The country of origin of a Tonneau cover.

N333330 July 5, 2023 OT:RR:NC:N2:206 CATEGORY: Origin BJ Shannon Alston & Bird, LLP 950 F Street NW ,Washington, DC 20004 RE: The country of origin of a Tonneau cover. Dear Ms. BJ Shannon: In your letter dated June 5, 2023, you requested a country of origin ruling on a Tonneau Cover, which you filed on behalf of your client, Truck Accessories Group, LLC, d/b/a LEER Group. The product under review is a Folding Tonneau Cover, which is a custom fitted cover for truck beds that keep truck cargo safe, even in extreme conditions. The cover is constructed from four honeycomb/fiberglass skinned panels, which are manufactured into a cover using a specialized adhesive. The cover opens and closes by folding. A prop rod can hold the unfolded cover in the vertical position. The cover has a continuous side seal to ensure a water-tight fit over the truck’s bed. It also has a latch system, a tailgate endcap, a bulkhead buckle, and a secondary tether. The Tonneau cover will be produced in Vietnam, using materials sourced according to one of two scenarios: Scenario 1. Honeycomb/fiberglass skinned panels (which have a polypropylene honeycomb core and fiberglass skin laminated on the top and bottom) are sourced from China. Adhesive is sourced from the United States. All other components (aluminum extrusions, synthetic rubber extrusions, plastic components, hardware, and packaging) are sourced from Vietnam. Final manufacturing and all assembly occur in Vietnam. Scenario 2. Honeycomb/fiberglass skinned panels are sourced from China. Adhesive is sourced from the United States. All other components are sourced from China. Final manufacturing and all assembly occur in Vietnam. At the manufacturing facility in Vietnam, the vendor cuts the rubber and aluminum extrusions to length and notches the aluminum extrusions. A damper (which contains the steel rods) is inserted into the aluminum extrusion hinges. Using this adhesive, the vendor frames the four honeycomb/fiberglass skinned panels with the extrusions and builds a separate (fifth) bulkhead panel of aluminum extrusions (no fiberglass). The vendor then assembles the latches into a channel profile in the extrusions on three of the four main panels. Installation of the injection molded plastic components (specifically, the prop rod base and the tailgate panel endcaps), the secondary tether, and two foam blocks onto the panels, and the vendor attaches labels and logos occurs. The vendor then assembles the hinge and side seals from the rubber extrusions and adhesive, and assembles the main panels to build the cover, using the adhesive to lock the components together. 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. 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). 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. In both scenarios all foreign components have a predetermined use and they do not undergo any physical change in Vietnam. Thus, combining the components together to make the Tonneau cover does not meet the substantial transformation requirements. As a result, we need to determine the essence of the Tonneau cover. In your letter and during our conference call on June 20, 2023, you stressed the importance of the adhesive from the United States and its high value compared to other components. However, the function of the Tonneau cover is to protect the truck’s bed from the elements and to keep the cargo safe. The adhesive by itself cannot provide such protection. It is the honeycomb panels by themselves that can provide some protection even without being made into the Tonneau cover. As a result, it is the opinion of this office that the essence of the Tonneau cover is the honeycomb panels. Thus, the country of origin of the Tonneau cover in both scenarios will be China. 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