CLA-2-84:OT:RR:NC:N1:104
Ms. Lucy Da Costa
American River Group of Companies
10 Woodbridge Center Drive, Suite 500
Woodbridge, NJ 07095
RE: The country of origin of a forklift from China
Dear Ms. Da Costa:
In your letter dated December 7, 2018, on behalf of Dobbs Import, you requested a country of origin ruling.
Engines manufactured in the United States are exported from the United States to China for the purpose of further assembly into fork-lift trucks. In China, the engine is assembled together with components manufactured in China. These components are: the cab, the mast, the load backrest, the forks, the overhead guard, the tires, the counterweight, the tilt cylinder, the transmission and the drive and steer axles. In your letter, each of these components is referred to as a “minor assembly component”. Once assembly is completed, the finished fork-lift trucks are exported from China to the United States.
You propose that the the country of origin of the engine is the deciding factor in the origin determination of the forklift. As justification for this proposal, you claim that the essential character of the fork-lift is imparted by the engine.
This office notes that components of a forklift, such as an engine, are considered for classification and country of origin purposes individually when imported separately. However, this is not the case with the importation of a complete forklift. HQ H016418 dated July 1, 2008 states, in pertinent part,
The rule is well established that goods are classified in the condition in which they are imported. See United States v. Citroen, 223 U.S. 407, 414-415 (1911). In his submission, the importer states that the outboard motorboats in question are imported with the engine already mounted (i.e., physically attached to the boat as well as mechanically and electronically connected). Thus, pursuant to GRI 1, the engine, like the hundreds of other components that go into the construction of a motorboat, is classified together with the motorboat, as the sum of its parts. Similarly, automobile engines are not separately classified from the automobiles to which they are attached at the time of importation.
Likewise, in this case, the country of origin of the forklift will be determined by the “sum of its parts”. The engine does not impart the essential character of the forklift. Rather it merits equal consideration with the various necessary components listed above without which the fork-lift cannot operate. None of the cited components appear to be of minor significance. Thus, the country of origin of the fork-lift is China.
In view of the above facts, two other factors must be considered, i.e., the fork-lift’s (1) eligibility under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (“HTSUS”) and (2) liability for Section 301 duties.
Subheading 9802.00.80, HTSUS, provides a partial duty exemption for: Articles, except goods of heading 9802.00.90 and goods imported under
provisions of subchapter XIX of this chapter and goods imported under provisions of subchapter XX, assembled abroad in whole or in part of fabricated components, the product of the United States, which (a) were exported in condition ready for assembly without further fabrication, (b) have not lost their physical identity in such articles by change in form, shape or otherwise, and (c) have not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process such as cleaning, lubricating and painting
All three requirements of subheading 9802.00.80, HTSUS, must be satisfied before a component may receive a duty allowance. An article entered under this tariff provision is subject to duty upon the full value of the imported assembled article, less the cost or value of the U.S. components assembled therein, upon compliance with the documentary requirements of Section 10.24, Customs Regulations (19 C.F.R. §10.24). Section 10.16(a), Customs Regulations (19CFR 10.16(a)), provides that the assembly operation performed abroad may consist of any method used to join or fit together solid components, such as welding, soldering, riveting, force fitting, gluing, laminating, sewing, or the use of fasteners. Section 10.14(a), Customs Regulations (19 C.F.R. §10.14(a)), states in part that: The components must be in condition ready for assembly without further fabrication at the
time of their exportation from the United States to qualify for the exemption. Components
will not lose their entitlement to the exemption by being subjected to operations incidental to
the assembly either before, during, or after their assembly with other components.
Provided that all documentary requirements are met, the fork-lift may be eligible for a duty allowance under subheading 9802.00.80, HTSUS, upon entry into the United States.
Effective July 6, 2018, the Office of the United States Trade Representative (USTR) imposed an additional tariff on certain products of China classified in the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(b), HTSUS. The USTR imposed additional tariffs, effective August 23, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(d), HTSUS. Subsequently, the USTR imposed further tariffs, effective September 24, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(f) and U.S. Note 20(g), HTSUS. For additional information, please see the relevant Federal Register notices dated June 20, 2018 (83 F.R. 28710), August 16, 2018 (83 F.R. 40823), and September 21, 2018 (83 F.R. 47974). Products of China that are provided for in subheading 9903.88.01, 9903.88.02, 9903.88.03, or 9903.88.04 and classified in one of the subheadings enumerated in U.S. Note 20(b), U.S. Note 20(d), U.S. Note 20(f) or U.S. Note 20(g) to subchapter III shall continue to be subject to antidumping, countervailing, or other duties, fees and charges that apply to such products, as well as to those imposed by the aforementioned Chapter 99 subheadings.
Products of China classified under subheading 8427.20.4000, HTSUS, unless specifically excluded, are subject to the additional 25 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.01, in addition to subheading 8427.20.4000, HTSUS, listed above.
However, it should be noted that Note 20(a) also includes the following statement:
The additional duties imposed by heading 9903.88.01 do not apply to goods for which entry is properly claimed under a provision of chapter 98 of the HTSUS, except for goods entered under subheadings 9802.00.40, 8402.00.50, and 9802.00.60, and heading 9802.00.80. For subheadings 9802.00.40, 9802.00.50, and 9802.00.60, the additional duties apply to the value of repairs, alterations, or processing performed abroad, as described in the applicable subheading. For heading 9802.00.80, the additional duties apply to the value of the article less the cost or value of such products of the United States, as described in heading 9802.00.80.
The tariff is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Notice cited above and the applicable Chapter 99 subheading.
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 Patricia O’Donnell at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division