The country of origin of an electric actuator

N308382 January 14, 2020 CLA-2-85:OT:RR:NC:N2:220 CATEGORY: Origin Jeffery Hopkins Bray International 13333 Westland East Blvd. Houston, Texas 77041 RE: The country of origin of an electric actuator Dear Mr. Hopkins: In your letter dated December 16, 2019 you requested a country of origin ruling. The merchandise under consideration is identified as the S70 Electric Actuator (Actuator) which is described as a housing containing a permanent split capacitor electric gear motor, a worm shaft, manual override gearing and handwheel, a position indicator, and various electrical control apparatus such as limit switches, a heater, and a terminal block. Internally, the Actuator incorporates two sections: the power center, which is located below the switch plate, and the control center located above the switch plate. External to the Actuator housing is the handwheel where the device can be manually overridden. The power center is comprised of the gear motor, the spur gear train, the worm gear output, and the override mechanism for manual operation. The control center is comprised of the limit switches, the terminal strips, the torque switches, the heater, and the electronic controllers. Also located in the control center is the position indicator and shaft assembly. On the top of the housing cover is a windowed position indicator that displays a 360° viewable open/closed status of the Actuator’s position. In your request you describe the production process as consisting of 44 individual steps that include the assembly of the gear motor, worm shaft, gearing, manual override assembly, electrical control apparatus, and position indicator. Once assembled, the Actuator undergoes testing and packaging for export. You provide four scenarios, which are described hereafter, where you identify a varying combination of the countries of assembly and origins of the gear motor. In Scenario 1, you state the gear motor is produced in Malaysia from a Malaysian rotor and stator. Also sourced from Malaysia is the cover, the switch plate, the manual handwheel, and the base. The worm shaft, indicator assembly, the limit switches, and manual override assembly are sourced from China. The heater and terminal strips are sourced from Germany. In this scenario, the subject Actuator is assembled, tested, and packed in Malaysia. In Scenario 2, you state the gear motor is produced in China from a Malaysian rotor and stator. Also sourced from China is the worm shaft, indicator assembly, the limit switches, and manual override assembly. The cover, the switch plate, the manual handwheel, and the base are sourced from Malaysia. The heater and terminal strips are sourced from Germany. In this scenario, the subject Actuator is assembled, tested, and packed in Malaysia. In Scenario 3, you state the gear motor is produced in China from a Malaysian rotor and stator. Also sourced from China is the worm shaft, indicator assembly, the limit switches, and manual override assembly. The cover, the switch plate, the manual handwheel, and the base are sourced from Malaysia. The heater and terminal strips are sourced from Germany. In this scenario, the subject Actuator is assembled, tested, and packed in China. In Scenario 4, you state the gear motor is produced in China from a Chinese rotor and stator. Also sourced from China is the worm shaft, indicator assembly, the limit switches, and manual override assembly. The cover, the switch plate, the manual handwheel, and the base are sourced from Malaysia. The heater and terminal strips are sourced from Germany. In this scenario, the subject Actuator is assembled, tested, and packed in Malaysia. 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 (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 its container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. The “country of origin” is defined in 19 CFR 134.1(b) 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 this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin.” 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, 69 C.C.P.A. 151 (1982). This determination is based on the totality of the evidence. See National Hand Tool Corp. v. United States, 16 C.I.T. 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993). 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. Regarding the country of origin of the subject motor actuators, in our opinion the assembly operations, which consists of 44 assembly steps beginning with individual components processed into subassemblies, and then final assembly into a functional motor actuator, is significant and effects a change in the components as well as the electric motor. In our view, the assembly process described transforms the individual components into a new and different product having a new function and purpose. Therefore, based upon the facts presented, it is the opinion of this office that the assembly process performed in each of the descried scenarios results in a substantial transformation of the individual components into a new and different article of commerce with a name, character, and use distinct from the components used in the production of the motor actuators. As such, the S70 Actuator assembled under Scenario 1, 2, and 4 are considered a product of Malaysia for origin and marking purposes at time of importation into the United States. With regard to Scenario 3, the S70 Actuator is considered a product of China for origin and marking purposes at the time of importation into the United States. As a result, the S70 Actuator assembled under Scenario 3 is subject to Section 301 trade remedies applicable to products of 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