• HQ H303865
• Jan 23, 2020

• Type : Origin • HTSUS :
•  Related:   H282391; H303529   

CLA-2 OT:RR:CTF:VS H303865 EGJ

Thomas M. Keating
Rock Trade Law LLC
134 N. LaSalle St., Suite 1800

RE: Country of origin of Three Dishwasher Pumps: Section 301 trade remedy; 9903.88.01, HTSUS

Dear Mr. Keating:

This is in response to your request, dated April 4, 2019, filed on behalf of Johnson Electric North America, regarding the country of origin of three different models of dishwasher pumps. In your letter, you request a binding ruling on the applicability of Section 301 trade remedies to proposed transactions involving these three dishwasher pumps. FACTS:

The subject merchandise consists of three models of centrifugal dishwasher pumps, part numbers 1999-1130103EU, 1999-1130105EU, and 1999-1130107EU. You have provided us with supporting documents specific to part number 1999-1130105EU, but you state that all three part numbers have the same production process and material sources.

Each pump consists of a pump assembly and an electric motor. In order to manufacture the pump, workers in Serbia combine discrete parts into subassemblies, which are then combined to form the finished product. The majority of the discrete parts are sourced from China, although a small percentage are sourced from Serbia and other countries. Workers in Serbia will construct subassemblies to form the electric motor. These subassemblies are the motor housing (stator), the rotor, the brackets, the rectifier, and the brush subassemblies. The manufacturing process for each of these subassemblies is set forth below. The Motor Housing (Stator) Subassembly

The finished motor housing is circular in shape. Workers assemble the housing from an adhesive and four components which are manufactured in China: the steel housing, unmagnetized ferrite bars, a magnet holder and a keeper ring. A pneumatic press locks the ferrite bars and the magnet holder into place within the steel housing. Workers then place the unfinished housing into a machine which magnetizes the ferrite bars. Next, the housing moves to a pneumatic press which secures the external keeper ring around the outside of the housing. Finally, workers apply glue to the outer edges of the magnet in order to finish the motor housing subassembly.

The Rotor Subassembly

There are at least 15 components which make up the rotor subassembly; all of them are manufactured in China except for the magnet wire which is manufactured in Europe. The rotor production consists of 19 steps. First, a precut shaft is knurled by a roller blade to prepare the shaft surface to receive a commutator (an electrical rotary switch). Next, workers set silicon steel laminations into a stacking machine to a set stack height. The laminations are then aligned and the shaft is pneumatically press fit through the center of the lamination stack. Two plastic spiders and the commutator are also pneumatically pressed onto the shaft. The spiders give the lamination stack additional support to hold its shape.

Dielectric strips are then inserted into each of the unwound lamination slots to provide insulation between the steel and magnet wire. Workers then place the unit into a winding machine where insulated copper wire is spun around the lamination stack in a specific pattern and hooked to the commutator. Next, workers place the commutator into a fusing machine, which permanently fuses the winding wire to the commutator. Then workers place additional dielectric insulation in each of the wound armature slots. Workers perform tests and visual inspections before applying an epoxy resin to the wound coil to prevent wires from coming loose due to high speeds or vibration. Workers place the assembly into an oven for the epoxy to cure.

After the epoxy has cured, the surface of the commutator is then machine turned to achieve improved concentricity, roundness and surface finish. The rotor subassembly is placed onto a balancing machine where epoxy material is added to meet the correct balancing value. Workers manually apply more epoxy resin as balancing material. The rotor assembly is then heated again for curing. Finally, the commutator is cleaned and there is a final electrical test and visual inspection.

The Brackets, the Rectifier, and the Brush Subassemblies

The two brackets are plastic input and output brackets, and all of their components are manufactured in China. The output bracket is made up of a bracket housing, ball bearing and bearing retainer which are pneumatically press fit together. The input bracket is made up of a bracket housing, a sintered bearing, a bearing retainer and a metal washer which are pneumatically press fit together.

All of the components which make up the rectifier subassembly are manufactured in China. The first step involves shaping a rectifier and cutting the lead to length. Insulated lead wires are cut to length and machine stripped at their ends. The lead wires are dipped in solder. Next, heat shrink tubing and silicon glass tubing are cut to length. The lead wires are inserted into the glass tubing. The rectifier and lead wire are attached in a crimping press and the rectifier is placed under heat to shrink the tubing around the lead wires. These steps are repeated with the capacitor. Finally, workers solder a heat sink onto the rectifier subassembly.

All of the components which make up the brush subassembly are manufactured in China. Workers place carbon brushes, a brush holder and a spring into a jig where they are crimped together. Next, the brush shunt wire is welded to the brush holder.

The Electric Motor Assembly

All of the aforementioned subassemblies are combined in a nine step process to form the electric motor assembly. First, the rotor subassembly and the plastic output bracket are pneumatically press fit together. Then, this new unit is press fit together with the motor housing subassembly. Next, the plastic input bracket is hand fit onto the shaft. The housing is crimped to the input and output brackets to form a motor unit. The unit is placed into a fixtures where the section of the shaft extending from the input bracket is punched to create straight knurls in the surface. The brush and rectifier subassemblies are inserted into position on the input bracket. The rectifier wiring is then bundled with a cable tie and trimmed. The electric motor assembly is now ready to be combined with the pump assembly.

The Pump Assembly

All of the components of the pump assembly are manufactured in China except for the labels. Workers insert polyurethane foam gaskets into a plastic rear pump cover. This cover is then press fit onto the motor assembly. A metal insert is fit into the center of a plastic fan vane with a pneumatic press and then this unit is pneumatically press fit into the rear pump cover and onto the shaft. The pump subassembly is then put through several operating tests.

Workers manually place a rubber O-ring into the exterior groove of the plastic pump housing and apply lubricant to it. Next, a stationary seal is placed into the center of the pump housing and pneumatically pressed into place. Then, a rotational seal is press fit onto the plastic extension of the impeller. A plastic spacer is placed in the pump housing and the impeller is pressed onto the shaft and into the pump housing. A metal macerator blade is then screwed onto the top of the impeller. An over-molded volute is then fit onto the pump housing. Then workers test the pump for leakage. A plastic fan cover is nap fit onto the bottom of the assembly to cover the cooling fan. Finally, workers test, label, and visually inspect the finished pump.

ISSUE:

What is the country of origin of the three centrifugal dishwasher pumps for the purposes of applying Section 301 trade remedies? LAW AND ANALYSIS:

There is no dispute that the instant centrifugal dishwasher pumps are classified under subheading 8413.70.20 of the Harmonized Tariff Schedule of the United States (“HTSUS”), which provides for “Pumps for liquids, whether or not fitted with a measuring device…: Other centrifugal pumps: Other: Other.” The United States Trade Representative (“USTR”) has determined that an additional ad valorem duty of 25% will be imposed on certain Chinese imports pursuant to its authority under Section 301(b) of the Trade Act of 1974 (“Section 301 measures”). The Section 301 measures apply to products of China enumerated in Section XXII, Chapter 99, Subchapter III, U.S. Note 20(b), HTSUS. Among the subheadings listed in U.S. Note 20(b) of Subchapter III, Chapter 99, HTSUS, is 8413.70.20, HTSUS.

When determining the country of origin for purposes of applying current trade remedies under Section 301, the substantial transformation analysis is applicable. 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). In order to determine whether a substantial transformation has occurred, CBP considers the totality of the circumstances and makes such determinations on a case-by-case basis. CBP has stated that a new and different article of commerce is an article that has undergone a change in commercial designation or identity, fundamental character, or commercial use. A determinative issue is the extent of the operations performed and whether the materials lose their identity and become an integral part of the new article. 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).

The question presented is whether the discrete parts from China are substantially transformed when they are assembled into a finished centrifugal dishwasher pump in Serbia. In determining whether the combining of parts or materials constitutes a substantial transformation, the determinative issue is the extent of operations performed and whether the parts lose their identity and become an integral part of the new article. Belcrest Linens v. United States, 573 F. Supp. 1149 (Ct. Int’l Trade 1983), aff’d, 741 F.2d 1368 (Fed. Cir. 1984). Assembly operations that are minimal or simple, as opposed to complex or meaningful, will generally not result in a substantial transformation. Factors which may be relevant in this evaluation may include the nature of the operation (including the number of components assembled), the number of different operations involved, and whether a significant period of time, skill, detail, and quality control are necessary for the assembly operation. See C.S.D. 80-111, C.S.D. 85-25, C.S.D. 89-110, C.S.D. 89-118, C.S.D. 90-51, and C.S.D. 90-97. If the manufacturing or combining process is a minor one which leaves the identity of the article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026 (1982), aff’d 702 F. 2d 1022 (Fed. Cir. 1983).

In HQ H282391, dated March 16, 2017, CBP determined that the country of origin of a gear motor was the United States because the assembly process in the United States amounted to a substantial transformation. The gear motor was comprised of two subassemblies, a gear box and a motor. The assembly of the gear motor consisted of assembling together 131 unique parts, and at least a total of 200 parts. These parts were imported from various origins and were used to first assemble the gear box and motor subassemblies, and then to assemble the complete gear motor through a complex operation with specialized skill and expertise. CBP noted that the complex operations involved at least 27 steps and took approximately two hours. CBP also considered the worker experience and training, stating that the workers were hired with previous experience and underwent additional training in order to reach proficiency in the assembly process. CBP thereby concluded that the foreign components lost their individual identities and became an integral part of a new article, the gear motor, and possessed a new name, character and use, amounting to a substantial transformation as a result of the assembly operations.

In addition, CBP has held that whether an assembly process is sufficiently complex to rise to the level of 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. For example, in HQ H303529, dated June 6, 2019, the subject merchandise was an incomplete postage meter, which functioned as a specialized printer in a mail handling system. While one of the major subassemblies was made in Malaysia, the remaining subassemblies were made in China, and the final assembly process of connecting the subassemblies also occurred in China. CBP found that the assembly process that occurred in China was sufficiently extensive and complex as to substantially transform the components into a product of China. In doing so, CBP noted that the question of the complexity of the assembly process which occurred in China was not limited to an examination of the assembly of the various subassemblies to one another, but included an examination of all the assembly processes involved in China in the production of the incomplete postage meter. See Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308, 1318 (2016) (“case law…indicates that a determination of substantial transformation must be based on a totality of factors”) (citing National Hand Tool Corp. v. United States, 16 C.I.T. 308, 312 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993) and Ran-Paige Co., Inc. v. United States, 35 Fed. Cl. 117, 121 (1996)).

In the instant case, approximately 50 discrete parts from China are shipped to Serbia to be manufactured into subassemblies, and then combined to form the finished centrifugal dishwasher pump. The assembly is complex and involves soldering, fusing, machining, knurling and crimping. Therefore, we find that the discrete parts are substantially transformed when they are combined to form a finished centrifugal pump in Serbia.

As the assembly of the Chinese parts into a centrifugal dishwasher pump results in a substantial transformation, the pump is a product of Serbia. Therefore, Section 301 measures will not apply.

HOLDING:

The country of origin of the three models of centrifugal pump assemblies for the purposes of the application of subheading 9903.88.01, HTSUS, is Serbia. As the merchandise will be products of Serbia, Section 301 measures will not apply. A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy of this ruling, it should be brought to the attention of the CBP officer handling the transaction.

Sincerely,

Monika R. Brenner, Chief
Valuation and Special Programs Branch