The country of origin of an automated guided vehicle

N340295 June 14, 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 22, 2024, you requested a country of origin ruling on the JAS-Reel Direct-500Kg on behalf of your client, Samsung SDS America Inc. The JAS-Reel Direct-500kg is an automated guided vehicle used to load, unload, and transport floating reels of material that are used during battery manufacturing. The vehicle navigates autonomously throughout a manufacturing facility and is described as having a tower-like body with specialized docking shafts extending from the front and rear of its body. A reel of material is loaded onto the docking shaft and transported to a docking machine. The docking shaft slides the reel onto a matching shaft located on the docking machine. The components used to assemble the JAS-Reel Direct-500kg are sourced from China, Germany, India, Japan, Korea, Malaysia, Singapore, and Taiwan. 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 uses a Korean-sourced metal structural base that is fitted with supports and brackets designed to hold various components, including the battery, camera, cabling, and sensors. The assembly process begins with fastening the mechanical components for the drive system to the structural base, which include a reducer, drive wheel, and casters. Next, a worker attaches the electrical components, including various sensors, controller boards, a motor, and the battery. Finally, a worker completes the wiring for the drive frame assembly, which involves connecting, routing, and organizing multiple cables and harnesses. The handling frame assembly is described as a vertical frame that will contain the mechanism used to lift reels of material. This subassembly uses a metal frame that is manufactured in Korea. Within this frame, a worker installs a motor, reducer, lifting screws, and lifting guides, components that will form a mechanical assembly that allows a set of docking shafts to move vertically within the frame. The lifting screws and lifting guides are sourced from Japan while the reducer, motor, and docking shafts are sourced from China. The docking shafts are fastened into place before a worker completes the wiring within the assembly, which involves installing cable ducts and organizing various cables and harnesses. Lastly, the handling frame assembly is mounted to the drive frame assembly. The external covers are attached, and the vehicle is inspected, calibrated, and tested. With regard to your request for the appropriate country of origin of the JAS-Reel Direct-500kg, 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, China, and Japan, 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 Direct-500kg, 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