The applicability of certain trade remedies under Section 301 to electric motors

N321415 September 30, 2021 OT:RR:NC:N2:220 CATEGORY: Trade Remedies Lenny Feldman Sandler, Travis & Rosenberg, P.A. 5385 Blue Lagoon Drive - Suite 200 Miami, FL 33126 RE: The applicability of certain trade remedies under Section 301 to electric motors Dear Mr. Feldman: In your letter dated September 6, 2021, you requested a ruling on the applicability of Section 301 remedies for electric motors on behalf of your client, General Transmissions, Inc. The merchandise under consideration is referred to as the Brushless Direct Current Motor with built-in controller and external switch (BLDC motor), PN AEM56024, which is described as a DC electric motor that operates on 14.4 VDC and has a maximum output of 356 W. The BLDC motor is said to be used in various power tool appliances. The BLDC motor is comprised of the rotor subassembly, the stator subassembly, the controller printed circuit board assembly (PCBA), and the electrical switch subassembly. You state that the BLDC motor is manufactured through five principal processes: stamping and stacking of the rotor and stator laminations to produce rotor/stator cores; electronic subassembly manufacturing; rotor assembly; stator assembly; and the final assembly of the BLDC motor. The rotor, stator, PCBA, and electrical switch are manufactured and assembled into the BLDC motor as detailed below, where you provide four scenarios describing an assembly process that will be the same for each scenario aside from the country location for certain production steps. The assembly of the BLDC motor begins with the “Stamping and Stacking of Stator and Rotor Laminations” process (Process One), where you state that the rotor and stator subassemblies will be manufactured by stamping steel coil into laminations, stacking the laminations, and machine pressing to produce what you refer to as rotor and stator cores. The “Electronic sub-assembly manufacturing” process (Process Two) is described as mounting and soldering electronic components onto a bare printed circuit board via surface mounting and through hole insertion to produce a control PCBA. Once the assembly of the control PCBA is complete, the subassembly is function tested. In a separate process, the electrical switch and an LED are added to a printed circuit board and the subassembly is function tested. The “Rotor Finishing” process (Process Three) is described as inserting the shaft into the rotor core, applying glue and magnets, curing, magnetization, machine-pressing bushings, balancing, attaching a fan blade and crimping a bearing on the shaft to produce a rotor subassembly. The “Stator Finishing; Controller Mounting” process (Process Four) is described as attaching two insulation plates onto the sides of the stator stack, winding with wire, applying varnish, attaching the Controller PCBA, and mounting inside a housing to produce a stator subassembly. The “Complete Motor Assembly; Switch Mounting” process (Process Five) is described as reaming the front and rear plates, crimping the bearing via machine press, coupling the rotor and stator subassemblies together, and pressing the end plate onto the housing to produce a working BLDC motor. The motor is tested, marked, and a gear is crimped onto the shaft. In the first proposed scenario, Process One occurs in Taiwan to produce rotor and stator cores of Taiwanese origin. The balance of the manufacturing, Process Two through Process Five, takes place in China. In the second proposed scenario, Process One and Process Two occur in China to produce Chinese origin rotor/stator cores and control PCBA. The balance of the manufacturing, Process Three through Process Five, takes place in Mexico. In the third proposed scenario, Process One occurs in China to produce rotor and stator cores of Chinese origin. The balance of the manufacturing, Process Two through Process Five, takes place in Mexico. In the fourth proposed scenario, Process One occurs in Mexico to produce rotor and stator cores of Mexican origin. Process Two is said to occur in China. The balance of the manufacturing, Process Three through Process Five, takes place in China. 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). In the proposed first scenario, in our opinion, the stamping and pressing work performed in Taiwan, as described in Process One, produces rotor and stator cores of Taiwanese origin. The cores are subsequently shipped to China where Process Two through Process Five are completed. In our view, the rotor and stator are the dominant components of a finished electric motor. Based on the description provided in the proposed first scenario, the Taiwanese rotor and stator cores are not substantially transformed by adding the PCBA; winding wire around the stator; pressing the shaft onto the rotor core; pressing bushings and bearings onto the shaft; gluing magnets; etc. While the PCBA and all the component parts are of Chinese origin, as well as the final assembly/testing in China, the two dominant components (the rotor and the stator) are not substantially transformed as a result of the assembly operations described in Process Two through Process Five. Thus, it is the opinion of this office that the assembly performed in China does not result in a substantial transformation of the Taiwanese cores and the motors described in the proposed first scenario are not subject to the additional duties applicable to products of China under Section 301 of the Trade Act of 1974, as amended, upon importation into the United States. In the proposed second scenario, the stamping and pressing work performed in China, as described in Process One, produces rotor and stator cores of the Chinese origin. The Chinese origin rotor and stator cores, the housing, the magnets, the bearings, the end caps, the shaft, the bushings, the switch, the PCBA, and various parts and components are shipped to Mexico where Process Three through Process Five are completed to produce a functioning electric motor. It remains the opinion of this office that the rotor and the stator cores are not substantially transformed as a result of the assembly operations described in Process Two through Process Five. Thus, the assembly performed in Mexico does not result in a substantial transformation of the Chinese cores and the motors described in the proposed second scenario are subject to the additional duties applicable to products of China under Section 301 of the Trade Act of 1974, as amended, upon importation into the United States. In the proposed third scenario, the stamping and pressing work performed in China, as described in Process One, produces rotor and stator cores of the Chinese origin. The Chinese origin rotor and stator cores, the housing, the magnets, the bearings, the end caps, the shaft, the bushings, the switch, and various parts and components are shipped to Mexico where Process Two through Process Five are completed to produce a functioning electric motor. It remains the opinion of this office that the rotor and the stator cores are not substantially transformed as a result of the assembly operations described in Process Two through Process Five. Thus, the assembly performed in Mexico does not result in a substantial transformation of the Chinese cores and the motors described in the proposed third scenario are subject to the additional duties applicable to products of China under Section 301 of the Trade Act of 1974, as amended, upon importation into the United States. In the proposed fourth scenario, the stamping and pressing work performed in Mexico, as described in Process One, produces rotor and stator cores of Mexican origin. The Chinese origin PCBA, the housing, the magnets, the bearings, the end caps, the shaft, the bushings, the switch, and various parts and components are shipped to Mexico where Process Three through Process Five are completed to produce a functioning electric motor. In our opinion, the processing performed outside of Mexico does not result in a substantial transformation of the Mexican cores, and the motors described in the proposed fourth scenario are not subject to the additional duties applicable to products of China under Section 301 of the Trade Act of 1974, as amended, upon importation into the United States. Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all 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