The country of origin of an automated guided vehicle

N340047 June 7, 2024 OT:RR:NC:N1:103 CATEGORY: Origin Aaron Marx Crowell & Moring, LLP 1001 Pennsylvania Ave. NWWashington, DC 20004 RE:  The country of origin of an automated guided vehicle Dear Mr. Marx: In your letter dated May 9, 2024, you requested a country of origin ruling on the JAS-Reel-1000kg on behalf of your client, Samsung SDS America, Inc. The JAS-Reel-1000kg is described as an automated guided vehicle used in battery manufacturing facilities to load, transport, and unload reels of material placed on a support stand. The stand sits atop a dock with an opening that runs along its length and the automated guided vehicle is designed so that its entire chassis can be aligned and parked underneath the dock. Once aligned, the vehicle raises its lifting mechanism between the opening to lift the stand and its materials, which it then transports to the appropriate destination. The components used to assemble the JAS-Reel-1000kg are sourced from Germany, China, Korea, Japan, Malaysia, Taiwan, and India. Final assembly of the vehicle occurs in Korea using two main subassemblies, identified in your submission as a drive frame assembly and a handling frame assembly. The drive frame assembly will be built on a Korean chassis frame, a metal structural base that will contain mounting boards, mounting plates, brackets, and holders that support various electrical and mechanical components. The electrical components are bolted to the chassis frame, including a power supply, controllers, sensors, batteries, circuit boards, and other electrical devices. The mechanical components are also bolted into place, and include a drive motor, drive wheel, drive reducer, and casters. The next step is dedicated to wiring the drive frame assembly, which involves first connecting, routing, and organizing cables using cable ties, then securing the cables using fasteners. The handling frame assembly uses a Korean vertical frame support with a counterweight already integrated into the frame. The vertical frame support will incorporate various brackets and threaded rods where sensors, electrical boards, and lasers can be affixed. Assembled to the front of the vertical frame support is a Chinese subassembly that will include a motor, reducer, support plate, and guides that are enclosed within its own frame. This subassembly is responsible for lifting the stand and its reel of material off the dock. Sensors and a Korean lift plate are bolted to this subassembly before it is secured to the vertical frame support. The assembly process continues with a worker bolting down various electrical devices including motors, controllers, harnesses, modules, sensors, and more.  Afterward, a worker completes the wiring, which consists of installing cable ducts, routing cables, binding wires with cable ties, and then securing everything using fasteners. Lastly, the handling frame assembly is bolted to the drive frame assembly and external covers are attached. Software is loaded, and each vehicle is calibrated, inspected, and tested. With regard to your request for the appropriate country of origin of the JAS-Reel-1000kg, 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 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. CBP has held that whether an assembly process is sufficiently complex to rise to the level of a substantial transformation is determined upon consideration of all of the operations that occur within that country, including any subassembly processes that take place in that country. Based upon your description of the manufacturing operations, the sum of the final assembly and the preassembly of core components in Korea constitutes a substantial transformation. In particular, various mechanical and electrical components of multiple origins are added to the drive frame assembly and handling frame assembly before they are joined to form the final automated guided vehicle. In our view, the core components used during assembly are sourced from multiple countries, including Korea and China, with each country supplying a comparable number of core components in varying degrees of completion. Thus, based on the totality of the circumstances, the country of origin of the JAS-Reel-1000kg, as described above, will be South Korea. 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