CLA-2-85:OT:RR:NC:N2:212
Jennifer Diaz
Diaz Trade Law
12700 Biscayne Boulevard
North Miami, FL 33181
RE: The country of origin and status under the United States-Korea Free Trade Agreement (UKFTA) of electrical wire cables
Dear Ms. Diaz:
In your letter dated October 25, 2021, you requested a tariff classification ruling on behalf of your client, Prominent Wire and Cable, LLC.
There are five items at issue with this request, all described as electrical cable wires. The first cable is identified as the MHF cable, which is comprised of a bundle of aluminum conductor wires encapsulated in insulation. The cables are imported on reels in lengths of 1,000 feet and are not terminated with connectors. You state that these cables are rated for use at 600V and used as underground electrical service entrance cables in mobile homes.
The second cable is identified as the SER cable, which is constructed of a bundle of aluminum conductor wires with a ground conductor, all encapsulated in insulation. The cables are imported on reels in lengths of 1,000 feet and are not terminated with connectors. You state that this cable is used as an above ground service entrance cable to deliver power from a service drop to a meter base or distribution panel board.
The third cable is identified as the URD cable, which is constructed of a bundle of aluminum conductor wires encapsulated in insulation. The cables are imported on reels in lengths of 1,000 feet and are not terminated with connectors. You state that these cables are rated for use at 600V and used in underground wiring systems to support secondary power distribution.
The fourth cable is identified as the Underground Service Entrance (USE) cable, which is constructed of a bundle of aluminum conductor wires encapsulated in insulation. The cables are imported on reels in lengths of 1,000 feet and are not terminated with connectors. You state that these cables are rated for use at 600V and are specially designed to be used underground in industrial applications.
The fifth and final cable is identified as the XHHW cable, which is constructed of a bundle of aluminum conductor wires encapsulated in insulation. The cables are imported on reels in lengths of 1,000 feet and are not terminated with connectors. You state that the cables are rated for use at 600V and generally used for power distribution in residential installations.
In your request, you state that the manufacturing process for all five cables is virtually identical and described in the following manner. Aluminum ingots are imported into Korea from Australia where they are melted, alloyed, casted, and rolled into rods. The rods are then drawn and stranded into wires before they are insulated, and laid up into the completed products. The finished insulated cables are then placed on reels and packaged for sale and transportation to the United States.
In order for us to provide you with the status of the cables under the UKFTA, we must first establish the correct classification under the Harmonized Tariff Schedule of the United States (HTSUS). In your request, you state that the correct classification for these cables is 8544.49.9000, HTSUS. We agree.
The applicable subheading for the electrical wire cables MHF, SER, URD, USE, and XHHW will be 8544.49.9000, 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: Other electric conductors, for a voltage not exceeding 1,000 V: Other: Other: Other.” The general rate of duty will be 3.9% ad valorem.
As to your request for status under the UKFTA, General Note 33, HTSUS, sets forth the criteria for determining whether a good is originating under the UKFTA. General Note 33(b), HTSUS, (19 USC 1202) states that:
For the purposes of this note, subject to the provisions of subdivisions (c), (d), (n) and
(o) thereof, a good imported into the customs territory of the United States is eligible for treatment as an originating good of a UKFTA country under the terms of this note if-
(i) the good is wholly obtained or produced entirely in the territory of Korea or of the United States, or both;
(ii) the good is produced entirely in the territory of Korea or of the United States or both, and -
(A) each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (o) of this note; or
(B) the good otherwise satisfies any applicable regional value-content or other requirements set forth in such subdivision (o); and satisfies all other applicable requirements of this note and of applicable regulations; or
(iii) the good is produced entirely in the territory of Korea or the United States,
or both, exclusively from materials described in subdivisions (i) or (ii), above.
For the purposes of this note, the term “UKFTA country” refers only to Korea or to the United States.
For goods classified under subheading 8544.49, General Note 33(o)/54.92 states:
A change to subheadings 8544.30 through 8544.49 from any other heading
Based upon the information provided, the aluminum ingot is the the only non-originating material used in the manufacturing process in Korea. As this material would be classified outside of heading 8544, HTSUS, it would make the aforementioned tariff shift. Consequently, based upon the fact presented, the subject electrical wires will qualify for preferential tariff treatment under the UKFTA.
While the rules set forth above will determine the eligibility of preferential tariff treatment under the UKFTA, the substantial transformation test will determine the country of origin for marking purposes.
For tariff purposes, the courts have held that a substantial transformation occurs when an article emerges from a process with a new name, character or use different from that possessed by the article prior to processing. United States v. Gibson-Thomsen Co., Inc., 27 CCPA 267, C.A.D. 98 (1940); National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff’d, 989 F. 2d 1201 (Fed. Cir. 1993); Anheuser Busch Brewing Association v. The United States, 207 U.S. 556 (1908) and Uniroyal Inc. v. United States, 542 F. Supp. 1026 (1982).
Further, in Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308 (2016), the Court of International Trade (“CIT”) interpreted the meaning of “substantial transformation” as used in the Trade Agreements Act of 1979 (“TAA”) for purposes of government procurement. In Energizer, the court reviewed the “name, character and use” test in determining whether a substantial transformation had occurred in determining the origin of a flashlight, and reviewed various court decisions involving substantial transformation determinations. The court noted, citing Uniroyal, Inc. v. United States, 3 C.I.T. 220, 226, 542 F. Supp. 1026, 1031, aff’d, 702 F.2d 1022 (Fed. Cir. 1983), 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, “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. v. United States, 16 C.I.T. 308, 310, aff’d 989 F.2d 1201 (Fed. Cir. 1993). Furthermore, courts have considered the nature of the assembly, i.e., whether it is a simple assembly or more complex, such that individual parts lose their separate identities and become integral parts of a new article.
Regarding the origin of the subject cables, it is our opinion that the aluminum ingots, through the complex manufacturing process, are substantially transformed into a new and different article of commerce with a name, character, and use distinct from the individual components. The above described manufacturing process creates aluminum wire conductor, which is considered the essential functional component of the finished cable, in Korea. As such, the country of origin for marking purposes will be Korea.
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 Luke LePage at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division