The country of origin of an air conditioning unit

N316693 January 19, 2021 CLA-2 OT:RR:NC:N1:102 CATEGORY: Origin Lawrence M. Friedman Barnes Richardson & Colburn 303 E. Wacker Dr. Chicago, Illinois 60601 RE: The country of origin of an air conditioning unit Dear Mr. Friedman: In your letter dated December 30, 2020, you requested a country of origin ruling on behalf of your client, Electrolux Home Products, Inc. The product under consideration is a room air conditioning unit, part number FHPC082AC1. The 8,000 BTU portable air conditioner features programmable timers, dehumidifying capabilities, a washable filter, caster wheels and handles, a multi-speed fan, and an automatic restart. Each air conditioning unit is packaged with a remote control. In your letter, you describe three country of origin scenarios, in which each air conditioning unit is assembled in Thailand from components manufactured in China or Thailand. You explain that the distinction between the three scenarios is the sourcing and manufacturing of the heat exchangers, which you indicate is a general term for the condenser and evaporator units. The manufacturing of the condenser and evaporator units begins with raw copper being curved and cut into long and short U Tubes. The fins are then formed from aluminum that has been flared and punched. The fins feature holes that allow the long tubes to be threaded onto them. Using rings, the small U Tubes are connected to the long copper tubes. Afterwards, the long and small U Tubes, fins, rings, and side boards are welded together. The connective piping, and capillary tubes are then manually welded to each unit. In Scenario 1, both the condenser and evaporator units are manufactured in Thailand, and welded to connective piping and capillary tubes in Thailand. In Scenario 2, the evaporator is manufactured in Thailand, and welded to connective piping and capillary tubes in Thailand. The condenser is manufactured in China and welded to connective piping and capillary tubes in Thailand. In Scenario 3, the side boards, fins and tubes of the evaporators and the condensers are produced in China. The fins are threaded, the tubes are cut, and these components, along with the rings, and side boards are welded together in China. The unit is then exported to Thailand, where connective piping, and capillary tubes are manually welded to the unit. The final assembly of each air conditioning unit occurs in Thailand, and begins with the installation of the Chinese foot cushions and Chinese compressor into the unit’s outer back panel, which is also manufactured in China. The grounding wire is then connected. Next, the anti-collision beam, the condenser and piping are installed and welded as needed. The compressor wires are then connected. The noise canceling material, along with the Chinese lower wind tunnel are then installed. In the following step, the evaporator, capillary tubes, and Chinese upper wind tunnel are installed and welded, as needed. The temperature control wire is then connected. Afterwards, a Chinese main control box, a fan from Thailand, and a Chinese fan motor are installed. Each unit then undergoes a vacuum process and the refrigerant is added using a certain refrigerant injector. The unit is then sealed using a welding gun. The insulation pipes are wrapped, and if needed, the wires and pipes are adjusted. Four main control wires and a Chinese power cable are then connected. The main controller cover is then installed and secured using clips and a screw. The castors, and the top and back panels, which are all of Chinese origin, are screwed into place. As each unit is assembled, a Chinese filter is installed. Each completed unit is labeled, tested, and packaged with a Chinese remote control. With regard to your request for the appropriate country of origin of the room air conditioning unit, part number FHPC082AC1, 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 country of origin scenarios 1, 2, and 3, components from Thailand and China are joined or assembled to each other during the final assembly in Thailand. We do not believe the essence of the air conditioning unit, the cooling unit, which consists of a compressor from a China, and a condenser and evaporator from either China or Thailand, are substantially transformed in Thailand when combined or assembled to each other because the assembly operations to make each unit in Thailand are not complex and meaningful. We believe that the country of origin of the room air conditioning unit, part number FHPC082AC1, for scenario 1 will be Thailand for the purpose of applying current 301 trade remedies, as two of the cooling unit components are from Thailand. For scenario 2, two of the cooling unit components are from China, and in scenario 3, the three cooling unit components are from China. Accordingly, the country of origin of the room air conditioning unit, part number FHPC082AC1, in scenarios 2 and 3, will be China for the purpose of applying current 301 trade remedies. This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 CFR 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