The country of origin of a solar tracker drive

N336263 November 15, 2023 OT:RR:NC:N1:104 CATEGORY: Origin Shara Aranoff Covington & Burling LLP One CityCenter, 850 Tenth Street, NWWashington, DC 20001 RE:  The country of origin of a solar tracker drive Dear Ms. Aranoff: In your letter dated October 31, 2023, you requested a country of origin ruling. The item under consideration is a solar tracker slew drive (“slew drive”), model number VE6D.  It is a component of a solar tracker system.  The slew drive is designed to adjust the orientation of solar panels based on the movement of the sun in order to maximize the solar panel’s exposure to sunlight and optimize the generation of solar power.  As imported, the assembled slew drive will not include the motor, electrical controls, or related apparatus. The slew drive is basically a gearbox employing a worm drive mechanism.  It is comprised of a structural steel housing, a gear shaft, a single worm shaft, a gear shaft support, bearing bushing, seals, tapered roller bearings, a sleeve, and an end cap.  The gear shaft serves as the slow-speed (output) shaft of a solar tracker, which rotates the solar panels or mirrors.  The gear shaft is driven by the worm (input) shaft.  The motor-driven worm shaft threads meshed with the gear teeth supply the torque needed to move the tracker system. All the slew drive’s components are complete prior to their assembly into the completed slew drive.  The slew drive will be assembled in India from the aforementioned components under two scenarios. In scenario one, the slew drive will be assembled from Chinese-sourced components, with the exception of the housing, which is sourced from India.  This scenario includes the following operations. Tapered roller bearings are mounted onto the worm shaft, and a bearing bushing is pressed onto the housing and gear shaft support.  These two steps are performed by a hydraulic press and tooling and take about 7 minutes in total to complete, including inspection. Next, the worm shaft is inserted into the housing using a hammer, permanent adhesive, and special tooling. This step takes 3 minutes to complete.  The sleeve is then assembled to the housing using a permanent adhesive and a pneumatic drill, followed by inspection, measurement, and adjustment of worm assembly accuracy; in total, this step consumes less than 2 minutes. Next, the tooth surface of the worm shaft assembly is greased. The middle (output) gear shaft is then assembled into the housing, and the O-ring is bolted down using a pneumatic drill.  These two operations take about 3 minutes in total to complete. Trained employees then measure the backlash and the gear meshing clearance between the worm shaft and the gear shaft. Seals are assembled on each side of the gear shaft using a hydraulic press and special tooling.  The unit is then inspected and tested for air tightness.  Finally, the unit is subjected to a paint process, inspected, and packaged for shipment. The second scenario is identical to the first except that in scenario two, the worm shaft and the gear shaft components of the slew drive will be manufactured in India. You assert that the combined assembly operations in India effect a substantial transformation of the foreign components for both scenarios. 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).  To determine whether a substantial transformation has occurred, CBP considers the totality of the circumstances and makes such determinations on a case-by-case basis. See National Hand Tool Corp. v. United States, 16 C.I.T. 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993).  CBP has stated that a new and different article of commerce is an article that has undergone a change in commercial designation or identity, fundamental character, or commercial use. The courts have emphasized 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 Battery, Inc. v. United States, 190 F. Supp. 3d 1308,  1318 (2016) (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)). Courts look to the nature of such assembly, i.e., whether it is simple or complex, to determine whether the individual parts or components lose their separate identities and become integral parts of a new article. Furthermore, the nature or character of particular components being assembled into an article is relevant to whether the article undergoes a substantial transformation through such assembly.  See Uniroyal 3 C.I.T. at 225, 542 F. Supp. at 1030 (holding that because the shoe’s “upper” component imparted the shoe’s defining character, its minor assembly into a shoe did not result in a substantial transformation).  In N317253 (Feb. 23, 2021), Customs and Border Protection (CBP) considered the country of origin of front and rear caliper brake assemblies to be assembled in Korea from Korean and Chinese components under two proposed production scenarios.  In scenario one, most of the components were sourced in Korea except for the brake pad assembly and the electronic actuator, which were purchased from China. CBP determined that the Korean assembly process was minor and did not result in a substantial transformation of the articles, noting that the defining character of the caliper was imparted by the Chinese-sourced brake pad assembly -- the core component that causes the rotors to stop spinning and brake the vehicle.  As the Korean assembly process did not substantially transform the articles, which included the Chinese brake pad assembly, the country of origin of the finished brake calipers was determined to be China.  However, in the second production scenario, where only the electronic actuator for the rear caliper was made in China while the remaining components, including the pad assembly, were made in Korea, the country of origin was determined to be Korea.      In the instant matter, for scenario one, we disagree that the assembly operations performed in India, which consist mainly of non-complex assembly, aligning, and fastening operations performed on all Chinese manufactured components (with the exception of the Indian housing), substantially transform the Chinese components into a product with a new name, character, or use.  Importantly, in this production scenario the Chinese components include the main functional components of the slew drive, i.e., the gear shaft and the worm shaft, which are instrumental in creating torque to drive the solar tracker. At the time of importation to India, these vital Chinese components are dedicated for use with, and largely impart the character of, the slew drive. While the joining and fastening of the finished components complete the slew drive, the Chinese components do not undergo a physical change or lose their identities as a result of assembly operations. Accordingly, for scenario one, the solar tracker slew drive is considered a product of China for purposes of origin, marking, and Section 301 Trade Remedies. In scenario two, the Indian assembly operations are identical to those in scenario one.  However, in scenario two both the worm shaft and the gear shaft are produced in India, not China.  As these dominant components determine the character of the finished slew drive, we agree that the country of origin of the solar tracker slew drive will be India for purposes of origin, marking, and Section 301 Trade Remedies. The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in Title 19, Code of Federal Regulations, Section 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, whether directly, by reference, or by implication, is accurate and complete in every material respect. In the event that the facts are modified in any way or if the goods do not conform to these facts at the time of importation, you should bring this to the attention of U.S. Customs and Border Protection and submit a request for a new ruling in accordance with 19 CFR 177.2. Additionally, we note that the material facts described in the foregoing ruling may be subject to periodic verification by CBP. This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection Regulations (19 CFR 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 Arthur Purcell at arthur.purcell@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division