The country of origin of a vaporizer pod assembly

N329000 November 10, 2022 CLA-2-85:OT:RR:NC:N2:212 CATEGORY: Country of Origin Steven Zisser Zisser Customs Law Group 9355 Airway Road San Diego, CA 92154 RE: The country of origin of a vaporizer pod assembly Dear Mr. Zisser: In your letter dated October 27, 2022, you requested a country of origin ruling on behalf of your client, Juul Labs, Inc. The merchandise under consideration is identified as the Juul Pod Assembly, which is described as a disposable e-cigarette vaporizer pod assembly. The unit is comprised of a plastic reservoir, and mouthpiece, within which is a heating element. The assembly is meant to be filled with e-liquid after importation and sold to consumers. The assembly is then added to an existing personal vaporization device, allowing the user to vaporize and inhale the liquid. We note that the subject assembly is always imported without the e-liquid. In your request, you state that the manufacturing process begins in either Vietnam or Malaysia. In this location, Chinese silica rope is cut into a designated length, creating what you refer to as a wick. Specialized Nichrome wire from Sweden is then cut to length and wound around the wick. You state that this subassembly functions as the atomizer that vaporizes the liquid as the wire is the heating element of the finished device. This atomizer subassembly is then sent to China. In China, the atomizer is then combined with the remainder of the Chinese origin parts through the following steps. Electrical contacts and a steel tube are added to the atomizer before it is placed within a housing. This housing is then combined with a plastic tank, gaskets, absorbent pads, and a mouthpiece to create the finished assembly. 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. Regarding the origin of the subject assembly, it is the opinion of this office that the atomizer, which is the heating element of the finished product, imparts the essential functional component of the finished device. Further, once the wire and wick are combined, the end use of the subassembly is predetermined and all subsequent assembly is not significantly complex. As such, based upon the facts presented, the country of origin of the Juul Pod Assembly will be Vietnam or Malaysia, dependent upon where the atomizer is manufactured. 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 Luke LePage at luke.lepage@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division