CLA-2-87:OT:RR:NC:N2:201
Matthew Bock
Bock Trade Law
53 State Street, Suite 500
Boston, MA 02109
RE: The country of origin of an alternator
Dear Mr. Bock:
In your letter dated September 29, 2022, on behalf of your client, Wetherill Associates, Inc., (WAI) of Miramar, Florida, you requested a country of origin ruling determination on an alternator used in various internal combustion and diesel engines. In your request you state that the alternator is assembled in China from a non-Chinese stator core and various other Chinese components. You state that these alternators are used in automotive, commercial vehicle, agricultural, industrial, powersports, and marine applications.
The item under consideration is described as an alternator assembled in China from various components, including a non-Chinese stator core. An alternator is an electrical generator that is used on spark-ignition internal combustion and compression-ignition diesel engine applications. Alternators convert mechanical energy to electrical energy in the form of alternating current. The magnetic interaction between the rotor and stator generates the electrical power. The electricity generated charges the vehicle’s battery and powers the vehicle’s electrical system when the engine is running.
You state that WAI Alternators are composed of the following parts: stator core, stator winding, slip ring end frame, rectifier, voltage regulator, rotor, bearings, drive end frame, assembly hardware, and a pulley. WAI’s production of the Alternator includes five (5) assembly phases, as well as a testing phase. The phases, in order of operation are: (1) Stator Core Manufacturing, (2) Rotor and Stator Assembly; (3) Drive End (“DE”) Assembly; (4) Slip Ring End (“SRE”) Assembly; and (5) Final Assembly.
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 to render such other country the “country of origin”.
To determine whether a substantial transformation occurs when components of various origins are assembled into completed products, CBP considers the totality of the circumstances and makes such determinations on a case-by-case basis. The country of origin of the item’s components, extent of the processing that occurs within a country, and whether such processing renders a product with a new name, character, and use are primary considerations in such cases. Additionally, factors such as the resources expended on product design and development, the extent and nature of post-assembly inspection and testing procedures, and worker skill required during the actual manufacturing process will be considered when determining whether a substantial transformation has occurred. No one factor is determinative.
Regarding your request for the appropriate country of origin of the alternators, 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 to render such other country the ‘country of origin’ with origin in the meaning of this part.
For tariff purposes, 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). 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 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). 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.
Regarding the country of origin of the subject alternators, it is the opinion of CBP that the stator core, provides the essential component of the alternator, and that the totality of the manufacturing processes, does not effect a change to the stator core’s primary purpose. The completed alternator’s functionality was predetermined by the stator core, and it did not undergo a substantial change because of the Chinese assembly processing. Therefore, based upon the facts presented, it is the opinion of this office that the assembly process performed in China did not result in a substantial transformation of the stator core. The non-Chinese components of the alternator were not transformed in China into a new and different article of commerce with a name, character, and use which were distinct from the articles exported from China. Consequently, the country of origin of the alternators will ultimately be determined by the Country of Origin of the stator core.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 CFR Part 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 Matthew Sullivan at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division