OT:RR:NC:N1:102
Jorge Torres
Interlink Trade Services
6500 South 35th St., Bldg. Y McAllen, TX 78503
RE: The country of origin, marking, USMCA Qualification and classification of pulleys
Dear Mr. Torres:
In your letter dated January 25, 2023, you requested a country of origin, marking and classification ruling of pulleys on behalf of your client, RBC Bearings Incorporated.
The items at issue are pulleys, part numbers 111104, 455313, 112042, 455601, and 112025. The pulleys are used in various applications, e.g., fan drive assemblies and pumps. The grooved pulleys, which are also referred to as sheaves, transmit rotating power received from a power driver to a driven piece of equipment.
In your letter, you suggest the pulleys are classified within subheading 8483.50.9040 Harmonized Tariff Schedule of the United States (HTSUS), which provides for Transmission shafts (including camshafts and crankshafts) and cranks; bearing housings, housed bearings and plain shaft bearings; gears and gearing; ball or roller screws; gear boxes and other speed changers, including torque converters; flywheels and pulleys, including pulley blocks; clutches and shaft couplings (including universal joints); parts thereof: Flywheels and pulleys, including pulley blocks: Other: Other: Grooved pulleys. We agree. The general rate of duty is 2.8 percent ad valorem.
You also request an origin determination with regard to Section 301 Trade Remedies and explain that pulley castings are produced in China and afterwards imported into Mexico to be further processed into the final product.
The Chinese produced castings are identified as part numbers 111403, 112360, 116895, and 112355. Cast number 111403 is imported into Mexico and finished into pulleys, part numbers 111104 or 455313, while cast numbers 112360, 116895, and 112355 are finished into pulleys, part numbers 112042, 455601, and 112025.
Based on the illustrations provided, cast number 111403 is circular-shaped and incorporates a hub with a center bore. Cast numbers 112360, 116895, and 112355 are wheels that feature spokes or arms that extend from the hub to the face, and a center bore that is shaped to accommodate shafts of a certain dimension.
In Mexico, the castings will be subjected to processes in a lathe, a mill, and a stamp marker. In the lathe, material is removed from one of the faces, grooves are formed, and the center bores are pre-chamfered to a required measurement. Afterwards, holes are drilled. Next, material is removed from the other face, the hub face, and the rim’s inner diameter, (For pulley 455313, the drilling process occurs prior to the being placed in a lathe again.) In addition, the bore is finished. During each of these phases, material is removed. Once finished, each pulley is stamped, e-coated, and afterwards packaged.
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 U.S. 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 U.S. the English name of the country of origin of the article.
The "country of origin" is defined in 19 CFR 134.1(b) 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 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 or 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 viewing the illustrations submitted for cast number 111403, this item is of a general geometric configuration. Cast number 111403 is not recognizable as a pulley or pulley wheel that rotates to transmit power. Cast number 111403 does not have the essential character of a finished pulley. Therefore, prior to being exported into Mexico, cast number 111403 is an article of heading 7325, which provides for other cast articles of iron or steel.
In Mexico, cast number 111403 is subjected to various processes that substantially transform this casting into a pulley, similar to the Chinese pulley castings of New York ruling (NYR) N019766 (December 7, 2007), in which castings were subjected to a number of operations in Canada (hardness testing, grinding, milling, balancing, drilling and inspection) to become pulleys. The ruling concluded that the non-originating castings, which were classified within heading 7325, were raw castings that lack the critical surfaces and grooving of the finished pulleys, which were classified in subheading 8483.50, and once subject to these various processes, the castings had been substantially transformed. As the castings lack the essential character of the finished pulleys, it was determined that the country of origin of the finished pulleys is Canada.
Furthermore, Headquarters (HQ) ruling 963283 (May 11, 2000) states that CBP’s longstanding position on the issue of advancements in castings is that the casting process is considered complete when, after the casting solidifies and cools, surface imperfections are removed by blast cleaning, chipping, burning or combinations of these processes. Certain independent and additional processes not merely incidental to the general foundry work are considered to advance an article beyond casting. Additionally, NYR G81782 (dated September 25, 2000) notes that once a steel casting is further processed...by machine-lathing to specific size and drilling holes, it has been advanced beyond the definition of cast article.
Therefore, as cast number 111403, which is classified within heading 7325, does not have the essential character of a finished pulley, the processes that occur in Mexico substantially transform the casting into finished pulleys, part numbers 111104 or 455313. Accordingly, the county of origin for the finished pulleys, part number 111104 and 455313, is Mexico for the purpose of 301 Trade Remedies.
Cast numbers 112360, 116895, and 112355 differ from cast number 111403. These circular shaped castings are recognizable as pulleys or pulley wheels that are intended to rotate. The pulley or pulley wheels, while not grooved, feature spokes or arms and have center bores shaped to incorporate a shaft of specific dimensions. Based on these features, cast numbers 112360, 116895, and 112355 are identifiable as pulleys classified within heading 8483.
Therefore, as cast numbers 112360, 116895, and 112355 are identifiable as pulleys or pulley wheels prior to being imported into Mexico, the machining and drilling processes completed in Mexico do not substantially transform cast numbers 112360, 116895, and 112355. These castings are recognizable as pulleys prior to undergoing the machining and drilling processes. The processes performed in Mexico do not change the shape, character or predetermined use of the castings, and as such, cast numbers 112360, 116895, and 112355 are not transformed in Mexico into a new and different article of commerce with a name, character, and use distinct from the article exported from China.
Accordingly, for the purpose of 301 trade remedies, the country of origin of the finished pulleys part numbers 112042, 455601, and 112025 is China at the time of importation into the United States.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8483.50.9040, HTSUS, unless specifically excluded, are subject to an additional 25 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.01 in addition to subheading 8483.50.9040, HTSUS, listed above.
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: (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 § 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
The pulleys are 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 pulleys 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 pulleys are classified under HTSUS subheading 8483.50. The tariff shift requirement in Section 102.20 for a good of subheading 8483.50 is a change to subheading 8483.30 through 8483.60 from any other subheading, including another subheading within that group.
Since the tariff shift can occur from any other subheading, including within the aforementioned 8483 subheading group, the tariff shift rule is met. Accordingly, the country of origin of the pulleys for marking purposes is Mexico.
Additionally, you have also requested consideration under the USMCA trade agreement. 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, and 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
(i) the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries;
(ii) the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials;
(iii) 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));
Since the pulleys contain non-originating materials, they are not considered goods wholly obtained or produced entirely in a USMCA country under GN 11(b)(i) and GN 11(b)(ii). Therefore, we must next determine whether the pulleys qualify under GN 11(b)(iii). The applicable change in tariff classification under subdivision (o) for goods of subheading 8483.50 is a change to subheadings 8483.40 through 8483.90 from any other subheading, including another subheading within that group. In noting the tariff shift can occur from any other subheading including another subheading within that group, the Chinese manufactured castings, which are the non-originating material of the pulleys, meet the requisite tariff shift rule. Accordingly, the pulleys qualify as USMCA originating goods.
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 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).This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection 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, please contact National Import Specialist Sandra Martinez at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division