconnect System, which is used in commercial and personal automotive industries. The cables provide data rates of up to 13.5 Gbps and support multiple communication protocols including vehicle performance information, infotainment, telematics data, and camera displays.
The subject cable assemblies consist of a set of electrical conductors braided together, insulated with an outer jacket, and fitted with connectors at each end, described as a “USB Mini-B” connector. The connectors are designed in such a way to ensure that the cable does not disconnect during the normal operation of the vehicle.
Though the classification of the cable assembly is not subject to this request, we would note that you state the correct subheading to be 8544.30, Harmonized Tariff Schedule of the United States (HTSUS). As it is clear that the subject merchandise is designed to be used within a vehicle, we would agree and note that the classification is 8544.30.0000, HTSUS.
In your request, you describe the manufacturing process and suggest that the country of origin of the cable assembly is Mexico and that the devices are not subject to the application of the Section 301 measures for products of China. This is due to the fact that all parts incorporated in the process discussed hereafter, undergo a substantial transformation in Mexico.
The information provided describes the manufacturing and assembly process in Mexico as follows:
Bulk, unterminated cable of Chinese origin, is imported in Mexico. This bulk cable consists of a twisted wiring pair, drain wires, and additional conductors enclosed within a braided layer and an insulated outer jacket. This cable is cut to length and the ends are stripped, dipped in flux, and tinned before the exposed wires are aligned at the end of the cable. The aligned wires are then soldered together and inspected prior to the USB connectors being assembled onto the cable. We note that the only constituent part that a country of origin is stated for is the bulk wire, which is stated to be China.
With regard to your request for the appropriate country of origin of the cable assemblies, 19 C.F.R. § 134.1(b) provides in pertinent part as follows:
Country of origin means 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;
Since Mexico is a NAFTA country, the NAFTA Marking Rules must be applied in determining the country of origin of the subject cable assemblies for marking purposes.
Part 102, Customs and Border Protection Regulations (19 C.F.R. Part 102), sets forth the NAFTA Marking Rules. Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes. 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:
(a)(1) The good is wholly obtained or produced;
(a)(2) The good is produced exclusively from domestic materials; or
(a)(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in Section 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because the cable assemblies are neither wholly obtained nor produced exclusively from “domestic” materials. Because the analysis of sections 102.11(a)(1) and 102.11(a)(2) does not yield a country of origin determination, we look to section 102.11(a)(3). “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.” In this case, the cable assemblies are classified under subheading 8544.30.0000, HTSUS. The applicable rule for subheading 8544.30.0000, HTSUS, in section 102.20 requires:
A change to subheadings 8544.11 through 8544.70 from any other subheading, including another subheading within that group, except when resulting from simple assembly.
You state in your request that the bulk, jacketed cable is imported from China into Mexico. This cable would be classified under subheading 8544.49, HTSUS, and would, therefore, fall within the subheadings listed in the rule above. The components that make up the connectors include a USB connector, inner shield, outer shield, and plastic housing. These items, regardless of origin, would be classified outside of heading 8544, HTSUS. However, based on the information provided, we find that the process of affixing the connector parts to the end of the cable is not complex and consists of a limited number of steps and parts. As such, the addition of the connectors would be considered simple assembly as defined in 19 C.F.R. § 102.1(o) and would not allow for a determination to be made pursuant to the terms of section 102.20.
As a determination cannot be reached by application of sections 102.11(a)(3) and 102.20, we must then consider the applicability of section 102(b)(1), which states, in part, that the country of origin is derived from the single material that imparts the essential character of the finished good. It is the opinion of this office that the Chinese origin insulated cable conductor imparts the essential character of the finished cable assembly. Therefore, the HSAL1 LVDS Cable Assembly, part number 1006880122, is not eligible to be marked as a product of Mexico pursuant to 19 C.F.R. § 102 and the country of origin is China.
While the NAFTA marking rules contained in 19 C.F.R. Part 102 will determine the country of origin for marking purposes, the substantial transformation test will determine the country of origin for purposes of the Section 301 measures. See, e.g., Headquarters Ruling Letter (“HQ”) H301619, dated November 6, 2018.
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). 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).
Further, 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” as used in the Trade Agreements Act of 1979 (“TAA”) for purposes of government procurement. In Energizer, the court reviewed the “name, character and use” test in determining whether a substantial transformation had occurred in determining the origin of a flashlight, and reviewed various court decisions involving substantial transformation determinations. The court noted, citing Uniroyal, Inc. v. United States, 3 C.I.T. 220, 226, 542 F. Supp. 1026, 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, “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). 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.
Based on the facts presented with this case, it is the opinion of this office that the Chinese origin conductor imparts the essence of the finished cable assembly. The addition of the connectors in Mexico does not substantially transform the conductor into a new and different article of commerce with a name, character, and use distinct from that of the imported article. For the purposes of the application of Section 301 trade remedies under 9903.88.01, HTSUS, the country of origin of the finished cable assembly is China. Therefore, the HSAL1 LVDS Cable Assembly, part number 1006880122, is subject to the Section 301 trade remedies as provided for under 9903.88.01, HTSUS.
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 Luke LePage at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division