CLA-2-84: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 units and the applicability of certain trade remedies under Section 301
Dear Ms. Kepkay:
In your letter dated November 21, 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 units. A detailed description of the manufacturing process was submitted for our review.
The products under consideration are refrigerating appliances, models numbers BC93 and BCD87. Model number BC93 is described as a refrigerator unit with a separate chiller compartment. The refrigerator unit features a reversible door, adjustable legs and has an interior volume of 3.3 cubic feet. Model number BCD87 is a unit with refrigerating and freezing sections and features a reversible door, adjustable legs and has an interior volume of 3.1 cubic feet.
Each unit is produced by combining Thailand manufactured components with cooling components from China, such as the compressor. All assembly processes are completed in Thailand.
The production of each cooling unit begins by processing certain components in Thailand. A high impact polystyrene sheet is formed into a door liner and an inner liner using heating and vacuum processes. The side plate is then manufactured using a punching and cold rolled forming machine and once formed, the slide plate is attached to a Thailand manufactured condenser using aluminum tape. The metal door shell is also formed using a punching and cold forming machine. The same aforementioned processes occur for model number BCD87, with the exception of the inner and door liners being manufactured into rear and front sections.
In the final assembly of both refrigerating models, the lead wire assemblies are arranged and connected to the electrical components of both models. It is noted that the final assembly for model number BCD87 involves an additional step prior to the connection of the lead wire assemblies, such step includes securing the rear and front inner liners to each other using a front partition. Next, the pipe assemblies that incorporate the condenser pipe and the suction pipe are secured to both sides of the side plate using aluminum tape. The suction pipe assembly is also connected to the inner liner by lacing the pipe through holes in the inner liner.
Afterwards, the side plate, the inner liner, the front partition and the bottom plate are attached to each other using screws. The cabinet is then covered by a rear plate and the cabinet, along with the door, are subjected to a urethane forming process. Subsequently, the compressor, which is of Chinese origin, is combined with other components to become a compressor assembly and the compressor assembly is secured to each unit. An evaporator from Thailand is then combined with other components to become an evaporator assembly and the evaporator assembly is then secured to each unit. For model number BCD87, the rear evaporator and the front pipe-wound evaporator assembly are attached to each other and the rear inner liner using a welding process. Various pipes are then welded into the cooling system and the door with a gasket assembly is secured to the cabinet. The refrigerant gas pipe is then charged with a preset amount of gas. Upon completion, each unit undergoes various testing.
With regard to your request for the appropriate country of origin of the refrigerating units, 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 manufacturing and assembly processes that occur in Thailand create a new and different article of commerce, as the structural and cooling components of each unit are subjected to complex operations resulting in the individual parts losing their separate identities to become a new article, i.e., complete refrigerating units. As such, we find that the country of origin of the refrigerating units, model numbers BC93 and BCD87 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