MAR-2 OT:RR:NC:N1:102
Ms. Allison Kepkay
White & Case LLP
701 13th Street NW
Washington, DC 20005
RE: The country of origin of refrigerating or freezing units and the applicability of certain trade remedies under Section 301
Dear Ms. Kepkay:
In your letter dated July 8, 2019, on behalf of Midea America Corporation of Parsippany, New Jersey, you requested a ruling on the country of origin and application of Section 301 duties for certain refrigerating and freezing units. A detailed description of the manufacturing process was submitted for our review.
The products under consideration are refrigerating and freezing appliances, models BCD296, BCD510 and BD481. Models BCD296 and BCD510 are referred to as refrigerator units with a top-mounted freezer. Model BD481 is described as an upright freezer that can be converted to a refrigerator based on the appliance’s internal settings. Each unit is produced by completing various processes that manufacture components and subassemblies that are combined with components from China. All production processes are completed in Thailand.
The production of each cooling unit begins by processing raw materials from Thailand or China into specifically configured pipes, an inner liner, insulation, a bottom plate pre-assembly, a rear plate pre-assembly and the air duct pre-assembly. The assembly continues by forming the cabinet using urethane and forming machines, covering the rear plate assembly, arranging the lead wire assembly, and connecting the inner liners to each other and sections of insulation. In addition, key subassemblies, such as the condenser assembly, the evaporator assembly, the compressor assembly and the door assembly, are assembled and installed. Afterwards, the charged refrigerant gas pipe and other cooling system piping, which are also charged with gas, are welded to the unit. Upon completion, each unit undergoes various testing.
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin 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 the ultimate purchaser in the U.S. the English name of the country of origin of the article.
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 this part. The case of U.S. v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940), provides that an article used in manufacture which results in an article having a name, character, or use differing from that of the constituent article will be considered substantially transformed.
In determining whether the combining of parts or materials constitute a substantial transformation, the issue is the extent of operations performed and whether the parts lose their identity and become an integral part of a new article. In this instance, the production processes in Thailand create a new and different article of commerce, as the components and subassemblies, to include the essential cooling elements, are subject to complex operations resulting in the individual parts and subassemblies losing their separate identities to become a new article, i.e., a complete refrigerating or freezing unit. As such, we find that the country of origin of models BCD296, BCD510 and BD481 will be Thailand. Accordingly, the subject products will not be subject to the Section 301 remedy.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 CFR Part 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