CLA-2-84:OT:RR:NC:N1:102
Allison Kepkay
White & Case LLP
701 13th Street NW
Washington, DC 20005
RE: The country of origin of refrigerating units and the applicability of certain trade remedies under Section 301
Dear Ms. Kepkay:
In your letter dated January 29, 2020, on behalf of Midea America Corporation, you requested a ruling on the country of origin and application of Section 301 duties for certain refrigerating units. A detailed description of the manufacturing process was submitted for our review.
The products under consideration are refrigerating appliances, model numbers BCD290, BCD326, BD390 and BD594. Model numbers BCD290 and BCD326 are described as refrigerator units that feature a top mounted freezer with an automatic defrost. Model numbers BD390 and BD594 are described as upright freezers with an automatic defrost. The low configurations of model numbers BD390 and BD594 can be converted into a refrigerator, based on the model’s internal settings, while the high configuration of these model numbers feature LED displays on the front door. The refrigerating appliances differ in net volume and load capacity.
Each unit is produced by combining components manufactured in Thailand with cooling components from Thailand and China, such as the compressor and the evaporator. All assembly processes are completed in Thailand. The production of each cooling unit begins by completing various steps in Thailand. The first four steps involve forming certain pipes from Thailand material using a rolling, cutting to size, and bending into shape processes. Afterwards, a high impact polystyrene sheet is formed into an inner liner using heating and vacuum processes. The side plate is then manufactured, primarily using a punching machine, a cold rolled forming machine, a cutting machine, and a bending machine. The middle insulation, which is also constructed from expanded polystyrene, is formed, shaped and dried and the bottom plate pre-assembly is formed by combining Chinese metal with reinforced iron, which is then sealed using soft and paper tape. Next, the rear plate pre-assembly is formed by attaching Chinese made metal to baffles. The rear plate pre-assembly and the air duct pre-assembly are then subjected to a sealing process.
The final assembly begins by connecting the rear inner liner to the front inner liner. Second, the lead wire assemblies are arranged and later connected to the electrical components. The middle insulation pieces, which consist of four or five separate components, are then attached to the inner liners. The suction pipe and Thailand condenser with a condenser pipe are connected to both sides of the side plate using aluminum tape. The suction pipe assembly is then inserted and connected to the inner liner. Next, the side plate, the inner liner, the suction pipe, the front partition and bottom plate are connected to each other. The rear plate is then covered for the urethane injection process and the cabinet is then formed using a urethane injection process. The heater, fuse, defrost sensor and the Chinese evaporator are then connected to form an assembly for the defrost system. Afterwards, the evaporator assembly is inserted and welded into the inner liner. The compressor assembly is then formed by connecting a Chinese compressor to a spring base, a sleeve, a temperature coefficient, and an overload protector and afterwards installed. The cooling system pipes formed in Thailand are then welded onto the unit, vacuumed and filled with gas. The final assembly step involves attaching the door with a gasket assembly to the refrigerator cabinet. Upon completion, each unit undergoes various testing.
With regard to your request for the appropriate country of origin of the refrigerating units, Section 134.1(b), Customs Regulations (19 CFR § 134.1(b)), defines "country of origin" as the country of manufacture, production or growth of any article of foreign origin entering the U.S. 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 case of U.S. v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940), provides that an article used in manufacture which results in an article having a name, character, or use differing from that of the constituent article will be considered substantially transformed.
In determining whether the combining of parts or materials constitute a substantial transformation, the issue is the extent of operations performed and whether the parts lose their identity and become an integral part of a new article. In this instance, the assembly operations performed in China are not complex or meaningful enough. It is the various manufacturing and assembly processes in Thailand that create a new and different article of commerce, as the structural and cooling components of each unit, to include the less significant Chinese components, are subjected to operations resulting in the individual parts losing their separate identities to become a new article, i.e., complete refrigerating units. As such, we find that the country of origin of the refrigerating units, model numbers BCD290, BCD326, BD390 and BD594, will be Thailand. Accordingly, the subject products will not be subject to the Section 301 remedy.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 CFR § Part 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, contact National Import Specialist Sandra Martinez at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division