The tariff classification and country of origin of the Augury Endpoint 3XS Sensor

N306869 November 19, 2019 CLA-2-90:OT:RR:NC:N1:105 CATEGORY: Classification TARIFF NO.: 9031.80.8085; 9903.88.01 Kelvin Yeung Rayson Innovation Limited Flat 22, Chi Wan Industrial Centre, Chai Wan, Hong Kong Hong Kong HI 00852 China RE: The tariff classification and country of origin of the Augury Endpoint 3XS Sensor Dear Mr. Yeung: In your letter dated October 21, 2019, on behalf of your client, Mochila Fulfillment LLC, you requested a country of origin and tariff classification ruling. The Augury Endpoint 3XS Sensor is a wireless vibration, temperature and magnetic sensor, which enables real-time continuous “health” monitoring of rotating machinery. The sensor gives a comprehensive picture of the machinery’s status for enhanced operations, reliability and maintenance practices. The 3XS Sensor contains a three-axis accelerometer, which is used to detect the vibrations and relay information to the user. The device also monitors the temperature and magnetic values of machinery. The collected data is sent, via Bluetooth, to a nearby hub, which will then be relayed via the internet to the customer’s server. The 3XS Sensor is used in large machinery such as power plants, water treatment, food and pharmacy industries. The applicable subheading for the Augury Endpoint 3XS Sensor will be 9031.80.8085, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Measuring or checking instruments, appliances and machines, not specified or included elsewhere in this chapter; profile projectors; parts and accessories thereof: Other instruments, appliances and machines: Other, Other.” The rate of duty will be free. Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at https://hts.usitc.gov/current. With regard to your request for the appropriate country of origin of the Augury Endpoint 3XS Sensor, 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, and use”. In addition, the court has held 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.” However, if the manufacturing or combining process is a minor one that leaves the identity of the article intact, a substantial transformation has not occurred. In order to determine whether a substantial transformation occurs when components of various origins are assembled into completed products, all factors such as the components used to create the product and manufacturing processes that these components undergo are considered in order to determine whether a product with a new name, character and use has been produced. No one factor is decisive. As noted, assembly operations that are minimal will generally not result in a substantial transformation. In this instance, the sub-assemblies are built in China from components from numerous countries of origin. The subassemblies have all of the physical characteristics of the completed sensor but are not able to perform without the addition of the battery, which is built in Hong Kong, or the additional programming and assembly. In Hong Kong, the battery is built and then attached to the subassembly. Once completed the newly built sensor is attached to the customer’s server via a jig for programming and testing. The test jig will generate vibration similar to a machine to which the subject device will eventually be attached. The device will then detect and send back the data to the server. The server will determine whether the device will pass or fail. It is this office’s opinion that the assembly operations performed in China create a device that can clearly be identifiable as an Augury Endpoint 3XS Sensor. The device already contains the working accelerometer and all of the hookups necessary to function. The testing, addition of the power supply, programming and packaging are considered minor in comparison to the work completed in China. In our view, the assembly process described does not transform the subassembly into a new and different product having a new function and purpose. In view of these facts, the country of origin is China. Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 9031.80.8085, HTSUS, unless specifically excluded, are subject to an additional 25 percent ad valorem rate of duty.  At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.01, in addition to subheading 9031.80.8085, HTSUS, listed above.   The HTSUS is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Note cited above and the applicable Chapter 99 subheading.  For background information regarding the trade remedy initiated pursuant to Section 301 of the Trade Act of 1974, you may refer to the relevant parts of the USTR and CBP websites, which are available at https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions and https://www.cbp.gov/trade/remedies/301-certain-products-china respectively. 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 Jason Christie at Jason.M.Christie@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division