The country of origin of the JAS-Roll-Electrode

N336445 December 5, 2023 OT:RR:NC:N1:103 CATEGORY: Origin Andrew Park Andrew J Park CHB 19515 S. Vermont Ave., Suite 100Torrance, CA 90502 RE:  The country of origin of the JAS-Roll-Electrode Dear Mr. Park: In your letter dated November 8, 2023, you requested a country of origin ruling on a certain automated guided vehicle on behalf of your client, Samsung SDS America Inc. The subject merchandise is identified as the JAS-Roll-Electrode, which is described as an automated guided vehicle capable of loading roll-type objects. It is equipped with a lifting mechanism that can raise or lower a feeder assembly and is designed to transport anode rolls and cathode rolls that are used to manufacture electric vehicle batteries. The JAS-Roll-Electrode is assembled in South Korea using components sourced from China, Germany, India, Japan, Korea, Malaysia, Singapore, and Taiwan. The production process begins in China where the Lower Frame Assembly is manufactured. The Lower Frame Assembly will serve as a chassis assembly that will house the motors, reducers, sensors, brackets, controllers, and other electronic components. Metal plates are cut, assembled, welded, and polished into support plates, drive support boards, and brackets. A worker arranges the various components to form the structural framework of the chassis before installing the drive frame components, which are described as mechanical components that include the drive springs, bearings, and linear guides. The subassembly is sent to Korea where the drive assembly, battery, casters, controllers, cameras, power cables, communication cables, sensor cables, and electrical components are added. The Lower Frame Assembly is completed in Korea using torque wrenches and hand tools. The Upper Frame Assembly is also produced in China, and begins with tubing, metal sheets, plates, and flanges that are assembled and welded to form the frame support of the assembly. Once the frame is assembled, it is combined with the roller support mechanism and shear lifting mechanism. The shear lifting mechanism will function as the lifting device for the vehicle while the roller support mechanism will act as the support frame for each roll of material. A worker assembles the mechanisms to the frame along with a motor, reducer, guides, and springs. The subassembly is sent to Korea where electrical components including a Wi-Fi module, power supply, touch panels, switches, alarms, and sensors are installed. The assembly process in Korea is said to be completed using screwdrivers and torque wrenches, and the operational steps are described as connecting, wiring, and fastening. The Upper Frame and Lower Frame Assemblies are combined with an external cover assembly, which is described as the outer shell that forms the housing for the finished machine. Lastly, software is loaded, and each machine will be calibrated, inspected, and tested, which you emphasize accounts for a significant portion of the processing time in Korea. With regard to your request for the appropriate country of origin of the JAS-Roll-Electrode, 19 C.F.R. § 134.1(b) provides in pertinent part as follows: Country of origin means 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. As stated in HQ 735009, dated July 30, 1993, “The country of origin is the country where the article last underwent a ‘substantial transformation,’ that is, processing which results in a change in the article's name, character, or use.” In addition, the court has held that “A substantial transformation occurs when an article emerges from a manufacturing process with a name, character, and use that differs from the original material subjected to the processing.” This determination is based on the totality of the evidence. See National Hand Tool Corp. v. United States, 16 C.I.T. 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993). In Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308 (2016), the Court of International Trade 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 that “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. Although the manufacturing process that occurs in Korea is time consuming, it is not particularly complex, and uses tools such as torque wrenches and screwdrivers. The operational steps are largely described as fastening various subassemblies and parts into position. As a result, we must consider the totality of the circumstances, including the country of origin of the product’s parts, the extent of the processing that occurs within a country, and whether such processing renders a product with a new name, character, and use. In your submission, you state the structural assemblies, including the Lower Frame Assembly and Upper Frame Assembly, are sourced from China as finished subassemblies. Similarly, the remaining foreign-origin parts arrive in Korea as individual finished elements, including those that you refer to as major core components, such as the moving motor, main control unit, lasers, and sensors. Among the subassemblies and parts, the items from China and Korea account for the majority of the value and quantity. However, among the parts from Korea, the majority of the value is attributed to the battery and the AGV shell, which again is described as paneling and covers. Based on the totality of the evidence, we find that for the assembly process described above, there is no substantial transformation of the foreign-origin parts and subassemblies in Korea that results in a change to their name, character, or use. As such, the country of origin of the JAS-Roll-Electrode will be China. 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 (CFR), 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 time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) 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 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 Paul Huang at paul.huang@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division