CLA-2 OT:RR:NC:N1:102
Porfirio Waters
Global Logistix Co.
24449 Laguna Seca Rd S
Edinburg, Texas 78541
RE: The classification and country of origin of a fan blower assembly
Dear Mr. Waters:
In your letter dated February 10, 2020, on behalf of your client, Shinano Kenshi Corporation, you requested a ruling on the country of origin of a fan blower assembly. A detailed description of the manufacturing and assembly processes was submitted for our review.
The fan blower assembly, part number IDRF-3432-502M, is used in a Continuous Positive Airway Pressure Machine (CPAP). The fan blower assembly primarily consists of a centrifugal fan and a motor and is designed to circulate air.
In your request, you suggest the flan blower assembly is correctly classified under subheading 8414.59.6560, Harmonized Tariff Schedule of the United States (HTSUS). Based on the facts presented, we agree.
The applicable subheading of the fan blower assembly, part number IDRF-3432-502M, will be 8414.59.6560, HTSUS, which provides for Air or vacuum pumps, air or other gas compressors and fans; ventilating or recycling hoods incorporating a fan, whether or not fitted with filters; parts thereof: Fans: Other: Other: Other: Centrifugal. The general rate of duty is 2.3 percent ad valorem.
In your request, you describe the manufacturing process of the fan blower assembly and suggest the country of origin is Mexico, as the manufacturing and assembly processes of the fan blower assembly occur in Mexico.
The manufacturing and assembly processes that occur in Mexico begin with the assembly of the motor’s stator subassembly. Magnetic wire from China is wound onto a Chinese stator core. Once wound, the wire is cut and prepared for a soldering process. The PCBA (printed circuit board assembly) and the Chinse insulator sheets are then connected and soldered onto the stator assembly. The stator assembly is then installed and bonded to the Chinese bottom housing. A lead wire harness from China is then soldered to the contacts of the PCBA assembly and a Japanese seal is then installed in the bottom housing. Afterwards, the stator assembly then undergoes a curing process.
The assembly of the rotor assembly begins by installing a retaining ring on a Chinese shaft to form a shaft assembly. Washers from Mexico or the United States are then installed onto the shaft. To form the front and rear ball bearing assemblies, ball bearings are bonded to bearing housings and the shaft using adhesive. The completed rotor assembly then undergoes a curing process.
While the rotor assembly curing process occurs, the magnet is then assembled and bonded to the rotor yoke with adhesive. The magnetic yoke assembly then undergoes a curing process. Afterwards, the magnet is magnetized using specialized equipment and the magnetic yoke assembly is then bonded to the rotor assembly. The completed rotor assembly then undergoes a curing process.
Upon completion of the rotor assembly, the Chinese impeller is then press fitted and bonded onto the rotor assembly with adhesive, which is then cured. Next, the fan assembly with the rotor assembly, is fastened to the stator assembly and a Chinese top housing is then fitted and screwed onto the impeller attached to the completed rotor and stator assemblies. Each complete fan blower assembly undergoes various testing.
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.
With regard to your request for the appropriate country of origin of the fan blower assembly, 19 C.F.R. § 134.1(b) provides in pertinent part as follows: Country of origin means 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; Since Mexico is a NAFTA country, the NAFTA Marking Rules must be applied in determining the country of origin of the subject battery pack for marking purposes. Part 102, Customs and Border Protection Regulations (19 C.F.R. Part 102), sets forth the NAFTA Marking Rules. Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes. See 19 C.F.R. § 102.11. Applied in sequential order, the required hierarchy establishes that the country of origin of a good is the country in which:
(a)(1) The good is wholly obtained or produced;
(a)(2) The good is produced exclusively from domestic materials; or
(a)(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in Section 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied. Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because the ball valve is neither wholly obtained nor produced exclusively from “domestic” materials. Because the analysis of sections 102.11(a)(1) and 102.11(a)(2) does not yield a country of origin determination, we look to section 102.11(a)(3). “Foreign material” is defined in 19 C.F.R. § 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.” In this case, the fan blower assembly is classified under subheading 8414.59.6550, Harmonized Tariff Schedule of the United States (HTSUS). The applicable rule for subheading 8414.59.65, HTSUS, in section 102.20 requires:
A change to subheading 8414.10 through 8414.80 from any other subheading,
including another subheading within that group.
In this instance, the foreign materials, which are imported into Mexico, are all classified from any other subheading, including another subheading within that group. Since the fan blower assembly is classified under subheading 8414.59.65, HTSUS, and the foreign materials undergo an applicable change in tariff classification as set out in 19 C.F.R. § 102.20, the fan blower assembly in question qualifies to be marked as a good of Mexico.
Nonetheless, while the NAFTA marking rules contained in 19 C.F.R. Part 102 will determine the country of origin for marking purposes, the substantial transformation test will determine the country of origin for purposes of the Section 301 measures. See, e.g., Headquarters Ruling Letter (“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 and 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). 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). In order to determine whether a substantial transformation occurs when components of various origins are assembled into completed products, all factors such as the components used to create the product and the manufacturing processes that these components undergo are considered in order to determine whether a product with a new name, character and use has been produced. No one factor is decisive, and assembly operations that are minimal will generally not result in a substantial transformation.
In this instance, the assembly operations performed in China and Japan are not complex or meaningful enough. It is the various manufacturing and assembly processes in Mexico that create a new and different article of commerce, as the air circulating and motor components of each unit, to include the less significant Chinese and Japanese components, are subjected to operations resulting in the individual parts losing their separate identities to become a new article, i.e., a fan blower assembly that consists of an impeller and a motor. As such, we find that the country of origin of the fan blower assembly, part number IDRF-3432-502M, will be Mexico. Accordingly, the subject article will not be subject to the Section 301 remedy.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at https://hts.usitc.gov/current. This ruling is being issued under the provisions of Part 177 of the Customs 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, contact National Import Specialist Sandra Martinez at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division