The country of origin of an Airwave Outlet Assembly

N330075 January 20, 2023 OT:RR:NC:N2: 206 CATEGORY: Origin Jeremy Page Page Fura, P.C. 939 W. North Avenue, Suite 750Chicago, IL 60642 RE: The country of origin of an Airwave Outlet Assembly Dear Mr. Page: This is in response to your letter, dated January 5, 2023, requesting a ruling on the country of origin of an airwave outlet assembly for purposes of applying trade remedies under Section 301 of the Trade Act of 1974, as amended, from China, on behalf of your client, Yanfeng International Automotive Technology, US. LLC. The product under consideration is an airwave outlet assembly, which is produced to the specifications of a motor vehicle Original Equipment Manufacturer (OEM) customer. The assembly will be located within the floor console that separates the two front bucket seats and acts to ensure proper vehicle climate conditions to the motor vehicle's rear passengers through temperature, strength, directional and source airflow management. The airwave outlet assembly consists of components from China and four actuators from South Korea. The assembly of the Chinese components and the South Korean electric actuators into a functional airwave assembly occurs in Canada. 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; however, for a good of a NAFTA or USMCA country, the marking rules set forth in part 102 of this chapter (hereinafter referred to as the part 102 Rules) will determine the country of origin." However, when determining the country of origin for purposes of applying current trade remedies under Section 301, the substantial transformation analysis is applicable.  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).” However, if the manufacturing or combining process is merely a minor one that leaves the identity of the article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983) (Uniroyal). Substantial transformation determinations are based on the totality of the evidence. See Headquarters Ruling (HQ) W968434, date January 17, 2007, citing Ferrostaal Metals Corp. v. United States, 11 CIT 470, 478, 664 F. Supp. 535, 541 (1987). In Uniroyal case, the court held that an upper was not substantially transformed when attached to an outsole to form a shoe and that the upper was "the very essence of the completed shoe". 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. According to the information supplied, none of the components from China and South Korea undergo any substantial processing. The end-use of all components from China and South Korea is pre-determined at the time of importation to Canada. The assembly of the components into the complete airwave outlet assembly appears to be a minor one, and therefore, does not meet the substantial transformation requirements. Accordingly, we need to determine the essence of the airwave outlet assembly. You state in the additional information, which you provided to this office upon request, that the function of the actuators is to control the airflow outlet directions (up/down and cross car) by moving the airfoil and trailing edge shaped vanes to provide airflow to the rear seat occupants. In our opinion, the actuators are the essence of the airwave outlet assembly. Therefore, the country of origin of the entire product will be the country of origin of the actuators. Subsequently, the country of origin of the airwave outlet assembly will be South Korea for purposes of applying trade remedies under Section 301, of the Trade Act of 1974, as amended. 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 and Border Protection 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