OT:RR:CTF:VS H314566 UBB
Alma Arabelovic
Robert Bosch LLC
2800 S. 25th Avenue
Broadview, IL 60155-4594
RE: Country of origin of FB3 Wiper Blade assembled in Mexico; Marking; Section 301 trade remedy; 9903.88.03, HTSUS
Dear Ms. Arabelovic:
This is in response to your October 1, 2020 ruling request regarding the country of origin of FB3 wiper blades, which will be assembled in Mexico, for purposes of marking and Section 301 trade remedies. The ruling below takes into consideration the updated materials you provided at the May 11, 2021 meeting.
FACTS:
Robert Bosch LLC provides automotive, industrial technology, and consumer goods. The company produces auto parts, commercial vehicle equipment, home appliances, power tools, packaging technology, production tools, and security systems. Bosch plans to assemble the FB3 wiper blade (“wiper blade”) in Mexico. The FB3 is a beam-type wiper blade featuring dual precision-tensioned steel springs that distributes uniform pressure along the entire length of the blade. The wiper blade is used to clear water, debris and dust from a vehicle’s windscreen.
You state that the FB3 wiper blade will be partially manufactured and assembled in Mexico. You classify the finished wiper blade under subheading 8512.90.90, Harmonized Tariff Schedule of the United States (HTSUS). The imported components used to produce the wiper blade include steel coil from China (classified in 7217.90.50, HTSUS), which is cut to size in Mexico, bent to shape, and formed using a punch press to create holes for final wiper blade assembly. You state that this cutting and bending process is precise and engineered to product specifications, and that accurate bending of the flat vertebra is key to proper wiper performance. The flat blade vertebra is then assembled with the remaining imported components: a rubber wiper blade element from a country in Europe (classified in 4016.99.60, HTSUS), a basic adaptor, a spoiler, and an end cap from Kosovo (all classified in 8512.90.90, HTSUS), and a hook connector/holding spring, a plastic beauty cover, and a holding spring from China (all classified in 8512.90.90), HTSUS. With the exception of the steel coil, all other components of non-Mexican origin are imported as-is with their end-use determined.
ISSUE:
What is the country of origin of the FB3 wiper blade for the purposes of marking and Section 301 trade remedies?
LAW AND ANALYSIS:
Marking
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 United States 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 United States the English name of the country of origin of the article. Part 134 of the U.S. Customs and Border Protection (“CBP”) Regulations (19 C.F.R. Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. § 1304.
To provide a more seamless transition to the U.S.-Mexico-Canada Agreement (“USMCA”) for Canadian and Mexican traders, at this time, CBP continues to utilize the marking rules in 19 C.F.R. Part 102, with the exception of 19 C.F.R. § 102.19, for purposes of country of origin marking with respect to goods of those countries. Title 19, C.F.R. § 102.11(a) provides that the country of origin of a good is the country in which:
The good is wholly obtained or produced;
The good is produced exclusively from domestic materials; or
(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in § 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
“Material” means a good that is incorporated into another good as a result of production with respect to that other good, and includes parts, ingredients, subassemblies, and components.” 19 C.F.R. § 102.1(l).
“Foreign material” is defined in Section 102.1(e) as “a material whose country of origin as determined under these rules is not the same country as the country in which the good is produced.”
The wiper blade is neither “wholly obtained or produced” nor “produced exclusively from domestic materials.” Therefore, paragraphs (a)(1) and (a)(2) cannot be used to determine the country of origin of the wiper blade, and paragraph (a)(3) must be applied next to determine the origin of the finished article. The tariff shift requirement in Section 102.20(o) for the wiper blade at issue states:
A change to subheading 8512.90 from any other subheading.
This tariff shift rule requires a shift to subheading 8512.90, HTSUS, from any other subheading. There are two wiper blade components (the steel coil and the wiper blade element) classified in subheadings other than 8512.90, HTSUS, and these undergo the required tariff shift. The remaining components (the basic adaptor, the spoiler, the hook connector/holding spring, the additional holding spring, the plastic beauty cover, and the end cap) are classified in 8512.90, HTSUS at the time they are imported into Mexico and therefore do not undergo the change in tariff classification set out in 19 C.F.R. § 102.20(o).
Since no country of origin determination can be made applying Section 102.11(a) for the components that were classified in subheading 8512.90, HTSUS when imported into Mexico, the analysis continues with Section 102.11(b), which instructs us to examine the wiper blade’s “essential character” to determine its country of origin.
Section 102.11(b) states, in relevant part:
Except for a good that is specifically described in the Harmonized System as a set, or is classified as a set pursuant to General Rule of Interpretation [(“GRI”)] 3, where the country of origin cannot be determined under paragraph (a) of this section:
The country of origin of the good is the country or countries of origin of the single material that imparts the essential character to the good ….
In determining the “essential character” of the finished good, Section 102.18(b)(1) provides, in relevant part:
(b) (1) For purposes of identifying the material that imparts the essential character to a good under § 102.11, the only materials that shall be taken into consideration are those domestic or foreign materials that are classified in a tariff provision from which a change in tariff classification is not allowed under the § 102.20 specific rule or other requirements applicable to the good … (ii) Materials that may be considered include materials produced by the producer of the good and incorporated in the good. For example, if a producer of a good purchases raw materials and converts those raw materials into a component that is incorporated in the good, that component is a material that may be considered for purposes of identifying the materials that impart the essential character to the good, provided that the component is classified in a tariff provision from which a change in tariff classification is not allowed under the specific rule or other requirements applicable to the good; …
(2) For purposes of determining which one of two or more materials described in paragraph (b)(1) of this section imparts the essential character to a good under § 102.11, various factors may be examined depending upon the type of good involved. These factors include, but are not limited to, the following:
The nature of each material, such as its bulk, quantity, weight or value; and
(ii) The role of each material in relation to the use of the good.
Here, the steel coil, classified under subheading 7217.90, HTSUS and the wiper blade element, classified under subheading 4016.99, HTSUS undergo the applicable tariff shift in 19 C.F.R. § 102.20(o), however, the remaining components (the basic adaptor, the spoiler, the hook connector/holding spring, the additional holding spring, the plastic beauty cover, and the end cap), classified under subheading 8512.90, HTSUS, do not. Consistent with Sections 102.11(b) and 102.18(b)(1) and (2), it is only these components that do not undergo the tariff shift that must be taken into consideration when determining which material provides the essential character of the finished wiper blade.
Of the foreign components that do not undergo the tariff shift, half originate in China and the other half in Kosovo. All of these materials are classified in 8512.90 at the time of import into Mexico. The components are functionally important to the wiper blade, however taken individually no single component is functionally more important than another component. Therefore, of the parts that do not undergo the applicable tariff shift requirement, we find that no single item imparts the wiper blade with its essential character. Therefore, 19 C.F.R. § 102.11(b) cannot be used to determine the country of origin of the wiper blade.
The country of origin of the wiper blade cannot be determined by application of 19 C.F.R. § 102.11(c), as the wiper blade is not specifically described in the Harmonized System as a set or mixture, or classified as a set, mixture, or composite good pursuant to General Rule of Interpretation 3. Accordingly, we next consider section 102.11(d) of the hierarchical rules, which provides:
(d) Where the country of origin of a good cannot be determined under paragraph (a), (b) or (c) of this section, the country of origin of the good shall be determined as follows:
(1) If the good was produced only as a result of minor processing, the country of origin of the good is the country or countries of origin of each material that merits equal consideration for determining the essential character of the good;
(2) If the good was produced by simple assembly and the assembled parts that merit equal consideration for determining the essential character of the good are from the same country, the country of origin of the good is the country of origin of those parts; or
(3) If the country of origin of the good cannot be determined under paragraph (d)(1) or (d)(2) of this section, the country of origin of the good is the last country in which the good underwent production.
“Minor processing” is defined in 19 C.F.R. § 102.1(m) as including, in part, the mere dilution with water or another substance, cleaning, application of preservative or decorative coatings, trimming, filing, or cutting off small amounts of excess materials, unloading, reloading, putting up in measured doses, packing, repacking, packaging, repackaging, testing, marking, sorting, or grading, ornamental or finishing operations incidental to textile good production, repairs and alterations, washing laundering, or sterilizing.
“Simple assembly” is defined in section 102.1(o) as the fitting together of five or fewer parts all of which are foreign (excluding fasteners such as screws, bolts, etc.) by bolting, gluing, soldering, sewing or by other means without more than minor processing.
Based on the facts provided, we find that the totality of operations performed in Mexico constitute more than “minor processing” and exceed a “simple assembly,” as defined in 19 C.F.R. 102.1(o). Therefore, subparagraphs (1) and (2) of 19 C.F.R. § 102.11(d) are inapplicable. Consequently, by application of 19 C.F.R. § 102.11(d)(3), the country of origin of the wiper blade is the last country in which the goods underwent production. The term “production,” as defined in 19 C.F.R. § 102.1(n), includes manufacturing, processing, and assembling a good. Taken together, the operations performed in Mexico constitute production. Accordingly, we find that the country of origin of the FB3 wiper blade is Mexico for marking purposes, pursuant to 19 U.S.C. § 1304.
Section 301 Duties
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 USTR’s authority under Section 301(b) of the Trade Act of 1974 (“Section 301 measures”). See Section XXII, Chapter 99, Subchapter III, U.S. Note 20(e), HTSUS. The Section 301 measures apply to products of China enumerated in Section XXII, Chapter 99, Subchapter III, U.S. Note 20(f), HTSUS. Among the subheadings listed in U.S. Note 20(f) of Subchapter III, Chapter 99, HTSUS, is 8512.90.90.
When determining the country of origin for purposes of applying 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, 681 F.2d 778 (CCPA 1982). In deciding 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. See Belcrest Linens v. United States, 6 CIT 204, 573 F. Supp. 1149 (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. See Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983).
In Nat’l Hand Tool Corp. v. United States, 16 CIT 308, aff’d per curiam, 989 F.2d 1201 (Fed. Cir. 1993), the court determined that certain hand tool components used to make flex sockets, speeder handles, and flex handles were not substantially transformed within the United States. The components were cold-formed or hot-forged into their final shape prior to importation, with the exception of speeder handle bars, which were reshaped by a power press after importation, and the grips of the flex handles, which were knurled in the United States. After entry, the imported items were heat treated to strengthen the components, sand-blasted to clean the components, and electroplated to better enable the components to resist rust and corrosion. In making this determination, the court noted that the processing which occurred within the United States did not alter the name of the imported components, the character of the parts remained substantially unchanged upon the completion of such processing, and the intended use of the articles was predetermined at the time of importation. Although the court recognized that a predetermined use for imported articles does not preclude a finding of substantial transformation, the court noted that each component was intended to be incorporated in a particular finished mechanic’s hand tool. Moreover, the court dismissed as a basis for a substantial transformation the value of the processing, stating that the substantial transformation test utilizing name, character, and use criteria should generally be conclusive in country of origin marking determinations, and that such a finding must be based on the totality of the evidence.
The Court of International Trade more recently interpreted the meaning of “substantial transformation” in Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308 (2016). Energizer involved the determination of the country of origin of a flashlight, referred to as the Generation II flashlight. All of the components of the flashlight were of Chinese origin, except for a white LED and a hydrogen getter. The components were imported into the United States and assembled into the finished Generation II flashlight. The Energizer court reviewed the “name, character and use” test utilized in determining whether a substantial transformation had occurred and noted, citing Uniroyal, Inc., 3 C.I.T. at 226, 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.
In determining whether a substantial transformation has occurred in the processing of metals, CBP has generally held that cutting or bending materials to defined shapes or patterns suitable for use in making finished articles, as opposed to mere cutting to length or width which does not render the article suitable for a particular use, constitutes a substantial transformation. For example, in Headquarters Ruling Letter (“HRL”) 055684, dated August 14, 1979, CBP held that components of a water cooler gas absorption refrigeration unit which were formed by cutting to length, cleaning and bending imported steel tubes into the component shapes and configurations, or by cutting to length, flattening, and drilling holes into imported tubing, substantially transformed constituent materials for GSP purposes, while those imported tubes which were simply cut to length and assembled into the final articles were not. See also HRL 555811, dated March 20, 1992 (die cutting, stamping and shaping operations substantially transform aluminum flat stock into new and different articles of commerce).
In HRL 555265, dated July 3, 1989, CBP held rolls of imported aluminum strip were substantially transformed when the aluminum strip was crowned, that is, it was passed between convexed and concaved egg shape rollers to permanently bow the strip. Then the strip was cut to lengths and punched with holes. CBP stated that the cutting and crowning operations permanently altered the physical characteristics of the strip thereby limiting its potential uses. Prior to cutting and crowning, the strip was raw material and possessed nothing in its character indicative of its ultimate use. After the cutting and crowning operations, the strip could be used in the production of a limited range of articles, such as venetian blind slats or lattice fences. See also HRL 557159, dated January 11, 1994 (extruded aluminum cut to length and bent to shape to form the frame of grilles and louvers was substantially transformed).
In contrast, when processing consists primarily of assembly, CBP is hesitant to find that a substantial transformation occurred. In HQ H290528, dated February 21, 2018, CBP considered whether aluminum panels, which were used as an architectural finish, were substantially transformed by processing in the United States. The panels consisted of three main parts imported from Italy: the casing, core and mounting brackets. The imported casing was produced in Italy, where it was cut to specific dimensions, painted through a reverse coil process, and bent at three edges to create the shape required to house the honeycomb core. The core, also produced in Italy, consisted of two hard layers (skins) glued to an aluminum honeycomb panel that was itself coated with primer or pre-painted. Some cores were cut to size pre-importation in Italy and others were cut once they were imported into the United States. In the United States, workers cut some of the cores to size; drilled holes into the casing and core; and extruded, machined, bent, and cut-to-size the mounting blades. Workers then inserted the core into the casing and secured the mounting blades to the panel. CBP found that the U.S processing of the panels was minimal and did not alter the character of the casing and core. CBP noted that the pre-importation processing was significantly more complicated than the post-importation processing, which essentially consisted of some cutting and assembling of parts. As such, CBP found that the honeycomb panels were not substantially transformed through the assembly of the parts in the United States and that the country of origin of the aluminum honeycomb panels was Italy.
In your ruling request, you describe the production process for the FB3 wiper blade. First steel coil from China is cut to size, bent to shape and formed using a punch press to create holes for final wiper blade assembly. This cutting and bending process is precise and engineered to product specifications. In your ruling request you state that accurate bending of the flat vertebra is key to proper wiper performance. This processing of the steel coil into flat blade vertebra substantially transforms the coil. The flat blade vertebra is then assembled with the remaining components, from China, Kosovo, and a second European country, to create the finished wiper blade assembly. This assembly takes place over four stations. While the assembly process itself is not exceedingly complex, taking into consideration the extensive manufacture of the coil and its assembly with components from Mexico, Kosovo and a second European country, we find that the totality of processing that takes place in Mexico is sufficient for the imported materials to be substantially transformed in Mexico.
As the FB3 wiper blades are a product of Mexico, Section 301 remedies do not apply.
HOLDING:
Pursuant to 19 C.F.R. § 102.11(d), the country of origin of the FB3 wiper blade is Mexico. The FB3 wiper blade must be marked “made in Mexico” under 19 U.S.C. § 1304.
The country of origin of the FB3 wiper blade for the purposes of the application of subheading 9903.88.03, HTSUS, is Mexico. As such, Section 301 remedies do not apply.
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a [CBP] field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.”
A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Monika R. Brenner, Chief
Valuation and Special Programs Branch