The country of origin of control arms

N343396 November 13, 2024 OT:RR:NC:N2:206 CATEGORY: Origin Victor Shengli VSolution Manufacturing (Thailand) Co., Ltd. 368/8 Moo.8, Map Kha, Nikhom PhatthanaRayong 21180Thailand RE:  The country of origin of control arms Dear Mr. Shengli: In your letter dated October 17, 2024, you requested a country of origin ruling on control arms for marking purposes. Descriptive literature and pictorial diagrams were provided with your request. The subject merchandise is a control arm (Part Number MFG# 810-497179B), which is used in passenger vehicles. The control arm is part of the automobile suspension system that connect the wheels to the body flexibly through ball joints or bushings to effectively absorb shocks and vibrations caused by uneven road surfaces.  Its primary function is to ensure that the tires maintain constant contact with the road, providing traction, stability, and control.  Control arms play a crucial role in determining suspension geometry for precise steering, handling, and minimizing tire wear, and also assist with managing the forces exerted during braking and acceleration. You state state that the control arm consists of three major components: a ball joint assembly (ball pin, housing, dust boot, end caps, and miscellaneous clips and rings), an arm body, and a bushing. The steel ball pin forging, steel housing forgings, and steel sheets for the ball joint assembly and arm body are sourced in China and imported to Thailand for further processing. In Thailand, the ball pin forging undergoes rough turning, flat length cutting and drilling a center hole, rod finish turning, head rough turning, drilling a pin hole, and thread rolling to assist with attaching to other parts. Then, the ball pin is subject to heat treatment, called induction hardening, to form a hardening layer. The heat treatment changes the metallographic structure of the product surface from austenite to martensite and improves the hardness of the product surface upgrading it from an HRC28 to HRC55 standard of hardness. A phosphate coating is then applied to the ball pin for corrosion resistance. After that, the housing undergoes turning, flat length and lead center hole drilling, turning, rough inner hole drilling, finish turning and inner hole finishing, and knurling. The housing is then subjected to the induction hardening and phosphate coating. Further, the end caps are made from the left over scraps of steel sheet, imported into Thailand from China to make arm bodies, by stretching of the metal, forming the cap by stamping (cutting). The same corrosion resistant finishing coating as the ball pin and ball housing is applied, and the end caps are laser marked, and inspected. The complete ball pin, housing, end caps, and a rubber boot made entirely in Thailand, along with Chinese clips and rings, are assembled to create a ball joint assembly. The arm body is made from Chinese steel sheets that undergo stamping into the shape of the arm body, pre-stretching and trimming using a hydraulic machine, punching and flanging with different molds to punch the ball joint hole, flanging of the ball joint and bushing holes. Then the components are welded together, and welding slag is removed. A corrosion resistant surface coating of black powder paint is applied, and the arm body is laser marked. Finally, the ball joint assembly and arm body, and the rubber bushings made entirely in Thailand, are assembled together by machine press. The control arm undergoes surface cleaning, riveting, adding a clamp ring, laser marking, torque testing, labeling, sealing, packing, and final inspection. 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 courts have held that a substantial transformation occurs when an article emerges from a process with a new name, character or use different from that possessed by the article prior to processing. United States v. Gibson-Thomsen Co., Inc., 27 CCPA 267, C.A.D. 98 (1940); National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff’d, 989 F. 2d 1201 (Fed. Cir. 1993); Anheuser Busch Brewing Association v. The United States, 207 U.S. 556 (1908) and Uniroyal Inc. v. United States, 542 F. Supp. 1026 (1982). Further, in Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308 (2016), the Court of International Trade (“CIT”) 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, “…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 reviewed country of origin scenarios for similar control arms in New York Rulings N309252, dated 02/15/2020, N339304, dated 05/03/2024, and N341829, dated 08/29/2024, and deemed that the assembly of components do not result in a substantial transformation. Furthermore, it was determined in all of the above-mentioned cases that the character of control arms is the ball joint assembly. However, we believe that the present case is distinguishable from N309252, N339304, and N341829, because in those cases the ball joints were basically in their finished form when they were assembled with the other components to make the control arms.  In this case, before the assembly of the control arms, the subcomponents of the ball joint from China - steel forgings and sheets undergo a major physical change when they are further processed in Thailand.  This processing allows the control arms to fulfill their functioning as part of a suspension system to provide traction, stability, and control. In addition, the rest of the components of the control arm also undergo a physical change in Thailand. As a result, it is the opinion of this office that a substantial transformation occurs in Thailand. Therefore, the country of origin of the control arm (Part Number MFG# 810-497179B) is Thailand for marking purposes. 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 Liana Alvarez at liana.alvarez@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division