CLA-2-83:OT:RR:NC:N1:121
Jeremy Ross Page
Page-Fura, P.C.
311 West Superior, Suite 306
Chicago, IL 60654
RE: The country of origin and application of Section 301 remedies of a rear engine mount
Dear Mr. Page:
In your letter dated June 13, 2019 you requested a country of origin ruling and application of Section 301 remedies determination on behalf of Daimler Trucks North America LLC (DTNA).
The merchandise under consideration is identified as a rear engine mount. The rear engine mount consists of three components:
One center pin that was cast, machined and e-coated in China;
One rubber isolator molding made in Mexico;
One aluminum housing made in either China or the U.S.
According to your request, the engine mount will be assembled in Mexico. The Chinese casting will be coated with an adhesive and the rubber isolator of Mexican origin will be permanently bonded to the pin. An aluminum housing of either Chinese or U.S. origin will be crimped onto bonded steel strips incorporated into the rubber isolator. You did not include cost information, other than to indicate that the rubber molding is the costliest of the components.
You state in your request that, based on previous rulings issued by CBP, the finished rear engine mount is classified in subheading 8302.30.3060, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Base metal mountings suitable for motor vehicles; and parts thereof (see ruling N302657). You further state that the center pin casting is also classified in subheading 8302.30.3060, HTSUS, (see ruling N302652), and that the rubber molding is classified in subheading 4016.99.3000, HTSUS, which provides for Other articles of vulcanized rubber other than hard rubber…Vibration control goods of a kind used in the vehicles of headings 8701 through 8705 (see ruling N300207). You did not include a classification of the housing.
You indicate that the function of the engine mount is to secure the powertrain in the vehicle chassis, and to provide vibration isolation. You further describe the individual functions of the components as follows: “the function of the center pin is to attach the engine mount isolator to the engine leg while also providing an adequate surface area.…” The function of the rubber isolator is to establish “a cushion and restriction on vibration essential to the reliable and safe performance of the truck engine.” The function of the housings is “to attach the engine mount isolator to the vehicle frame rail and to provide adequate surface area…”
You have requested a country of origin determination in regards to NAFTA marking rules. Section 304 of the 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 container) will permit in such a manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article. The regulations implementing the requirements and exception to 19 U.S.C. § 1304 are set forth in Part 134, Customs and Border Protection Regulations (19 C.F.R. Part 134). 19 C.F.R. § 134.1(b) provides 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; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin. Since Mexico is a NAFTA country, the NAFTA Marking Rules must be applied in determining the country of origin for purposes of marking. 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. As you noted, sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because the assembled engine mount 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.” The applicable rule for subheading 8302.30.3060, HTSUS, in section 102.20 requires:
A change to headings 8302 through 8304 from any other heading, including another heading within that group.
The center pin casting (and in two styles, the cast aluminum housing) used in the assembly of the subject rear engine mount is imported into Mexico and is therefore designated as foreign material. As you stated in your request, the center pin casting is classifiable under 8302.30.3060, HTSUS, which prevents the rear engine mount from satisfying the heading change rule provided in section 102.11(a)(3).
Since the center pin from China is classified under heading 8302, HTSUS, the tariff shift rule is not satisfied. Because 19 C.F.R. § 102.11(a)(1)-(3) is not determinative of origin, the analysis continues to 19 C.F.R. § 102.11(b) which provides in pertinent part: Except for a good that is specifically described in the Harmonized System as a set, or is classified as a set pursuant to General Rule of Interpretation 3, where the country of origin cannot be determined under paragraph (a) of this section: (1) The country of origin of the good is the country or countries of origin of the single material that imparts the essential character to the good, or… When determining the essential character of a good under 19 C.F.R. § 102.11, 19 C.F.R. § 102.18(b) provides that only domestic and foreign materials that are classified in a tariff provision from which a change is not allowed shall be taken into consideration. In deciding among these materials, consideration is given to various factors, including the nature of the material such as its bulk, quantity, weight, or value, and the function of each material in relation to the use of the good.
This office notes that the center pin casting enters Mexico as a mounting of subheading 8302.30.3060 and the completed rear engine mount is exported as a mounting of subheading 8302.30.3060. You state the rubber molding of Mexican origin is the costliest of the components and provides a critical dampening function; however, as you also note, the Mexican rubber molding undergoes the tariff shift, therefore, pursuant to 19 C.F.R. § 102.18(b), it cannot be considered. Based upon the above factors, we find that the center pin is the single material that imparts the essential character of the rear engine mount. Accordingly, the country of origin of the rear engine mount, pursuant to section 102.11(b)(1) of the Customs Regulations, is China.
You have also requested a country of origin determination for the application of 301 remedies. 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 (“HQ”) H301619, dated November 6, 2018.
Section 134.1(b), Customs Regulations (19 CFR 134.1(b), defines "country of origin" as the country of manufacture, production or growth of any article of foreign origin entering the U.S. 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 Part 134.
The test for determining whether a substantial transformation will occur is whether an article emerges from a process with a new name, character or 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 this case, you state that rear engine mount will be manufactured in Mexico, using parts from China and the United States. As noted above, the center pin casting enters Mexico as a mounting of subheading 8302.30.3060 and the completed rear engine mounting is exported as mounting of subheading 8302.30.3060. It is the opinion of this office that the assembly of the center pin casting with the rubber molding and aluminum housing in Mexico does not constitute a substantial transformation. Therefore, the additional processing does not render a new and different article. Since the center pin casting is of Chinese origin and no substantial transformation takes place, it is the opinion of this office that the country of origin of the rear engine mount is China. Accordingly, the merchandise will be a product of China, and the Section 301 measures will apply.
Additionally, you propose that the cost/value of the individual component(s) should be subject to a separate assessment of duties and fees, including duties pursuant to Section 301. This office disagrees. The assessment of duties and fees is based on the classification and value of the finished good.
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). See also “Notice of Action and Request for Public Comment Concerning Proposed Determination of Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation” (June 20, 2018, 83 F.R. 28710). 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 8302.30.3060, 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., 9903.88.03, in addition to subheading 8302.30.3060, HTSUS, listed above.
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 Jennifer Jameson at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division