The country of origin of a brake rotor.

N316196 December 18, 2020 MAR-2:OT:RR:NC:N2:206 CATEGORY: Country of Origin Dan R. Bouchey XMY Auto Parts (Yuekai Machinery Manufacturing Co.) Anyang Industrial Park Haiphong City, 180000 Vietnam RE: The country of origin of a brake rotor. Dear Mr. Bouchey: This is in response to your letter dated December 01, 2020, requesting a ruling on the country of origin of a brake rotor. Pictures, videos, and descriptive literature were provided with your request. The product under review is an automotive brake rotor. You state that the production process of the brake rotor consists of foundry operations, machining, painting, cleaning and packing, and quality control and testing. The foundry process involves melting down pig iron, scrap steel and other materials to produce a blank iron casting. The blank casting production is split between a Chinese foundry and a Vietnamese foundry. The rest of the operations are done in Vietnam. The facility in Vietnam utilizes robotic arms and machining “pods”. The equipment for machining and robotic arm are all computer programmed for precision drilling, cutting and finishing. Coatings are often applied to brake rotors after machining. The coating helps prevent rust buildup on the casted iron surface. After machining and coating, brake rotors receive a light oil to protect the part in the box before it is installed on an automobile. After cleaning, brake rotors are bagged and boxed. Boxes are corrugated. Finally, the parts are stacked on wood pallets and wrapped for shipping. Raw material testing, casting chemical range testing, and quality control machine checking is performed to ensure that machining specifications meet the standard. The “country of origin” is defined in 19 CFR 134.1(b), in pertinent part, 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.” For tariff purposes, the courts have held that a substantial transformation occurs when an article emerges from a process with a new name, character or use different from that possessed by the article prior to processing. United States v. Gibson-Thomsen Co., Inc., 27 CCPA 267, C.A.D. 98 (1940); National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff’d, 989 F. 2d 1201 (Fed. Cir. 1993); Anheuser Busch Brewing Association v. The United States, 207 U.S. 556 (1908) and Uniroyal Inc. v. United States, 542 F. Supp. 1026 (1982). 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, “…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. In ruling N307523, dated December 10, 2019, this office considered the country of origin of a brake rotor, which had the following scenario, “…the raw brake rotor cast is produced in China and imported into Canada for further processing. In Canada, the imported brake cast undergoes certain manufacturing processes, which involve advance testing, CNC machining, milling, and the application of a zinc exoskeleton.” We found that the country of origin of the brake rotor was China, because the end-use of the brake rotor cast from China was pre-determined at the time of importation to Canada. Similarly, in the present case, the machining and other operations in Vietnam does not change the essence of the blank iron casting. As a result, the country of origin of the brake rotor will be China, if the blank iron casting is made in the Chinese foundry, or Vietnam, if the casting is made in Vietnam. 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, please contact National Import Specialist Liana Alvarez at liana.alvarez@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division