OT:RR:NC:N2:206
Jeremy Page
Page Fura, P.C.
939 W. North Avenue, Suite 750 Chicago, IL 60642
RE: The country of origin of an airbag module
Dear Mr. Page:
In your letter dated October 1, 2024, you requested a country of origin ruling on an airbag module for purposes of applying trade remedies under Section 301 of the Trade Act of 1974, as amended, from China, which you filed on behalf of Yanfeng International Automotive Technology (YIAT) US I LLC.
The merchandise under consideration is a Passenger Air Bag or "PAB" Module (YIAT Part Number Y0772518) that YIAT is producing in Mexico from components of Serbian, Chinese, Italian and Mexican origin. The PAB will be incorporated into the steering wheel, front passenger dashboard, side driver/passenger seats, and rear door panels to protect and cushion occupants during a collision. You state that each PAB is comprised of 15 unique components totaling 27 parts overall that will undergo 10 distinct operations in Mexico before resulting in the production of the finished good.
The initial step begins with the creation of the Active Adaptive Unit or "AAU" subassembly. The AAU is a form of pyro-technic actuator that relies on external sensors to generate signals which are fed to the AAU to initiate airbag deployment. You state that the AAU, fixation clip and AAU holder, of Chinese origin, are combined through a pressing operation where care is required to ensure that only the appropriate level of pressure is applied to render the subassembly operable.
Then, the cushion, also of Chinese origin, undergoes a folding operation before it is combined with the AAU subassembly. The folding operation is extremely precise as the cushion fabric must be folded in a certain configuration in order to ensure that, when needed, it opens to provide the maximum surface coverage area in the least amount of time possible.
The next step is the creation of the housing assembly. This involves a crimping and spot-welding operation combining the housing, two brackets, and two metal clips, all of Chinese origin. Once combined, the two retainer rings of Serbian origin are integrated into the housing subassembly through a spot weld operation. Then, the Chinese inflators are inserted into the housing's cutaways and affixed through a crimping operation to create the inflator subassembly.
The AAU subassembly is finally incorporated into the housing subassembly, and the cushion assembly is incorporated into the unit.
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; however, for a good of a NAFTA or USMCA country, the marking rules set forth in part 102 of this chapter will determine the country of origin."
However, when determining the country of origin for purposes of applying current trade remedies under Section 301, the substantial transformation analysis is applicable. See, e.g., Headquarters Ruling Letter (“HQ”) H301619, dated November 6, 2018. 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, 681 F.2d 778 (C.C.P.A. 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).
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) (Uniroyal). In Uniroyal case, the court held that an upper was not substantially transformed when attached to an outsole to form a shoe and that the upper was "the very essence of the completed shoe".
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.
Although some of the operations in Mexico are time consuming and require precision, they are not complex and meaningful enough to substantially transform the components into an article with a new name, character, and use. The components from China have a pre-determined use at the time of importation to Mexico and do not undergo any physical change in Mexico. As a result, no substantial transformation occurs in Mexico. Therefore, the country of origin of the "PAB" Module (YIAT Part Number Y0772518) will be China for purposes of applying trade remedies under Section 301 of the Trade Act of 1974, as amended.
The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in Title 19, Code of Federal Regulations (CFR), Section 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, whether directly, by reference, or by implication, is accurate and complete in every material respect. In the event that the facts are modified in any way, or if the goods do not conform to these facts at time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and submit a request for a new ruling in accordance with 19 CFR 177.2. Additionally, we note that the material facts described in the foregoing ruling may be subject to periodic verification by CBP.
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 Liana Alvarez at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division