The country of origin of solar modules from Vietnam

N305538 August 12, 2019 MAR-2-85:OT:RR:NC:N2:209 CATEGORY: Marking/Country of Origin Wonki Kim Hyundai Energy Solutions Co., Ltd 4th Floor, First Tower Building, 55, Bundang-Ro, Bundang-Gu, Seongnam-Si, Gyeonggi-Do Seongnam 13591 South Korea RE: The country of origin of solar modules from Vietnam Dear Ms. Kim: In your letter, received by this office on July 29, 2019, you requested a country of origin determination for solar panels. The solar modules/panels under consideration are manufactured in Vietnam from solar cells manufactured in South Korea and various other components manufactured in China. The South Korean solar cells and other Chinese components are imported into Vietnam where they undergo an assembly process that creates a finished solar panel. The submission describes the assembly process that takes place in Vietnam and provides the country of origin for each component. 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 imported into the United States 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 the ultimate purchaser in the United States the English name of the country of origin of the article. Congressional intent in enacting 19 U.S.C. § 1304 was “that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will.” United States v. Friedlaender & Co. Inc., 27 CCPA 297, 302, C.A.D. 104 (1940). Part 134, Customs Regulations (19 C.F.R. Part 134), implements the country of origin marking requirements and the exceptions of 19 U.S.C. § 1304. Section 134.1(b), Customs Regulations (19 C.F.R. § 134.1(b)), defines “country of origin” 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 the marking laws and regulations. In determining whether the combining of parts or materials constitutes a substantial transformation, the determinative issue is the extent of the operations performed and whether the parts lose their identity and become an integral part of the new article. Belcrest Linens v. United States, 6 C.I.T. 204, 573 F. Supp. 1149 (1983), aff’d, 741 F.2d 1368 (Fed. Cir. 1984). If the manufacturing or combining process is a minor one that leaves the identity of the imported article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 C.I.T. 220, 542 F. Supp. 1026 (1982). 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.” Energizer involved the determination of the country of origin of a flashlight, referred to as the Generation II flashlight. All of the components of the Generation II flashlight were of Chinese origin, except for a white LED and a hydrogen getter. The components were imported into the United States where they were assembled into the finished Generation II flashlight. The court reviewed the “name, character and use” test utilized in determining whether a substantial transformation has occurred and noted, citing Uniroyal, Inc. v. United States, 3 C.I.T. at 226, 542 F. Supp. at 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). In reaching its decision in Energizer, the court expressed the question as one of whether the imported components retained their names after they were assembled into the finished Generation II flashlights. The court found “[t]he constitutive components of the Generation II flashlight do not lose their individual names as a result [of] the post-importation assembly.” The court also found that the components had a pre-determined end-use as parts and components of a Generation II flashlight at the time of importation and did not undergo a change in use due to the post-importation assembly process. Finally, the court did not find the assembly process to be sufficiently complex as to constitute a substantial transformation. Thus, the court found that Energizer’s imported components did not undergo a change in name, character, or use as a result of the post-importation assembly of the components into a finished Generation II flashlight. The court determined that China, the source of all but two components, was the correct country of origin of the finished Generation II flashlights under the government procurement provisions of the TAA. In HQ H261693, dated September 16, 2015, CBP reviewed the issue of solar panels that were manufactured in Korea and Poland from solar cells (product of Malaysia or Korea). In addition to considering the country of origin of all of the components, CBP stated that the most important aspect of the case was the fact that the solar cells were produced in Malaysia or Korea and not in the countries where the solar panels were put together. CBP found that assembling solar cells into finished solar panels did not result in a product with a new name, character, and use. CBP opined that solar cells imparted the essential character of the solar panels. Accordingly, where Malaysian solar cells were used, the country of origin was Malaysia, and in the scenario where Korean solar cells were used, the country of origin was Korea. In H298653, dated November 19, 2018, CBP reviewed the issue of solar panels assembled in China using both Chinese and non-Chinese components. The polycrystalline solar cells, which constitute the very essence of the solar panels, were entirely manufactured in Germany. CBP held that solar cells do not lose their identity and become an integral part of the solar panels when they are combined with other components during the processing in China. The end-use of the solar cells and other components was pre-determined before the components were imported into China, and the solar cells (and other components) remained solar cells during processing in China. Therefore, in accordance with CBP’s decision in HQ H261693 and HQ H298653 and the judicial precedent cited above, it is the opinion of this office that the solar cells from South Korea are not substantially transformed by the processing that takes place in Vietnam. As such, the solar panels are considered a product of South Korea for marking purposes at time of importation into the United States. 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 Steven Pollichino at steven.pollichino@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division