Application for Further Review of Protest No. 280923110395; [ ]; Country of Origin of Imported Electrical Inverters and Battery Chargers; Section 301 Trade Remedy

H338596 February 27, 2026 OT:RR:CTF:VS H338596 AMW CATEGORY: Origin Center Director Electronics CEE U.S. Customs and Border Protection 1 World Trade Center Long Beach, CA 90831 Attn: Elizabeth Carrick, Import Specialist RE: Application for Further Review of Protest No. 280923110395; [ ]; Country of Origin of Imported Electrical Inverters and Battery Chargers; Section 301 Trade Remedy Dear Center Director: This is in response to an Application for Further Review (“AFR”) of Protest Number 280923110395, timely filed on behalf of [ ] (the “Protestant” or “Importer”), concerning liquidation and assessment of duties pursuant to Section 301 of the Trade Act of 1974 for the entry of certain electric inverters, battery chargers, and inverter/chargers. The Protestant asked that certain information submitted in connection with the protest be treated as confidential. Inasmuch as this request conforms to the requirements of 19 CFR § 177.2(b)(7), the request for confidentiality is approved. The information contained within brackets and all attachments to this ruling request, forwarded to our office, will not be released to the public and will be withheld from published versions of this decision. FACTS: The following facts are based on the protest submitted August 4, 2023, and follow-up submissions provided on September 14, 2024, October 10, 2024, June 2, 2025, and September 5, 2025. On August 16, 2022, the Protestant entered into the United States various models of electrical inverters, battery chargers, and inverter chargers (collectively, the “products” or “devices”). Upon entry, the Protestant declared the country of origin of the products to be Hong Kong. Upon reliquidation, CBP changed the country of origin of the products to China. 2 The Protestant purchased and imported the subject devices from an unrelated exporter, [ ] (the “Exporter”), which is based in Hong Kong. The Exporter, in turn, owns two additional entities: [ ] (the “China Entity”), which sourced the individual components and produced the underlying printed circuit board assemblies (“PCBAs”) in China; and [ ] (the “Hong Kong Entity”), which conducted final assembly of the subject merchandise in Hong Kong. The electrical inverters transform direct current (“DC”) electricity stored in batteries, which are imported and installed separately, into alternating current (“AC”) electricity that can be used to power household devices such as television sets and air conditioners. The battery chargers do the opposite: they convert AC power from an external power source (e.g., a wall socket) into DC power to recharge batteries. The inverter/chargers, meanwhile, are equipped to perform both functions. The devices are composed of a variety of subassemblies and components that are combined and partially assembled in China before undergoing final assembly in Hong Kong. In particular, each device contains five PCBAs: the main PCBA (i.e., “motherboard”), display PCBA, control PCBA, auxiliary power PCBA, and connector PCBA. The motherboard PCBA controls power management, energy scheduling, and the switching logic from DC input and AC output (or vice versa) to ensure the reasonable flow of electrical energy. A variety of components are affixed to the PCBA in either Hong Kong or China, including the metal-oxide-semiconductor field-effect transistor (“MOSFET”) and insulated gate bipolar transistor (“IGBT”) switches. The MOSFET and IGBT switches are important to the overall function of the devices, facilitating the conversion of the electric current by controlling the direction of the current and determining the output frequency. Overall, most individual components were sourced from China and a majority of the component value for each model was also associated with components originating in China. The Protestant has provided costed bills of material (“BOMs”) for seven models of devices subject to the instant protest. The BOMs show the following component and cost breakdown: Product No. Total No. of Component Types1 No. of Component Types Produced in China Total Component Value China Component Value Inverter [ ] 344 326 $91.56 $83.31 Inverter [ 359 340 $112.27 $100.92 1 This column reflects the number of different component line items reported in the BOMs. This number does not reflect the total number of components incorporated because the BOMs do not report a consistent unit of measurement for components used. For instance, for some components (e.g., nuts, transistor clamps) the BOMs provide the total number incorporated. However, for other components (e.g., tape, tubing, adhesives), the BOMs provide the length or volume used. 3 ] Inverter Charger [ ] 397 385 $147.88 $122.11 Battery Charger [ ] 326 317 $85.51 $76.44 Inverter [ ] 366 305 $188.02 $122.79 Inverter [ ] 364 301 $201.96 $140.18 Inverter Charger [ ] 446 440 $159.67 $139.44 Although the products differ in purpose, the Protestant notes that they are similar in construction, and, for the purpose of conducting a substantial transformation analysis, underwent an identical manufacturing process. The products underwent manufacturing and assembly operations in both China and Hong Kong. The initial stages of production occurred in China at a facility owned by the China Entity. To begin with, each device’s components are procured and the bare printed circuit boards (“PCBs”) were printed, creating the conductive pathways. Following this, the PCBs underwent a surface-mount technology (“SMT”) process in which various components were added, including diodes, capacitors, resistors, circuit breakers, and certain MOSFET/IGBT switches. Following this, the PCBAs were placed into a reflow oven in which soldering paste was melted and various components were affixed. Next, an automated optical inspection of the PCBA was conducted to detect any defects or device failures. Finally, an automated insertion (“AI”) process occurred to further attach discrete components, including additional capacitors and diodes. Once the AI process is complete, the components were packaged and sent as kits to Hong Kong. Based on photographs provided by the Protestant, the motherboard PCBAs left China with pre-punched holes to which additional components were added during the Hong Kong assembly. The final assembly occurred in Hong Kong at a facility owned by the Hong Kong Entity. Upon arrival at the Hong Kong facility, the kits’ components were unpacked and prepared for assembly. Next, various components were added to the motherboard PCBAs via through-hole insertion process (described in your request as a “stuffing” process), including resistors, resonators, displays, fuses, insulators, heatsinks, and additional switches. Afterwards, the PCBAs underwent a wave soldering process in which they were run through a conveyor and passed over a molten solder “wave” that created solder joints for the components inserted during the stuffing process. Next, a hand soldering process occurred by which employees added and 4 soldered additional components, including LED displays and lights, transistor clamps, and certain connectors. Once the additional components were affixed to the PCBAs, the boards underwent programming with firmware that was written in a variety of countries followed by in-circuit testing.2 Lastly, the PCBAs were assembled with the remaining components, including AC/DC power adapters, fuses, cables, connectors, fan, chassis, and cover, to form the complete unit. The devices then underwent final testing and were packed and exported. The Protestant claims that the applicable country of origin is Hong Kong, arguing that the individual components were substantially transformed into the finished devices in that country. On April 4, 2024, the Electronics CEE denied the protest on the following basis: “There is an ISO and IATF Certificate for [the China Entity] showing them designing, manufacturing, and selling the associated power products. Both certificates show China as the [c]ountry where operations are performed….” In support of its protest, the Protestant has provided the following documents: • CBP Form 7501 Entry documents for the underlying entry; • CBP’s invoice to the Importer for outstanding duties; • An ACE extract for the underlying entry; • Annual corporate returns for the Exporter and Hong Kong Entity; • BOMs for the specific SKUs in the underlying entry; • Importer’s purchase order for the underlying entry; • Exporter’s purchase orders to the Hong Kong Entity; • Schedule of China SMT process and translation; • China Customs export declaration; • Exporter kit invoice to Hong Kong Entity; • Hong Kong production schedule for relevant time period; • Annotated photos and recorded videos of manufacturing process in occurring in both China and Hong Kong; • Photographs of kits arriving in Hong Kong and after assembly in China; • Equipment purchase and shipment information for production equipment at Hong Kong facility; • Product kit material and packing lists; • Standardized work procedures for hand soldering process; • Certificate of Origin issued by Hong Kong Federation of Industries; • Timecards for employees working at Hong Kong Entity’s assembly facility; • Product “flow chart” containing a costed BOM for an exemplary inverter model, photographs and descriptions of underlying PCBAs, and costed list of manufacturing steps; and 2 The submission states that the firmware was written in a variety of different countries, and the origin would differ for each device. For each device, the firmware was written in the following countries: [ ] (United States and Thailand), [ ] (Malaysia and Thailand), [ ] (China), [ ] (Hong Kong), [ ] (United States and Philippines), [ ] (Canada), [ ] (Canada), [ ] (Hong Kong). 5 • Corporate documents, affidavits, and negotiation records demonstrating Exporter and Importer are unrelated parties ISSUE: Whether the country of origin for the subject devices is Hong Kong or China for the application of Section 301 duties. LAW AND ANALYSIS: To begin, this matter is protestable under 19 U.S.C. § 1514(a)(5) as a decision relating to the liquidation or reliquidation of an entry. The protest was timely filed, within 180 days of liquidation for the entry. See Miscellaneous Trade and Technical Corrections Act of 2004, Pub. L. 108-429, § 2103(2)(B)(ii)-(iii) (codified as amended at 19 U.S.C. § 1514(c)(3) (2006)). Further review of this protest is properly accorded to the importer pursuant to 19 CFR § 174.24(b) because the issues protested involve questions of law or fact, which have not been ruled upon. The United States Trade Representative (“USTR”) has determined that an additional ad valorem duty will be imposed on certain Chinese imports pursuant to USTR’s authority under Section 301(b) of the Trade Act of 1974 (“Section 301 measures”). See Section XXII, Chapter 99, Subchapter III, U.S. Note 20, HTSUS. The relevant Section 301 measures apply to products of China enumerated in Section XXII, Chapter 99, Subchapter III, U.S. Note 20(e), which provides in pertinent part that for the purposes of subheading 9903.88.15, products of China that are classified in the subheadings enumerated in U.S. note 20(f), shall be subject to an additional 25% percent ad valorem rate of duty. Products of China classifiable in subheading 8504.40.95, HTSUS, are subject to the additional tariff under subheading 9903.88.03, HTSUS. When determining the country of origin for applying trade remedies under Section 301, the substantial transformation analysis is applicable. A substantial transformation is said to have occurred when an article emerges from a manufacturing process with a name, character, and use which differs from the original material subjected to the process. United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 (C.A.D. 98) (1940); Texas Instruments, Inc. v. United States, 681 F.2d 778, 782 (1982). If the manufacturing or combining process is a minor one which leaves the identity of the article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 C.I.T. 220, 542 F. Supp. 1026 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983). In a number of rulings, CBP has stated: “in our experience these inquiries are highly fact and product specific; generalizations are troublesome and potentially misleading.” See e.g., Headquarters Ruling Letter (“HQ”) 735608 (Apr. 27, 1995) and HQ 559089 (Aug. 24, 1995). The determination is in this instance ‘a mixed question of technology and Customs law, mostly the latter.’” Texas Instruments, Inc. v. United States, 681 F.2d 778, 783 (CCPA 1982). The Court of International Trade (“CIT”) more recently interpreted the meaning of “substantial transformation” in Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308 (2016). Energizer Battery involved the determination of the country of origin of a flashlight, referred to as the Generation II flashlight. Every component of the flashlight was of Chinese origin, except for a white LED and a hydrogen getter. The components were imported into the 6 United States and assembled into the finished Generation II flashlight. The Energizer Battery court reviewed the “name, character and use” test utilized in determining whether a substantial transformation had occurred and noted, citing Uniroyal, Inc., 3 C.I.T. at 226, 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 Battery 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 Battery at 1319, citing as an example, National Hand Tool Corp. v. United States, 16 C.I.T. 308, 312 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993). In C.S.D. 85-25, 19 Cust. Bull. 844 (1985), CBP held that for purposes of the Generalized System of Preferences (“GSP”), the assembly of a large number of fabricated components onto a printed circuit board in a process involving a considerable amount of time and skill resulted in a substantial transformation. In that case, over 50 discrete fabricated components (e.g., resistors, capacitors, diodes, integrated circuits, sockets, and connectors) were assembled onto a PCB. CBP determined that the assembly of the PCBA involved a very large number of components and a significant number of different operations, required a relatively significant period of time, skill, attention to detail, and quality control. See C.S.D. 85-25, 19 Cust. Bull. 544 (1985), (the assembly of a large number of fabricated components onto a printed circuit board in a process involving a considerable amount of time and skill resulted in a substantial transformation); see also, HQ H326574, dated June 21, 2023 (holding that the country of origin of a network CATV amplifier is that in which the PCBA is manufactured via SMT). The Protestant has presented two arguments as to why the subject devices originate in Hong Kong. First, the Protestant argues that the CEE erroneously relied on an ISO Certificate issued to the Chinese Entity, which stated that the products originated in China and that the Exporter performed a logistics function as opposed to being a manufacturer. Second, the Protestant argues that the assembly operations performed in Hong Kong are sufficient to affect a substantial transformation of the underlying components. To begin with, the Protestant has provided documentation purporting to substantiate the manufacturing processes occurring in Hong Kong. Even if we were to accept these documents as sufficient, however, the level of operations the Protestant claims to occur in Hong Kong would still not produce a substantial transformation of the underlying merchandise as analyzed below. Given the above, the saliant question is whether the assembly operations occurring in Hong Kong were sufficient to substantially transform the underlying components into an article with a different name, character, and use. We will analyze each in turn. For the change in name, the Protestant does not present an argument as to when the components underwent a change in name. However, throughout its submissions, the Protestant describes the PCBA produced in China as a “bare PCB,” which suggests the Protestant believes the components underwent a change in name in Hong Kong from their individual names to become the final motherboard PCBA and the inverter, charger, and inverter/chargers. We observe, however, that the court in Energizer Battery analyzed a similar argument, noting: “[t]he 7 issue is not whether Plaintiff imported approximately fifty ‘flashlights,’ but rather whether the Plaintiff’s imported components retained their names after they were assembled into the Generation II flashlight. Thus, the proper query would be whether the . . . components would still be called by their pre-importation name after assembly into the finished flashlight, or whether they would be indistinguishable in name from the finished product.” Energizer Battery at 1322. The court found that “[t]he constitutive components of the Generation II flashlight do not lose their individual names as a result of post-importation assembly [accordingly] no such name change has occurred.” Id.; see also, HQ H322417, dated February 23, 2022 (“when incorporated into the printed circuit board, the individual components and the blank printed circuit board develop a new name, a PCBA.”) Similar to Energizer Battery, we find that the individual components such as the PCB and PCBA components undergo a change in name when they are incorporated into the PCBA via SMT in China. In contrast, and again similar to Energizer Battery and HQ H327417, the Chinese-constructed PCBA itself does not undergo a change in name when it undergoes further through-hole processing and incorporation into the final device in Hong Kong. Importantly, CBP has consistently recognized that a bare PCB undergoes a change in name when it undergoes printing and SMT. See, e.g., HQ H325450, dated Nov. 17, 2022 (noting a bare PCB becomes a PCBA when an integrated circuit is “surface mounted onto a bare [pcb] along with components such as diodes, capacitors, resistors, switches….”) As such, although additional components are added to the motherboard PCBAs in Hong Kong, this does not change the fact that the PCB had already undergone the requisite name change to a PCBA in China. With respect to character, for courts to find a change in character, there often needs to be a substantial alteration in the characteristics of the articles or components. See e.g., Energizer Battery, 190 F. Supp. 3d at 1318 (citing National Hand Tool, 16 C.I.T. at 311). Courts have not found a change in character when changes are cosmetic or when the “form of the components remained the same.” Energizer Battery at 1318. In other cases, courts have looked to the “essence” of a completed article to determine whether an imported article has undergone a change in character as a result of post importation processing. Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308, 1318 (2016) (citing Uniden America Corp. v. United States, 120 F. Supp. 2d 1091, 1095-1098 (2000) and Uniroyal, Inc. v. United States, 3 C.I.T. 220, aff’d, 702 F.2d 1022 (Fed. Cir. 1983) (imported shoe uppers were the “essence of the finished shoe” and were not substantially transformed by the addition of an outer sole in the United States”). With respect to th