The country of origin of crankshafts

N330513 February 23, 2023 OT:RR:NC:N1:102 CATEGORY: Origin, Marking Adam Srebnik Sandler, Travis & Rosenberg, P.A. 5835 Waterford District Drive, Suite 200Miami, FL 33126 RE: The country of origin of crankshafts Dear Mr. Srebnik: In your letter dated January 26, 2023, on behalf of your client, Tecnoma Industries, you requested a country of origin ruling on crankshafts for marking purposes and the purpose of 301 Trade Remedies. The merchandise at issue is crankshafts. The steel crankshafts are designed to transmit power and are used in vehicles and boats that use high powered V8 engines. As described in your letter, crankshafts forgings are manufactured in either Japan or Italy using a closed-die process, e.g., the crankshaft forgings from Japan are formed from a twist forging operation and the crankshaft forgings from Italy are formed from a non-twist forging operation.  In viewing the illustrations provided, the crankshaft forgings from Japan and Italy possess roughly shaped features, such as journals, counterweights, flanged ends, and bearing surfaces. Once imported into China, the crankshaft forgings are subjected to various finishing processes, e.g., drilling/threading, milling, turning, additional drilling, stress relieving, grinding, polishing and nitriding.  It is said that the finishing processes impact the stroke of the crankshaft and the amount of material removed during these finishing processes can range between 1/16 to ¼ of an inch. The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. 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). 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, the 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 your letter you reference Headquarters (HQ) ruling 732923 (December 13, 1989), which discusses the origin of crankshaft forgings discussed in HQ 709253 (August 9, 1978).  Ruling 732923 determined that the crankshaft forgings subjected to finishing operations similar to those described above (milling, drilling and heat treating) and afterwards, installed in engines, were substantially transformed. It was determined that once installed in engines, the crankshafts lose their identity and become an integral part of a new or different article having a new name, character and use.  As such, the crankshaft forgings were found to be substantially transformed.  Here, finished crankshafts are not immediately installed into engines, and therefore, the subject origin scenario is distinguishable from the origin scenario described in ruling 732923. In viewing the pictures provided with your submission, the crankshaft forgings have a pre-determined end use prior to being subjected to the described finishing processes. Upon exportation from Japan or Italy, the crankshaft forgings, while not ready for direct use, have the approximate shape and outline of finished crankshafts, and can only be used as crankshafts upon completion. Furthermore, the crankshaft forgings are not substantially transformed by the processing that occurs in China, as the character, or essence of the crankshafts remain unchanged. Therefore, as the Italian and Japanese manufactured crankshafts are not transformed in China into a new and different article of commerce with a name, character, and use distinct from the article exported, the country of origin of the imported crankshafts for marking purposes and the purpose of Section 301 Trade Remedies is Japan or Italy, respectively.   As such, the subject crankshafts 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. 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 Sandra Martinez at sandra.martinez@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division