The country of origin and applicability of Section 301 trade remedies of AC inverters

N308421 January 10, 2020 CLA-2-85:OT:RR:NC:N2:220 CATEGORY: Origin William Shayne Shayne Law Group, P.C. 64 Fulton St. New York, NY 10038 RE: The country of origin and applicability of Section 301 trade remedies of AC inverters Dear Mr. Shayne: In your letter dated December 17, 2019 you requested a country of origin ruling and applicability of Section 301 trade remedies on behalf of your client, Toyota Industries Electric Systems North America Inc. The merchandise under consideration consists of two types of AC Inverters that you identify as the 150 Watt Inverter and the 400 Watt Inverter, which are described as enclosed printed circuit board assemblies (PCBAs) that function to convert DC electricity to AC electricity. In your request, you provide five scenarios detailing where the PCBAs are produced and where the PCBAs are mounted into their protective covers. For the purposes of this ruling, we will refer to both devices collectively as Inverters. You state that both subject Inverters are produced by surface mounting numerous individual components of various origins, such as resistors, capacitors, diodes, transistors, etc. onto a bare printed circuit board. Once the PCBAs are manufactured, they are tested and function as a fully operational electrical inverter. The protective covers, which consist of a steel base and an aluminum housing, have no electrical properties and function only as an enclosure. In Scenario 1, you state that the PCBAs are manufactured in Thailand, as described above, and you propose the country of origin of the fully functional PCBAs is Thailand. In Scenario 2, you state that the PCBAs are manufactured in Japan and you propose the country of origin of the fully functional PCBAs is Japan. In Scenario 3, you state that the PCBAs are manufactured in Thailand, as described in Scenario 1, and are subsequently exported to Vietnam where they will be mounted into their protective enclosure. In this scenario, you propose the country of origin of the enclosed PCBAs is Thailand. In Scenario 4, you state that the PCBAs are manufactured in Thailand, as described in Scenario 1, and are subsequently exported to China where they will be mounted into their protective enclosure. In this scenario, you propose the country of origin of the enclosed PCBAs is Thailand. In Scenario 5, you state the PCBAs are manufactured in Thailand, as described in Scenario 1, and are subsequently exported to China where they will be mounted into their protective enclosure and you request a determination of the applicability of Section 301 duties upon their importation into the United States. 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). With regard to the origin of the subject Inverter PCBAs in Scenario 1, in our view, the assembly of the PCBA in Thailand by soldering the individual components onto the bare board results in a substantial transformation of the components to produce a PCBA of Thailand origin. Thus, the Inverter PCBAs are considered a product of the Thailand for origin and marking purposes at the time of importation into the United States. Likewise, in Scenario 2 we are of the opinion that the assembly of the PCBA in Japan by soldering the individual components onto the bare board results in a substantial transformation of the components to produce a PCBA of Japanese origin. Thus, the Inverter PCBAs are considered a product of the Japan for origin and marking purposes at the time of importation into the United States. With regard to Scenarios 3 and 4, where Inverter PCBAs of Thailand origin are exported to Vietnam and China, respectively, for the purpose mounting the PCBAs into their protective covers, it is the opinion of this office that the mounting of the PCBA into the housing is not complex and does not affect a substantial transformation of the PCBA. As such, we find that the PCBAs that make up the complete enclosed AC Inverters are not transformed in Vietnam or China into a new and different article of commerce with a name, character, and use distinct from the article exported from Thailand. Thus, the AC Inverters described in Scenarios 3 and 4 are considered a product of Thailand for origin and marking purposes at time of importation into the United States. Lastly, you request this office issue a determination with respect to the applicability of Section 301 trade remedies for the AC Inverters as described in Scenario 5. Based upon the facts presented, it is the opinion of this office that AC Inverters are not subject to the Section 301 trade remedies because the mounting of the PCBAs in their protective covers does not affect a substantial transformation of the PCBAs. As the country of origin is Thailand for origin and marking purposes at time of importation into the United States, Section 301 trade remedies are not applicable. 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