OT:RR:CTF:VS H337046 AM
U.S. Customs & Border Protection Industrial and Manufacturing Materials CEE 100 Los Indios Blvd.
Los Indios, TX 78567
Attn: Michael E. Trevino, Supervisory Import Specialist Unit
RE: Application for Further Review of Protest 5501-23-106826; Country of Origin and Tariff Classification of Fiber Optic Cables; Section 301 Measures
Dear Center Director:
This is in response to the Application for Further Review (“AFR”) of Protest No. 5501- 23-106826 timely filed on April 20, 2023, by Corning Optical Communications LLC (hereinafter, “importer” and “protestant”). This decision concerns the country of origin of fiber optic cables and the applicability of Section 301 duties to the merchandise. Additionally, it concerns U.S. Customs and Border Protection’s (“CBP”) tariff classification of fiber optic cables under subheading 9001.10.00 of the Harmonized Tariff Schedule of the United States
(“HTSUS”). The protestant is challenging the liquidation, arguing that the fiber optic cables were not substantially transformed in China and are therefore a good of French origin for the purpose of Section 301 duties. The protestant requests a refund of Section 301 duties paid.
The protestant has asked that certain information submitted in connection with this ruling request be treated as confidential. Inasmuch as this request conforms to the requirements of 19
C.F.R. §177.2(b)(7), the request for confidentiality is approved. The information contained within brackets and all attachments to this ruling request, forwarded to our office, will not be released to the public and will be withheld from published versions of this decision.
FACTS:
The merchandise subject to the protest at issue is optical fiber cables. The merchandise was entered on January 9, 2022, and liquidated on October 6, 2023. The protestant claims the entry of the merchandise was inadvertently declared as Chinese origin by the protestant’s broker
and was subject to an additional 25% duty due to Section 301 measures. The protestant filed the protest challenging the assessment of duties paid and claims the country of origin is France.
The finished products are imported by Corning for sale to various customers for use in internal optical fiber communications systems. Based upon the information provided with the protest, the subject cables are all versions of the Corning Clear Track 12-fiber micro-module. The protest states that these are cables made up of 12 optical fibers inside an insulating jacket and are manufactured in varying lengths to fit the need of the end user. It is further stated that the cables have a proprietary adhesive backing to enable fast and easy installation. A weblink was provided for more information on the products.
On August 19, 2024, protestant submitted supplemental documentation illustrating the production process with more detail including photos and diagrams. A meeting was subsequently held between our office and the protestant on August 29, 2024.
The protestant describes the production process as follows:
In France, the core and cladding glasses are vapor-deposited around a rotating target rod to form a “soot” preform. The core material is deposited first, followed by the cladding.
The target rod is removed, the preform is placed in a furnace where it is consolidated into solid clear glass, and then the center hole is closed. During the consolidation process, gas flows through the preform to remove residual moisture. It is during this phase that the
fiber’s attenuation properties are determined.
The consolidated preform is placed in a draw tower where it is drawn into a continuous strand of fiber. First, the preform is lowered into the top of a draw furnace. The tip of the preform is heated and a piece of molten glass begins to fall from the preform. The fiber is pulled down to a diameter of 125 microns. During the draw, the fiber goes through an on-line diameter monitor to ensure the fiber conforms to the specific cladding diameter. Protective coatings also are applied and cured, using ultraviolet lamps. At the bottom of the draw, the fiber is wound onto reels. The fiber is fully functional and usable as optical fiber when it is exported from France.
In China, the fiber is prepared, colored, and prepared for jacketing. The resin is melted, temperature control is done, and the fiber is rolled together, jacketed with insulation then put on a reel. The fan out assembly is then added, and connectors are added to each end of that.
The protestant asserts the country of origin for the fiber optic cables is France.
ISSUE:
What is the country of origin of the optical fiber cables for purposes of Section 301 trade remedies?
What is the tariff classification of the optical fiber cables?
LAW AND ANALYSIS:
Country of Origin
The United States Trade Representative (“USTR”) has determined that an additional ad valorem duty of 25 percent 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”). The Section 301 measures apply to products of China enumerated in Section XXII, Chapter 99, Subchapter III, U.S. Note 20, Harmonized Tariff Schedule of the United States (“HTSUS”).
When determining the country of origin for purposes of applying current trade remedies under Section 301, the substantial transformation analysis is applicable. See, e.g., Headquarters Ruling (“HQ”) H301619, dated November 6, 2018. 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 (C.C.P.A. 1982). This determination is based on the totality of the evidence. See Nat’l Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993).
To determine whether a substantial transformation occurs, CBP considers the totality of the circumstances and makes such determinations on a case-by-case basis. The country of origin of the item’s components, extent of the processing that occurs within a country, and whether such processing renders a product with a new name, character, and use are primary considerations in such cases. Additionally, factors such as the resources expended on product design and development, the extent and nature of post-assembly inspection and testing procedures, and worker skill required during the actual manufacturing process will be considered when determining whether a substantial transformation has occurred. No one factor is determinative.
In HQ 560660, dated April 9, 1999, CBP ruled that the country of origin of fiber optic cables is the origin of the optical fiber preform. In this case, CBP determined that neither the drawing of the fiber or application of outer protective coatings resulted in a substantial transformation of the optical fiber preform. Similarly, in HQ 562754, dated Aug. 11, 2003, CBP confirmed the addition of Chinese-origin connectors to the end of U.S.-origin fiber optic cables in China did not result in a substantial transformation. In HQ 562754, CBP determined the fiber optic cable’s characteristics were primarily imparted at the time the fiber optic cable was manufactured in the U.S. Lastly, in HQ 561392, dated June 21, 1999, CBP considered the country of origin marking requirements of an insulated electric conductor which involved an electrical cable with pin connectors at each end used to connect computers to printers or other peripheral devices. The cable and connectors were made in Taiwan. In China, the cable was cut to length and connectors were attached to the cable. CBP held that cutting the cable to length and assembling the cable to the connectors in China did not result in a substantial transformation.
In the instant case, it is our opinion that bundling, jacketing, coloring, rolling, and assembly of the cable to Chinese-origin connectors in China does not result in a substantial transformation of the cable. The assembly operations in China are not complex enough so as to transform the merchandise into a new article. Notably, bundling 12 individual fibers together does not significantly affect the capability of the finished cable as the merchandise is usable as optical fiber when it is exported from France to China. After careful consideration of the pertinent facts and authorities, we find that the French origin optical fiber exported to China and processed in China as described above, is not substantially transformed into a new and different article of commerce with a name, character, and use distinct from the article exported. Thus, the country of origin of the subject merchandise is France and is not subject to Section 301 measures.
Tariff Classification
The tariff classification of merchandise under the HTSUS is governed by the principles set forth in the General Rules of Interpretation (GRIs) and, in the absence of special language or context which otherwise requires, by the Additional U.S. Rules of Interpretation. The GRIs and the additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provision of law for all purposes. See Sections 1204(a) and 1204(c) of the Omnibus Trade and Competitiveness Act of 1988 (19 U.S.C. §§ 1204(a) and 1204(c)).
GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order.
The 2024 HTSUS headings under consideration are as follows:
8544: Insulated (including enameled or anodized) wire, cable (including coaxial cable) and other insulated electric conductors, whether or not fitted with connectors; optical fiber cables, made up of individually sheathed fibers, whether or not assembled with electric conductors or fitted with connectors:
* * *
9001: Optical fibers and optical fiber bundles; optical fiber cables other than those of heading 8544; sheets and plates of polarizing material; lenses (including contact lenses), prisms, mirrors and other optical elements, of any material, unmounted, other than such elements of glass not optically worked:
Note 1(h) to Chapter 90, HTSUS, specifically excludes optical fiber cables of heading 8544 from classification under Chapter 90, and the text of heading 9001, HTSUS, explicitly indicates that the heading does not cover optical fiber cables of heading 8544. As such, if the subject merchandise falls under the scope of heading 8544, HTSUS, then it must be classified under that heading. Headquarters Ruling Letter (“HQ”) H251018, dated May 18, 2017,
specifically addresses the definition of the term “individually sheathed” for the purposes of heading 8544, HTSUS. In this ruling, CBP stated, “[i]t is evident that whether optical fibers are individually sheathed is at least one determinative factor regarding the applicability of headings
8544 or 9001, HTSUS.” Id. CBP further stated if an individual optical fiber is sheathed then that fiber cannot be classified in heading 9001, HTSUS. Id. CBP determined that the term
“sheath” means to cover with something that protects and if the individual fibers within the cable are encased with a protecting material, then they would be considered cables of heading 8544, as long as they are further insulated. Id.
Based upon the information and photographs provided, the fibers are considered complete cables of heading 8544. Here, the fibers are jacketed with resin in China prior to being rolled together to complete the cable and in turn, “sheathed” according to the definition provided in HQ H251018. Therefore, because the merchandise is sheathed, it is classified as fiber optic cables under subheading 8544.70.00, HTSUS.
HOLDING:
This protest should be GRANTED. Based on the information provided, the fiber optic cables are not substantially transformed as a result of the manufacturing process performed in China. Thus, the country of origin is France and the fiber optic cables are not subject to Section 301 measures. Furthermore, by application of GRIs 1 and 6, the fiber optic cables are classified under heading 8544, HTSUS, specifically in subheading 8544.70.00, HTSUS, which provides for: “Insulated (including enameled or anodized) wire, cable (including coaxial cable) and other insulated electric conductors, whether or not fitted with connectors; optical fiber cables, made up of individually sheathed fibers, whether or not assembled with electric conductors or fitted with connectors: Winding wire: Optical fiber cables.” Protest 5501-23-106826 is referred back to your Center for appropriate action.
You are instructed to notify the protestant of this decision no later than 60 days from the date of this decision. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to this notification. Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel, and to the public on the Customs Rulings Online Search System (“CROSS”) at https://rulings.cbp.gov/, which can be found on the CBP website at https://www.cbp.gov and other methods of public distribution.
Sincerely,
for Yuliya A. Gulis, Director
Commercial Trade and Facilitation Division