Country of Origin of an Alternator Assembly

H354721 March 9, 2025 OT:RR:CTF:VS H354721 RRB CATEGORY: Origin Mr. Cheng Chao Desmond Lee Everspark Industries SDN BHD PTD114234, Jalan Murni 15, Taman Perindustrian Murni 81400 Senai, Johor, Malaysia RE: Country of Origin of an Alternator Assembly Dear Mr. Lee: This is in response to your request, dated March 20, 2025, filed on behalf of Everspark Industries SDN BHD (“Everspark”), regarding the country of origin of an alternator assembly and starter assembly. The starter assembly was addressed in Headquarters Ruling Letter (HQ) H347172, dated January 20, 2026. FACTS: The item under consideration is identified as an alternator assembly that is used in spark-ignition internal combustion automotive engines. You explain that the purpose of the alternator is to convert mechanical energy into electrical energy in order to charge the battery that supplies power to all electronics in a vehicle. As additional background, we note that an alternator uses mechanical motion, provided by the turning of a crankshaft, to create an electrical current, which is an alternating or “AC” current. This AC current flows along the wiring in both a backward and forward motion. A motor vehicle’s electrical system uses direct, or “DC” current. DC current flows in only one direction. Thus, the alternator works by converting the AC current into the DC current that the vehicle can use. Specifically, the magnetic interaction between the key rotor and stator subassemblies generates the electrical energy. Alternator Assembly Manufacturing Operations The alternator assembly consists of the following components: • Stator from Malaysia • Rotor from China on all alternators manufactured before May 2025; rotor produced in Malaysia on all alternators manufactured since May 2025 • Alternator casing from Taiwan • Voltage regulator from Taiwan • Rectifier from Taiwan • Pulley from China • Bearing from China • Bolts and screws from Malaysia Based upon the submitted documentation, the most expensive component of the alternator is the stator produced in Malaysia. You state that all of the assembly operations to produce the subject alternator assembly take place in Malaysia. In an email dated October 7, 2025, you stated that for the rotors produced in China prior to May 2025, wire wrapping also occurred in China. In support of your ruling request, you describe the following manufacturing operations to produce the alternator assembly: 1. Install 13mm screw. 2. Tighten the screws. 3. Place the rotor on the bearing jig. 4. Place bearing on the shaft of the rotor. 5. Insert the front housing through the rotor shaft. 6. Install the clutch pulley. 7. Tighten the pulley. 8. Place the washer on top of the rotor bearing. 9. Take a stator and straighten the terminal wires using pliers. 10. Insert the rear housing into the stator, followed by the rectifier on top of the housing. 11. Screw the rectifier onto the rear housing. 12. Clip the stator terminal wire and rectifier terminal together. 13. Apply solder to the terminals to secure the connection. 14. Assemble front housing and rear housing together, ensuring that the holes of each housing are aligned. 15. Place the mounting rods into mounting holes to ensure alignment of the housing. 16. Tighten the housing screws. 17. Place the regulator and secure. 18. Clip the regulator terminal wire and rectifier terminal together. 19. Apply solder to the terminals to secure the connection. 20. Push the carbon into the holder. 21. Insert pin into the holder hole to hold the carbon. 2 22. Place the carbon holder onto position, then remove the pin. 23. Screw on the carbon holder. 24. Insert fiber into the B+ terminal, followed by the B+ nut. 25. Install the cover onto its position. ISSUE: What is the country of origin of the subject alternator assembly for purposes of trade remedies? LAW AND ANALYSIS: When determining the country of origin for purposes of applying trade remedies, the substantial transformation analysis is applicable. 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 (CCPA 1982). In deciding whether the combining of parts or materials constitutes a substantial transformation, the determinative issue is the extent of operations performed and whether the parts lose their identity and become an integral part of the new article. See Belcrest Linens v. United States, 6 CIT 204, 573 F. Supp. 1149 (1983), aff’d, 741 F.2d 1368 (Fed. Cir. 1984). Assembly operations that are minimal or simple, as opposed to complex or meaningful, will generally not result in a substantial transformation. Factors which may be relevant in this evaluation include the nature of the operation (including the number of components assembled); the number of different operations involved; and whether a significant period of time, skill, detail, and quality control are necessary for the assembly operation. See C.S.D. 80-111, C.S.D. 85-25, C.S.D. 89-110, C.S.D. 89-118, C.S.D. 90- 51, and C.S.D. 90-97. If the manufacturing or combining process is a minor one which leaves the identity of the article intact, a substantial transformation has not occurred. See Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983). CBP has found that a simple assembly process, for example, an assembly that involves press-fitting parts into each other, does not rise to the level of a substantial transformation. See HQ H313089, dated February 16, 2021. In examining assembly operations, CBP has looked to the nature of the assembly, as well as the origin of the component that imparts the “essential character” to the end product. Id. However, whether an assembly process is sufficiently complex to rise to the level of a substantial transformation is determined upon consideration of all of the operations that occur in a particular country, including any subassembly processes that take place in that country. See HQ H303529, dated June 6, 2019; see also NY N317575, dated March 5, 2021. In HQ H075667, dated January 21, 2010, CBP determined that the country of origin of a heavy-duty alternator used in diesel-powered motor vehicles was the United 3 States. There, the stator assembly, rotor assembly, rectifier, regulator base assembly, insulators, rear cover, outer package, and inner package were sourced from China while the overvoltage transient suppressor, retainer ring, bearings, regulator, and cable were sourced from the United States. CBP found that the country of origin of the alternator was the United States based on the assembly process that took place there, which consisted of 31 steps, including the following: pressing the bearing to the drive end housing; installing the snap ring, the heilicoil, and the stator; measuring the stator resistance and stator AUX winding resistance; using fluke meter to measure the rotor resistance and a hi-pot test to check insulation between each phase to ground; pressing the rotor into the stator/drive end housing assembly; and installing the SRE housing, air flow deflector, rectifier sub-assembly, heat shrink tubing, regulator back plate, and the ignition protect parts. CBP held that through this assembly process, the foreign components lost their individual identities and became part of a new article, i.e., the alternator, possessing a new name, character and use. In HQ H282391, dated March 16, 2017, CBP determined that the country of origin of a gear motor was the United States because the assembly process in the United States amounted to a substantial transformation. The gear motor was comprised of two subassemblies, a gear box and a motor. The assembly of the gear motor consisted of assembling together 131 unique parts, and at least a total of 200 parts. These parts were imported from various origins and were used to first assemble the gear box and motor subassemblies, and then the complete gear motor through a complex operation with specialized skill and expertise. CBP noted that the complex operations involved at least 27 steps and took approximately two hours. CBP also considered the worker experience and training, stating that the workers were hired with previous experience and underwent additional training in order to reach proficiency in the assembly process. CBP thereby concluded that the foreign components lost their individual identities and became an integral part of a new article, the gear motor, and possessed a new name, character and use, amounting to a substantial transformation as a result of the assembly operations. In HQ H337371, dated April 24, 2025, CBP determined that the country of origin of an automotive fuel pump that extracts fuel from the tank and supplies fuel to the engine at a constant pressure and output power was Thailand. There, various parts from Thailand, China, and Japan were used to manufacture the key pump core/motor subassembly, as well as the reservoir, inner support and other constituent parts in Thailand. CBP determined that through 28 discrete manufacturing steps, which included welding, soldering, magnetization, machining, plastic injection molding, and crimping, various separate parts were substantially transformed into the pump core/motor subassembly in Thailand. In addition, a series of plastic mold injection operations were also performed in Thailand, along with soldering and press-fitting, to produce other key components, including the inner support and reservoir. These subassemblies and other components were then combined to assemble the finished automotive fuel pump through a series of 18 additional steps in Thailand. Accordingly, CBP found that the various non-Thai components lost their individual identities and became an integral part of a new article, with a new name, character, and use. 4 With respect to the subject alternators that were produced before May 2025, while some subassemblies, including the rotor, were sourced from outside Malaysia, the stator subassembly and assembly of the various subassemblies into an alternator occurred in Malaysia. For the subject alternators that were produced in May 2025 onwards, the stator and rotor subassemblies, as well as assembly of the various subassemblies into the final alternator, will occur in Malaysia. The stator, which is the most expensive component, and rotor are both key subassemblies of the alternator. See, e.g., HQ 561030, dated February 16, 1999 (noting that based on cited scientific literature, the stator and rotor are key items in an alternator that work together to produce current and represent the essential identity of the alternators). Aside from the production of the stators and those rotors that are assembled into alternators manufactured beginning in May 2025, the assembly of the final alternator consists of 25 discrete manufacturing steps similar to those involved in the manufacture of alternators in HQ H075667. However, unlike the alternator in HQ H075667, even more of the subassemblies—most notably, the key subassemblies of the stator and rotor (in alternators manufactured beginning in May 2025)—are manufactured in the same country (i.e., Malaysia) as where the 25-step final assembly takes place. Moreover, much of the assembly process described in HQ H075667 is substantially similar to the manufacturing steps described above. Therefore, as in HQ H075667, we find that all of the non-Malaysian components are substantially transformed in Malaysia when they are assembled to produce the finished alternator. Thus, the country of origin of the alternator will be Malaysia for duty purposes. HOLDING: The country of origin of the alternator for duty purposes will be Malaysia. Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by [CBP] field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.” 5 A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction. Sincerely, Monika R. Brenner, Chief Valuation and Special Programs Branch 6