CLA-2-85:OT:RR:NC:N1:103
Annie Wei
DNS Industries (USA) Inc.
815 Brazos St
Austin, TX 78701
RE: The country of origin of a power bank
Dear Ms. Wei:
In your letter dated July 23, 2020, you requested a country of origin ruling.
The item under consideration is a 2500 mAh lithium-ion power bank, model 9W-258A. The power bank includes lithium polymer battery cells, a plastic housing, a printed circuit board assembly (PCBA), a USB-A female connector output, a micro-USB connector input, and a LED capacity indicator which displays the status during charging. The power bank is designed to charge mobile phones using the output port, while the input port is used to charge the power bank. You state the power bank is manufactured in the Philippines from components sourced from China and the Philippines.
The applicable subheading for the power bank, model 9W-258A will be 8507.60.0020, 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: Lithium-ion batteries: Other. The rate of duty will be 3.4 percent ad valorem.
The manufacturing process is broken down into four phases: preparation, semi-finished processing, assembly, and final testing and packing. All of the components are of Philippines origin with the exception of the lithium polymer battery cell which is sourced from China. The preparation phase begins by assembling the light guide column into the lower housing. This is followed by the installation of the PCBA, which is mounted into the lower housing with two screws. The last step in this phase is placing the lithium-ion battery cell into the lower shell. In the semi-finished processing phase, the battery cell is spot welded onto the nickel plate of the PCBA, testing is performed, and a temperature sensing probe is affixed with the use of a high temperature adhesive paper. In the third phase, the trim parts are assembled to the cover using hot melt, the upper and lower shells are pressed together, and testing is performed. The final phase consists of visual inspection, additional testing and packing. The entire process including inspection and packing takes approximately 6 minutes per power bank.
With regard to your request for the appropriate country of origin of the power bank, 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;
The test for determining whether a substantial transformation will occur is whether an article emerges from a process with a new name, character and use, different from that possessed by the article prior to processing. See Texas Instruments Inc. v. United States, 69 C.C.P.A. 151 (1982). 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 this instance, it is this office’s opinion that the battery cells, which store and provide power, impart the essence of the finished power bank. CBP has previously held that the assembly of battery cells into battery packs does not result in a substantial transformation of the battery cells because the essential character of the cells does not change simply by being placed together in a plastic case. Moreover, there is no significant change in name, use or character to the battery cells when such an assembly occurs. See HQ ruling 563045, dated August 9, 2004 and HQ ruling 734393 dated March 20, 1992. The assembly operations in the Philippines do not change the Chinese battery cells, which provide the essence of the power bank, into an article with a new name, character or use, different from that possessed by the article prior to processing. In view of these facts, the country of origin of the subject power bank, model 9W-258A is China.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8507.60.0020, HTSUS, unless specifically excluded, are subject to an additional 7.5% percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.15, in addition to subheading 8507.60.0020, HTSUS, listed above.
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.
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 trade remedy initiated pursuant to Section 301 of the Trade Act of 1974, 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.
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].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division