CLA-2-87:OT:RR:NC:N2:206
John Kenkel
International Trade Law Counselors, PLLC
8647 Richmond Highway, Suite 623 Alexandria, VA 22309
RE: The tariff classification and country of origin of 2nd and 3rd Generation wheel hub units
Dear Mr. Kenkel:
In your letter dated May 20, 2024, you requested a tariff classification and country of origin determination ruling on behalf of your client, GSP Automotive Malaysia Sdn Bhd.
The articles under consideration are 2nd Generation Wheel Hub Assemblies, Model Numbers 124224 and 233012, and 3rd Generation Wheel Hub Assemblies, Model Numbers 663401, 104214HD, and 530102, which are used in passenger vehicles. The sub-assemblies include flanges, inner ring, balls, cage and other accessories. You state that a wheel hub assembly is a pivotal component in a vehicle's functionality, supporting the weight of the vehicle while enabling smooth rotation of the wheels. By absorbing both axial and radial loads, it maintains stability and balance, crucial for safe driving. Additionally, the wheel hub assembly reduces friction between moving parts, contributing to fuel efficiency and extending the lifespan of other components. Integrated with anti-lock braking system (ABS) sensors in modern vehicles, it enhances braking precision and safety. Overall, a wheel hub assembly plays a multifaceted role, ensuring optimal performance, safety, and comfort on the road.
Models 124224 and 233012 contains an outer flange but no inner flange. Models 663401, 104214HD, and 530102 contain both outer and inner flanges. All five models are equipped with ABS rings, which are fixed to the flange. However, only model 104214HD is equipped with an ABS sensor. The flange end face is provided with a hole and a bolt, which can be directly connected to the wheel rim. The flange inner hole is provided with the spline slot, which can be used with the constant velocity (CV) axel half shaft.
You suggest classifying all five models in subheading 8708.99.5800, Harmonized Tariff Schedule of the United States (HTSUS), which provides for double flanged wheel hub units incorporating ball bearings for use in motor vehicles. However, Models 124224 and 233012 are single flanged. As a result, they will be classified elsewhere.
The applicable subheading for the 2nd Generation Wheel Hub Assemblies, Model Numbers 124224 and 233012 will be 8708.99.6800, HTSUS, which provides for Parts and accessories of the motor vehicles of headings 8701 to 8705: Other parts and accessories: Other: Other: Other: Other: Other parts of power trains: Other. The rate of duty will be 2.5% ad valorem.
The applicable subheading for the 3rd Generation Wheel Hub Assemblies, Model Numbers 663401, 104214HD, and 530102 will be 8708.99.5800, HTSUS, which provides for Parts and accessories of the motor vehicles of headings 8701 to 8705: Other parts and accessories: Other: Other: Other: Double flanged wheel hub units incorporating ball bearings. The rate of duty will be 2.5% ad valorem.
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 at https://hts.usitc.gov/.
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 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).
However, if the manufacturing or combining process is merely a minor one that leaves the identity of the article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983) (Uniroyal). Substantial transformation determinations are based on the totality of the evidence. See Headquarters Ruling (HQ) W968434, dated January 17, 2007, citing Ferrostaal Metals Corp. v. United States, 11 CIT 470, 478, 664 F. Supp. 535, 541 (1987). In the Uniroyal case, the court held that an upper was not substantially transformed when attached to an outsole to form a shoe and that the upper was "the very essence of the completed shoe."
According to the information provided, the outer flange in the 2nd Generation units and the inner and outer flanges in the 3rd Generation units, and the inner rings in both are produced in Malaysia. The balls, cage, sealing ring, spacer, cap, bolts, boots, ABS ring, and the sensor, where applicable, of each unit are made in China and imported to Malaysia for final assembly. In Malaysia, the components are assembled together using a ball automatic loading machine, hydraulic press machine, grease pump machine, and riveting machine, where applicable. After that, the hubs are inspected, laser marked, tested, and packaged for shipment.
The assembly of the components in the flanges is a simple assembly and would not be considered as a substantial transformation. Accordingly, in this case instead of looking at the assembly process to determine the country of origin of the wheel hub unit incorporating ball bearings, we must consider the component or components of the inner ring and the outer flange containing the races with precision raceways, that provides its essence.
This rationale is noted in Headquarters (HQ) Ruling 562528, dated December 10, 2002, which discusses the country of origin of a ball bearing. The ruling states that the fundamental character and use of the bearings is determined after the steel rings are ground and finished into races with precision raceways and they are no longer considered steel rings. This rationale is also discussed in HQ rulings 731968, March 1, 1990, and 731969, dated March 19, 1990, where rings are heat treated and polished in one country and the races are created, and superfinishing occurs in the second country. In these rulings, the country of origin of the bearings was determined to be the country in which the rings become races with precision raceways.
In the present case, the flanges and inner rings are all made in Malaysia. Accordingly, the country of origin of the 2nd Generation Wheel Hub Assemblies, Model Numbers 124224 and 233012, and 3rd Generation Wheel Hub Assemblies, Model Numbers 663401, 104214HD, and 530102, for marking purposes is Malaysia. As the country of origin of the subject items is Malaysia, the Section 301 Trade Remedy duties are not applicable to the wheel hub assemblies under consideration.
The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in Title 19, Code of Federal Regulations (CFR), Section 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, whether directly, by reference, or by implication, is accurate and complete in every material respect. In the event that the facts are modified in any way, or if the goods do not conform to these facts at time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and submit a request for a new ruling in accordance with 19 CFR 177.2. Additionally, we note that the material facts described in the foregoing ruling may be subject to periodic verification by CBP.
This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection 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, please contact National Import Specialist Liana Alvarez at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division