The country of origin of tape drive sled assemblies from the Netherlands or Germany

N301213 November 13, 2018 CLA-2-84:OT:RR:NC:N2:220 CATEGORY: Origin Michael Gamble Tradewin 3 Technology Drive Peabody, MA 01960 RE: The country of origin of tape drive sled assemblies from the Netherlands or Germany Dear Mr. Gamble: In your letter dated October 17, 2018 you requested a tariff classification ruling on behalf of your client, Spectra Logic Corporation. The merchandise under consideration is identified as the T950 Full Height Drive Sled Assembly, Model 90949785, and the T120 Half Height Drive Sled Assembly, Model 90959309. Based on the information provided, both devices require the assembly of what is referred to as a “sled”, which is the housing or chassis for the entire drive assembly, and a “brick”, which is the actual tape drive. The origin of the various parts that are used in the assembly of the Drive Sled Assemblies varies, however we would note that the origin of the individual tape drives, or bricks, is China. You state that the skilled workers fabricate the T950 Full Height Drive Sled Assembly by assembling the sled frames to form an enclosure, installing the controller board, cooling fan, and communication ports, and routing and attaching the various electrical connections. After the sled build is completed, the subassembly is tested and inspected. The sled subassembly then undergoes a separate build process where the tape drive is installed, configured, and tested. The total assembly process takes approximately 72 minutes. You state that the skilled workers fabricate the T120 Half Height Drive Sled Assembly by assembling the sled frames to form an enclosure, installing the controller board, cooling fan, and routing and attaching the various electrical connections. After the sled build is completed, the subassembly is tested and inspected. The sled subassembly then undergoes a separate build process where the tape drive is installed, communication ports are attached, and the drive is configured and tested. The total assembly process takes approximately 71 minutes. Section 304 of the 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 container) will permit in such a manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article. The regulations implementing the requirements and exception to 19 U.S.C. § 1304 are set forth in Part 134, Customs and Border Protection Regulations (19 C.F.R. Part 134). 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 in order to render such other country the “country of origin” within the meaning of this part; As stated in HQ 735009 dated July 30, 1993, “The country of origin is the country where the article last underwent a “substantial transformation”, that is, processing which results in a change in the article's name, character, or use”. Customs and Border Protection (CBP) maintains, based on United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 (C.A.D. 98) (1940), that “A substantial transformation occurs when an article emerges from a manufacturing process with a name, character, and use that differs from the original material subjected to the processing.” 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. With regard to the T950 Full Height and T120 Half Height Drive Sled Assemblies, the tape drive that is inserted into the sleds is manufactured in China. It is the view of this office that the assembly process performed in the Netherlands or Germany does not constitute substantial transformation of the original article into a new or different article of commerce. In the opinion of our office, the country of origin of the T950 Full Height Drive Sled Assembly, Model 90949785, and the T120 Half Height Drive Sled Assembly, Model 90959309, is China. This ruling is being issued under the provisions of Part 177 of the Customs 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, contact National Import Specialist Karl Moosbrugger at karl.moosbrugger@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division