CLA-2-84:OT:RR:NC:N1:102
Kristina Marie Barry
GDLSK LLP
599 Lexington Avenue FL 36
New York, New York 10022
RE: The classification and country of origin of Model Three wine preservation systems
Dear Ms. Barry:
In your letter dated May 6, 2022, you requested a tariff classification and country of origin ruling on behalf of your client, Coravin, Inc. Descriptive information was provided with your request.
The products under consideration are two Coravin wine preservation systems: the Model Three SL, the Model Three Plus. It is noted that New York ruling N320917, dated September 2, 2021, previously ruled on the classification of the Model Three SL and the Model Three Plus wine preservation systems, which were to be repackaged after being imported. In this submission, it is stated that these systems are packaged complete, and ready for retail sale at the time of importation. The systems allow users to enjoy and preserve wine.
The Model Three SL primarily consists of a Coravin Model Three device, a box sleeve, a needle clearing tool, a bottle sleeve, and a two argon gas capsules.
The Model Three Plus primarily consists of a Coravin Model Three device, an aerator, two screw caps, a box sleeve, a needle clearing tool, a bottle sleeve and two argon gas capsules.
The Coravin Model Three SL and Model Three Plus devices, which are primarily of plastic material, are designed to be handheld. These devices use compressed argon gas to allow a user to pour wine from a wine bottle. With the Model Three device, the user aligns the SmartClamps™ over the neck of the bottle and pushes down on the handle in one fluid motion, thereby manually inserting a needle through the cork and into the wine bottle. The needle, when inserted into an unopened wine bottle, facilitates the flow of argon gas from the device into the bottle, and wine flows out of the bottle for serving when the bottle is upturned. The user depresses a hand-operated trigger that activates a valve, which is designed to regulate the flow of compressed argon gas (stored in a disposable cartridge within the device body) through a pressure regulator valve and into the wine bottle. Argon gas is then sent into the bottle, forcing the pressurized wine to flow up the needle to the pouring spout. Releasing the trigger stops the flow of argon gas into the bottle, and the bottle is returned to an upright position to stop pouring.
The aerator packaged in the Model Three Plus aerates the wine.
The stainless-steel needle clearing tool is used to clear cork from the inside of the needle.
The screw cap seals the bottles. The screw cap is assembled in Indonesia, starting with a silicone plug being pressed into the body. The liner is placed, followed by the insert being pressed on top.
The bottle sleeve protects the bottle and prevents contamination of glass should the bottle break.
The classification of merchandise under the Harmonized Tariff Schedule of the United States (HTSUS) is governed by the General Rules of Interpretation ("GRIs"), taken in order. GRI 1 requires that classification be determined according to the terms of the headings and any relative section or chapter notes. In the event that goods cannot be classified solely based on GRI 1, and if the heading and legal notes do not otherwise require, the remaining GRIs will be applied, in the order of their appearance. Goods that are, prima facie, classifiable under two or more headings, are classifiable in accordance with GRI 3, HTSUS. GRI 3 (a) states in part when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods, those headings are to be regarded as equally specific, even if one heading gives a more precise description of the good.
GRI 3(b) is applicable when goods are, prima facie, classifiable under two or more headings, and have been put up in sets for retail sale. Goods classifiable under GRI 3(b) are classified as if they consisted of the material or component which gives them their essential character, which may be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the article.
In this instance, the Coravin Model Three handheld devices, which are considered to be valves, impart the essential character of the Models Three SL and Three Plus systems when considering their role and bulk. Therefore, in accordance with GRI 3(b), the applicable subheading for the Coravin Model Three SL and Model Three Plus systems will be subheading 8481.80.5090, HTSUS, which provides for Taps, cocks, valves and similar appliances, for pipes, boiler shells, tanks, vats or the like, including pressure-reducing valves and thermostatically controlled valves; parts thereof: Other appliances: Hand operated: Of other materials: Other. The general rate of duty will be 3 percent ad valorem.
In your submission, you also request a country of origin determination for the two Coravin wine preservation systems: the Model Three SL, and the Model Three Plus. The assembly processes submitted apply to both hand-held devices.
In addition, you explain that the Coravin devices primarily consist of the body assembly, the clamp assembly, the capsule cup assembly, and the needle assembly. The body assembly is made-up of key structural components, a regulator subassembly, and a valve subassembly.
The valve assembly, which regulates the flow of compressed argon gas and controls the flow of wine, is assembled in Indonesia. The assembly of the valve sub-assembly is completed in Indonesia. The Chinese O-rings are assembled to the stem. The Indonesian spout is pressed to the Indonesian valve body. The stem with O-rings is inserted into the Indonesian valve body with spout. Springs are placed over the Chinese stem; an Indonesian spring retainer is screwed in place and an Indonesian stem coupling is attached.
The regulator assembly is assembled in Indonesia. First, the lance subassembly is constructed by assembling a U.S. filter and Chinese O-ring to a Chinese lance. The process goes on by assembling and press-fitting a Chinese O-ring, a seal retainer, a Japanese ball, a Chinese ball spring to each other, which is followed by adding an Indonesian piston with a Chinese depressor and Chinese O-ring. Afterwards, a Chinese O-ring seal, a Japanese Ball, a Chinese ball spring, O-ring, washer, and steel cap are pressed in place. The piston with the O-ring, spring, and Chinese cap are then pressed on. The components are screwed in place.
The clamp assembly is assembled in Indonesia. It begins by adhering a Chinese clamp back pad to an Indonesian clamp body with heat and pressure. The left and right clamp arms of Indonesian origin are assembled to the clamp body using heat. Springs from China and bearings are then positioned into the clamp bodies. The pivot tubes of Chinese origin are then positioned and screwed into place.
The Indonesian capsule cup assembly is assembled in Indonesia. This assembly process begins by manually adding the Chinese load cell disc and cup to the Indonesian capsule cup. The components are screwed in place.
An Indonesian needle guide insert, and lock-out plunger are assembled to each other to from the needle guide assembly.
During the final assembly, which occurs in Indonesia, a U.S. manufactured gas hose and lock ring are assembled to the regulator. In sequence, a regulator seal, regulator, sleeve, and Indonesian platform are installed. The gas hose is then connected to the valve assembly and interconnected to an Indonesian trigger and coupling. The Indonesian head and nose covers are installed on the assembly and screwed in place. A friction stop and spring are assembled and inserted. The assembly process continues by sliding the clamp assembly onto the body assembly and then, the capsule cup assembly is screwed in place. Afterwards, the needle guide assembly is screwed to the clamp body. The clamp body is locked to the body assembly and the capsule cup is screwed into place. The needle is added. Amongst the steps, the rail is connected or assembled to the body. Throughout the steps, lubrication is applied. Various tests and inspections are also completed between the assembly processes.
Upon completion, the Model Three SL device is packaged with an Indonesian box sleeve, a Chinese bottle sleeve, a needle cleaning tool from China, and argon gas capsules from an unspecified country.
The Model Three Plus device is packaged with screw caps, an Indonesian box sleeve, an Indonesian Aerator, an Indonesian needle cover, an Indonesian bottle sleeve, a needle cleaning tool from China, and argon gas capsules from an unspecified country.
The “country of origin” is defined in 19 CFR 134.1(b) as “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.”
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 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.
For these systems, components from China and Indonesia are assembled to each other in Indonesia to produce hand-held devices, which imparts the essential character of the set. However, as described above, the assembly processes of the hand-held devices are rather simple, as the steps consist of pressing, inserting, and screwing components to each other. Instead, we believe the country of origin of the hand-held devices should be determined by their essence, which is the valve assembly, as it controls the flow of gas and in turn, the flow of wine. The country of origin of the valve assembly is Indonesia, as the origin of the valve body is Indonesia. Therefore, the origin of the hand-held devices is Indonesia. Accordingly, the origin of the Model Three SL and Model Three Plus systems is Indonesia.
With regard to the application of Section 301 trade remedies, we note that goods originating from China unless specifically excluded, are subject to the trade remedy duties. As articles of Chinese origin are packaged in the Model Three SL, and the Model Three Plus systems, we refer to the guidance pertaining to sets packaged for retail sale, which is provided on the CBP website under “CBP Section 301 Trade Remedies Frequently Asked Questions.” The answer to “How are the Section 301 duties assessed in respect to sets packaged for retail sale, which contain components covered by the Section 301 remedy,” reads, in pertinent part, as follows:
When importing goods put up in sets for retail sale (in accordance with General Rule of Interpretation 3) that contain articles subject to the Section 301 remedy, if the product that imparts the essential character to the set (i.e., the HTSUS provision under which the entire set is classified) is covered by the Section 301 remedy, then the entire set will be subject to the additional 25% duties.
Here, we find that the handheld devices, which are of Indonesian origin, impart the essential character of the Models Three SL and Three Plus systems. As such, the Models Three SL and Three Plus systems are not subject to the additional duties applicable to products of China under Section 301 of the Trade Act of 1974, as amended, upon importation into the United States.
Regarding the marking of the system, we would note that Treasury Decision (T.D.) 91-7, published in Volume 25, Customs Bulletin and Decisions, at 6 (January 16, 1991), addressed, among other things, the application of country of origin marking requirements to sets. It states therein, specifically at 16: . . . in most cases, the mere inclusion of an item in a collection will not substantially transform it into an article with a new name, character or use and, therefore, each item must be separately marked with its own country of origin. (Where the marking of the container will reasonably indicate the country of origin to the ultimate purchaser, the container may be marked instead of the individual articles. See 19 U.S.C. 1304(a)(3)(D) and 19 CFR 134.32(d)). This result is consistent with the purpose of the marking statute since the ultimate purchaser’s decision as to whether to buy the set might be influenced by the country of origin of any of the items in the set, whether or not an item gives the set its essential character. In considering T.D. 91-7, we find that the Chinese origin components packaged in the systems are not substantially transformed as a result of being packaged with the Indonesian components, and the individual components and the origin of all items within the systems must be identified. Consequently, each article must be individually marked with their country of origin, provided such marking is visible through the retail packaging of the systems, or the packaging must identify the origin of each of these items.
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 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