CLA-2-85:OT:RR:NC:N2:220
Angie Courteau
LZB Manufacturing, Inc.
One La-Z-Boy Drive
Monroe, MI 48162
RE: The country of origin of linear actuators
Dear Ms. Courteau:
In your letter dated July 26, 2019 you requested a country of origin ruling.
The merchandise under consideration is identified as the TA9 Series Actuators, which are described as electric motor actuators that are intended primarily for use in motion upholstery items, such as recliners, loveseats, and sofas. The function of the actuators is to mechanize the reclining and other motion actions of furniture.
In your request, you state that the actuators are assembled in Taiwan from components sourced from Taiwan and China and you provide production details for their assembly. You suggest that the components and subassemblies that make up the actuators are substantially transformed in Taiwan as a result of the production process and that the goods should be marked with a country of origin of Taiwan. Further, you state that the actuators would not subject to Section 301 trade remedies for products of China.
The main components/subassemblies that make up the actuators consist of the spindle assembly, the worm gear, housings, a limit switch, an electric DC motor, electrical cable, insulators, inner and outer tubes, motor brake assembly, and various hardware and gaskets. We would note that the electric DC motor, the brake components, the limit switch, and the assembly hardware is sourced from China. You state the balance of the components are sourced from Taiwan.
You describe the assembly process for the actuators as follows: the assembly of the spindle, bearing, and worm gear into an actuator arm subassembly; the assembly of the inner and outer tubes and limit switch into the actuator arm subassembly; the incorporation of the electric motor and cable into the actuator arm subassembly; incorporating the housings; testing and packing.
The marking statute, section 304, 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 its 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.
The “country of origin” is defined in 19 CFR 134.1(b), in pertinent part, 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.”
For tariff purposes, 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).
Further, in Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308 (2016), the Court of International Trade (“CIT”) interpreted the meaning of “substantial transformation” as used in the Trade Agreements Act of 1979 (“TAA”) for purposes of government procurement. In Energizer the court reviewed the “name, character and use” test in determining whether a substantial transformation had occurred in determining the origin of a flashlight, and reviewed various court decisions involving substantial transformation determinations. The court noted, citing Uniroyal, Inc. v. United States, 3 C.I.T. 220, 226, 542 F. Supp. 1026, 1031, aff’d, 702 F.2d 1022 (Fed. Cir. 1983), that when “the post-importation processing consists of assembly, courts have been reluctant to find a change in character, particularly when the imported articles do not undergo a physical change.” Energizer at 1318. In addition, the court noted that “when the end-use was pre-determined at the time of importation, courts have generally not found a change in use.” Energizer at 1319, citing as an example, National Hand Tool Corp. v. United States, 16 C.I.T. 308, 310, aff’d 989 F.2d 1201 (Fed. Cir. 1993). Furthermore, courts have considered the nature of the assembly, i.e., whether it is a simple assembly or more complex, such that individual parts lose their separate identities and become integral parts of a new article.
Regarding the country of origin of the subject motor actuators, in our opinion the assembly operations performed in Taiwan, which consists of 21 assembly steps beginning with individual components processed into subassemblies, and then final assembly into a functional motor actuator, is significant and effects a change in the components as well as the electric motor. In our view, the assembly process described transforms the individual components into a new and different product having a new function and purpose.
Therefore, based upon the facts presented, it is the opinion of this office that the assembly process performed in Taiwan results in a substantial transformation of the individual components into a new and different article of commerce with a name, character, and use distinct from the components used in the production of the motor actuators. As such, the TA9 Series Actuators are considered a product of Taiwan for origin and marking purposes at time of importation into the United States. As a result, the TA9 Series Actuators are not subject to Section 301 trade remedies applicable to products of China.
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 Karl Moosbrugger at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division