The country of origin of air conditioning units and the applicability of certain trade remedies under Section 301

N310987 April 20, 2020 MAR-2 OT:RR:NC:N1:102 CATEGORY: Country of Origin George R. Tuttle, III Tuttle law 1100 Larkspur Land Circle Larkspur, California 94939 RE: The country of origin of air conditioning units and the applicability of certain trade remedies under Section 301 Dear Mr. Tuttle: In your letter dated March 30, 2020, on behalf of Prem Supply, you requested a ruling on the country of origin of complete air conditioning units. A detailed description of the assembly process was submitted for our review. The merchandise under consideration is referred to as PremAire 42 Packaged Terminal Air Conditioners (PTAC). The air conditioner units are available in various models and are described as a self-contained cooling and heating units. The window or wall type of units are commonly used in hotels, motels, senior housing facilities, hospitals, condominiums, apartment buildings, add-on rooms and sunrooms. Each unit is assembled in El Salvador and consists of various processes that combine components from Mexico, Vietnam, El Salvador, and China. The assembly of each unit begins by affixing Chinese insulation to a Chinese base-pan assembly, which is part of the unit’s main body. A drain valve and Chinese compressor are then mounted and screwed to the base-pan assembly. Next, a sub-cooling tube from Mexico is brazed to a Mexican produced condenser assembly. The condenser assembly is then mounted to the base-pan assembly. Afterwards, a copper tube and a capillary tube are brazed to a Mexican produced evaporator assembly, which is subsequently mounted to the base-pan assembly. Copper discharge tubes, along with a suction tube, are then brazed to a Vietnamese reversing valve and once this process is completed, the reversing valve is mounted to the base-pan assembly. A heating capillary tube is then brazed to a valve from Mexico, which is afterwards mounted to the condenser assembly. Once the unit undergoes a vacuum process and is charged with refrigerant, the assembly process continues with an evaporator drain pan from El Salvador being mounted to the base-pan assembly. Then, a left and right flange assembly, a Chinese scroll plate, a Chinese left control panel with a capacitor and a partition are affixed to the Chinese firewall. Next, a Chinese motor and blower wheel are mounted to an indoor motor partition and afterwards, a Chinese fan blade/outdoor motor assembly is mounted to an outdoor motor bracket that is subsequently affixed to the base-pan assembly. The assembly process goes on with a condenser cover being mounted to a Chinese fan shroud and a Vietnamese solenoid being screwed onto the reversing valve. Next, a Chinese power printed circuit board with wiring is screwed onto a Chinese front control panel. The touch control panel assembly and the power cord assembly for the control panel are then assembled, which is followed by the installation of a Chinese electric heater and an indoor outlet bottom cover. Sealant is then applied and afterwards, the Decfront component, which is illustrated as the front outer cover of the unit, is mounted. Once complete, each unit undergoes testing and an inspection. With regard to your request for the appropriate country of origin of the PTAC units, 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”. The test for determining whether a substantial transformation will occur is whether an article emerges from a process with a new name, character and 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). 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, and assembly operations that are minimal will generally not result in a substantial transformation. In this scenario, components from El Salvador, Vietnam, Mexico and China are joined or assembled to each other during the final assembly in El Salvador. The El Salvadorian, Vietnamese, Mexican and Chinese components are substantially transformed in El Salvador when they are combined or assembled to each other because the assembly operations to make the units in El Salvador are complex and meaningful. Therefore, it is our view that the nature of the processing performed in El Salvador is one in which the foreign components lose their separate identities to become new articles, i.e., self-contained heating and cooling air conditioning units. As such, the country of origin of the subject units, PremAire 42 Packaged Terminal Air Conditioners (PTAC), will be El Salvador. Accordingly, these units are not subject to the Section 301 trade remedy. This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. Part 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 Sandra Martinez at Sandra.Martinez@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division