The country of origin of a an electric motor assembly and the applicability of certain trade remedies under Section 301

N315710 December 2, 2020 OT:RR:NC:N2:220 CATEGORY: Origin Lenny Feldman Sandler, Travis & Rosenberg, P.A. 5385 Blue Lagoon Drive - Suite 200 Miami, FL 33126 RE: The country of origin of a an electric motor assembly and the applicability of certain trade remedies under Section 301 Dear Mr. Feldman: In your letter dated Nov 5, 2020 you requested a country of origin ruling on behalf of your client, General Transmissions, Inc., and request a confirmation that Section 301 remedies do not apply to the electric motor assembly upon importation. The merchandise under consideration is identified as the Transmission, Model Number ME GEN2, which consists of a plastic enclosure containing a 108 V electric DC motor, gearing assembly (gearbox), and a dual output shaft. The electric motor is rated at a maximum of 500 Watts. The assembly operations of the Transmission is described as machining the steel bar for the output shaft, manufacturing the gears and enclosure by plastic injection molding of resin, and manually assembling the gears, springs, bearings, electric motor, etc. in Mexico to produce the finished electric motor assembly. You state that the gearbox assembly, the enclosure, and the shaft is manufactured in Mexico from foreign and domestic materials, while the electric motor is of Chinese origin. The gearbox assembly is manufactured by fitting together the the gears, springs, bearings, etc. into a single assembly that is ultrasonically welded in a plastic enclosure. The next steps are to mount the electric motor onto a molded support plate and then to insert the shaft to produce an electric motor with an attached gearbox assembly, which we refer to hereafter as the Transmission. Once the Transmission is assembled, it is tested prior to packing. Classification of merchandise under the Harmonized Tariff Schedule of the United States (HTSUS) is governed by the General Rules of Interpretation (GRIs). GRI 1 provides that classification is determined first in accordance with the terms of the headings of the tariff and any relative section or chapter notes. Additionally, while not dispositive, the Explanatory Notes (ENs) to the Harmonized Commodity Description and Coding System represent the official interpretation of the tariff at the international level and facilitate classification under the HTSUS by offering guidance in understanding the scope of the headings and the GRIs. ENs 85.01 state in pertinent part, “Motors remain classified here even when they are equipped with pulleys, with gears or gear boxes…” The merchandise under consideration here consists of an electric motor and an attached gear box and shaft. Thus, based on the facts presented, the Transmission is classifiable under heading 8501, HTSUS. 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.” 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). To allow for a more seamless transition period, at this time, CBP continues to utilize the marking rules set forth in 19 C.F.R. Part 102, with the exception of 19 C.F.R. § 102.19, for purposes of country of origin marking with respect to goods from Canada and Mexico. Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes, with the exception of textile goods which are subject to the provisions of 19 C.F.R. § 102.21. See 19 C.F.R. § 102.11. Applied in sequential order, the required hierarchy establishes that the country of origin of a good is the country in which:  (1) The good is wholly obtained or produced; The good is produced exclusively from domestic materials; or Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in § 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied. Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because the Transmission is neither wholly obtained or produced or produced exclusively from “domestic” materials. Because the analysis of sections 102.11(a)(1) and 102.11(a)(2) does not yield a country of origin determination, we look to section 102.11(a)(3). “Foreign material” is defined in section 102.1(e) as “a material whose country of origin as determined under these rules is not the same country as the country in which the good is produced.” The applicable tariff shift requirement in section 102.20 for the finished Transmission of heading 8501, HTSUS, is: A change to subheading 8501 from any other heading. The foreign material in this case consists of the electric motor, the bearings, springs, and hardware. As the electric motor is also classified under heading 8501, HTSUS, the tariff shift requirement of section 102.11(a)(3) is not met. Since an analysis of section 102.11(a) has not produced a country of origin determination, we turn to section 102.11(b) of the regulations. Section 102.11(b)(1) provides as follows: (b) Except for a good that is specifically described in the Harmonized System as a set, or is classified as a set pursuant to General Rule of Interpretation 3, where the country of origin cannot be determined under paragraph (a) of this section: (1) The country of origin of the good is the country or countries of origin of the single material that imparts the essential character to the good, or . . . The rule of interpretation set forth in 19 C.F.R. § 102.18(b)(1)(iii) states that if there is only one material that is classified in a tariff provision from which a change in tariff classification is not allowed under the 19 C.F.R. § 102.20 specific rule or other requirements applicable to the good, then that material will represent the single material that imparts the essential character to the good under 19 C.F.R. § 102.11. In this case, the only material that does not undergo the applicable tariff shift is the electric motor. As the Chinese electric motor is the material that imparts the essential character to the Transmission, the country of origin marking will be China when imported into the United States. With regard to the applicability of Section 301 remedies, in our view, the electric motor is the dominant component of the assembly that imparts the essence of the finished product. It is the opinion of this office that the assembly process performed in Mexico does not result in a substantial transformation of the Chinese electric motor into a new and different article of commerce with a name, character, and use distinct from the article exported from China. As such, the Transmission, Model Number ME GEN2, is subject to the additional duties under Section 301 of the Trade Act of 1974, as amended, upon importation. Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a Customs Service field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.” 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