CLA-2-84:OT:RR:NC:N1:102
Courtney Gene Rogers
GEN2 PTD1, LLC
251 So. Hillside
Wichita, Kansas 67211
RE: The classification and country of origin of a pyrolysis system
Dear Mr. Rogers:
In your letter dated June 1, 2020, you requested a ruling on the classification and the country of origin of a complete pyrolysis system. A description of the manufacturing and assembly processes was submitted for our review.
The Gen Tech PTD system, which is referred to as a closed loop pyrolysis system, will be imported in various containers on the same vessel as a single entry. The non-electric system consists of various machines, to include a series of distillers, condensers, an isolation chamber, pyrolysis heating chambers, the hydro-desulfurization unit, a desulfurization unit and a master control panel, that are installed onto a common base and frame. The primary function of the pyrolysis system is to convert waste plastic into different fuels, by applying heat to the waste plastic in a series of stages and the resulting product being liquefied into fuel using a condensation process. Afterwards, the fuels are subjected to a distillation process and a decontamination process to remove the light end gas and/or naphtha that is cycled through the system for internal use. The remaining fuel continues to be processed through a hydro-desulfurization unit and a scrubber to remove Sulphur and, an additional distillation process. Once these processes are completed, the diesel and marine fuels are stored and sold at a later time.
The applicable subheading for the Gen Tech PTD system, will be subheading 8419.89.9580, Harmonized Tariff Schedule of the United States, (HTSUS), which provides for Machinery, plant or laboratory equipment, whether or not electrically heated (excluding furnaces, ovens and other
equipment of heading 8514), for the treatment of materials by a process involving a change of temperature such as heating, cooking, roasting, distilling, rectifying, sterilizing, pasteurizing,
steaming, drying, evaporating, vaporizing, condensing or cooling, other than machinery or plant of a kind used for domestic purposes; instantaneous or storage water heaters, nonelectric; parts thereof: Other machinery, plant or equipment: Other: Other: Other: Other: For rubber and plastics. The general rate of duty is 4.2 percent ad valorem.
With regards to the country of origin of the Gen Tech PTD system, you explain that all machining, fabrication and final assembly operations are completed in South Africa. You go on to explain that all of the machines that complete the system are custom made by a South African manufacturer and that certain components (valves, burners and gauges) that are not of South African origin are installed and assembled into the aforementioned machines that are manufactured in South Africa. After being manufactured, the main components, to include the distillers, condensers, an isolation chamber, pyrolysis heating chambers, the hydro-desulfurization unit, a desulfurization unit and a master control panel are secured to a common base, which is also manufactured in South Africa. Every component is then inter-connected with South African produced piping or tubing that is either welded, or bolted together in South Africa to complete a Gen Tech PTD system. Upon undergoing testing and an inspection, the system is disassembled and loaded into containers.
With regard to your request for the appropriate country of origin of the Gen Tech PTD system, 19 C.F.R. § 134.1(b) provides in pertinent part 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. As stated in HQ 735009, dated July 30, 1993, “The country of origin is the country where the article last underwent a “substantial transformation” that is, processing which results in a change in the article's name, character, or use”.
The test for determining whether a substantial transformation will occur is whether an article emerges from a process with a new name, character and 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 order to determine whether a substantial transformation occurs when components of various origins are assembled into completed products, all factors such as the components used to create the product and manufacturing processes that these components undergo are considered in order to determine whether a product with a new name, character, and use has been produced. No one factor is decisive, and assembly operations that are minimal will generally not result in a substantial transformation.
In aforementioned scenario, all of the primary machines, the base, and connecting tubes or pipes are manufactured in South Africa and installed and interconnected in South Africa. The foreign components, which consists of valves, gauges and burners, are integrated into the primary machines in South Africa. Therefore, it is our view that the nature of the processing performed in South Africa is one in which the foreign components lose their separate identities to become a new article, i.e., a Gen Tech PTD system. As such, the country of origin of the subject Gen Tech PTD system will be South Africa.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 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