The country of origin of an e-cigarette atomizer unit

N333598 July 6, 2023 CLA-2-85:OT:RR:NC:N2:212 CATEGORY: Country of Origin Lynlee Brown Ernst & Young LLP 4365 Executive Dr., Suite 1600San Diego, CA  92122 RE:  The country of origin of an e-cigarette atomizer unit Dear Ms. Brown: In your letter dated June 19, 2023, you requested a country of origin ruling on behalf of your client, Power Source, Inc. The merchandise under consideration is identified by part numbers CGS0810-BS, CGS0810-S, CPS0910, and CPS0910-BS and are further described as disposable cartridge atomizers. The subject units are constructed of a heating module within a sealed housing with an electrical connection unit on one end. After importation, the device is filled with e-liquid and a power module is added to one end and a mouthpiece to the other. This completed unit will be used as a personal vaporizing device. We note that no liquid is imported with the device.   In your request, you state that the manufacturing process begins in Indonesia with the manufacture of the heating module. The heating module consists of a heating wire, heater base, ceramic matrix, and fabric strip. Initially, the heating wire is straightened and arranged in order to fit the module. The fabric strip is then wrapped around the ceramic matrix before this subassembly is attached to the heater base. This process creates the complete heat module that is used to atomize the desired e-liquid. The heating module is then shipped to China.   In China, a screw connector, sealing ring, and insulating sleeve are inserted into the cartridge housing. The heating module is then cleaned and placed within the housing to complete the cartridge atomizer. The complete unit is then tested and packaged for shipment to the United States.   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 atomizers, it is the opinion of this office that the heating module is the essential component of the finished article. Further, the creation of the heating module in Indonesia renders its end use predetermined and all subsequent assembly performed in China is not significantly complex to change the name, character, or use of the subassembly. As such, based upon the facts presented, the country of origin of the cartridge atomizer, part numbers CGS0810-BS, CGS0810-S, CPS0910, and CPS0910-BS, will be Indonesia. 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 Luke LePage at luke.lepage@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division