The country of origin of gas grills

N339983 May 29, 2024 OT:RR:NC:N4:410 CATEGORY: Origin James Pai BDO USA 600 Anton Boulevard, Suite 500Costa Mesa, CA 92626 RE:  The country of origin of gas grills Dear Mr. Pai: This is in response to your letter dated May 7, 2024, on behalf of your client Nexgrill Industries, Inc., requesting a country of origin determination of gas grills for purposes of Section 301 duties. The grills at issue are identified as the 2-burner grill and two 3-burner grills. All three models will be manufactured by almost identical operations/processes at a factory in Malaysia. You indicate that the ruling N335085 dated September 14, 2023, was issued to you for almost identical products and manufacturing processes; however, this new submission has a different circumstance, i.e., production will be occurring at a Malaysian factory instead of an Indonesian one. The gas grills each consist of a main lid, fire box, gas train assembly, control panel, cooking area, side shelf, cart frame, thermometer and burners. You present two manufacturing process scenarios, in which the factory in Malaysia assembles the components of both Chinese origin and Malaysian origin to manufacture the gas grills, including the production of certain key sub-assemblies and the final assembly process occurred in Malaysia.  Scenario 1 Main Lid Production The raw material (steel sheets) is purchased in China, where the steel sheets are formed into the lids by forming and punching operations; and the lids are then prepped for deep draw. The deep draw lids are then shipped to Malaysia, where the lids are then placed in multiple separate chemical baths of the formulation for the purposes of degreasing, pickling, and rinsing. Afterwards, the lids are kiln dried; various chemicals are mixed into a wet frit formulation. This operation includes the process that: porcelain enamel (frit) is sprayed to lid sub-assemblies, the lids are placed on a conveyor system that feeds into a furnace, the lids are baked at 1,600 Fahrenheit for 25 minutes, then the lids are removed from the conveyor system for inspection. After the coating is inspected, hardware (lid handle, badges, and thermometer) is affixed to complete the lids, the finished lids are then sent to the pack out line. Firebox Production The operation process of the fire boxes is similar to that in the above main lid production. The fire boxes will be formed and punched into their shape in China and shipped to Malaysia for the chemical baths to enhance the character of the lid through degreasing, pickling, and rinsing, allowing it to be sold in their final state. Gas Train Assembly Production The Chinese-originating gas train assemblies (manifold tube, regulator hose, fittings, and gas valves) are purchased by the Chinese factory, in which the gas valve port holes are added to the manifold; the manifold is bent to shape and threaded connectors are added; gas valves are assembled onto the manifold and the regulatory gas tightness test is conducted. The manifold sub-assemblies are shipped to the Malaysian factory, where the gas manifold will be assembled onto an LP regulator sub-assembly, and the completed gas train assemblies get fire tested, per the required CSA regulatory testing requirements. Burners Production The raw material (perforated tube steel) is purchased in China, where the tubes are cut to size (approximately 18 inches), one end of the tube is pressed and sealed, the opposite end is pressed and sealed to create a venturi funnel, a fuel mixer screw is added to this end, the venturi funnel end has a breather hole punched into it and then it is welded in spider mesh, and a cap is welded onto the open end to finalize assembly of the burner. The burners are shipped to the Malaysia factory, where they will be installed into the fireboxes. The remaining components, such as the control panels, cart frames, side shelves, and cooking area, will be manufactured in China and then shipped to Malaysia. In Malaysia, the completed firebox sub-assemblies then get fire tested, per the required CSA regulatory testing requirements before being sent to the pack out line. The control panel, knobs, and gas train assembly are installed onto the fireboxes. The gas train assemblies will be installed onto the grills and then tested for gas tightness, proper ignition, and combustion. After meeting regulatory testing requirements, the remaining components will be attached/combined with screws, bolts, and nuts to be manufactured into the finished products. Workers will then install labels and clean the surfaces of the products. Finally, the subject merchandise will be packaged for retail sale. Internal packaging items are added within the grill. The grill will be placed in its retail box and warehoused before being shipped to the U.S. Scenario 2 The difference between Scenario 1 and Scenario 2 is the production of the main lids and the fireboxes. In Scenario 2, the main lids and the fireboxes are made in Malaysia from the Chinese-originating sheet steel by forming, punching and deep draw in Malaysia. The rest of the manufacturing processes (including the final manufacturing) will be the same in Scenarios 1 and 2. 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). 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). Based on the information presented in Scenario 1, almost all of the components, including the key components of the main lids and the fireboxes are pre-made to their final forms in China. The processing that occurs in Malaysia including the “chemical baths” are not sufficient to substantially transform the Chinese made main lids and fireboxes.  Thus they remain of Chinese origin in this case.  The other manufacturing operations performed in Malaysia also would not substantially transform the core Chinese components, the lids and fire boxes of the grills. We find that the manufacturing process performed in Malaysia with respect to the grills in Scenario 1 does not constitute a substantial transformation of the imported components and parts into "products of" Malaysia. The country of origin for the gas grills will be China. Section 301 remedy for the Chinese origin products will apply. However, in Scenario 2, the key components, i.e., the main lids and fireboxes are made in Malaysia from the material of sheet steel from China. The production of these key components from the Chinese sheet steel would constitute a substantial transformation in Malaysia then they are manufactured into subassemblies, which are ultimately assembled into the subject grills. The manufacturing process performed in Malaysia with respect to the grills in the Scenario 2 does constitute a substantial transformation of the Chinse materials. The manufacturing process in Malaysia involves complex and skilled operations, which is more than a simple assembly. It creates a new and different article of commerce with a distinct character and use that is not inherent in the components imported into Malaysia. Thus, we find that the country of origin for the grills in Scenario 2 will be Malaysia. 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 Michael Chen at michael.w.chen@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division