CLA-2 OT:RR:NC:N1:102
James MacNeill
MacNeill Classification Compliance
P.O. Box 1214
Bristol, Connecticut 06011
RE: The country of origin of a torsional vibration damper assembled in Mexico, and USMCA
Dear Mr. MacNeill:
In your letter dated December 22, 2020, you requested a country of origin ruling on behalf of your client, Vibracoustic USA, Inc., for purposes of marking and Section 301 trade remedies.
The torsional vibration damper (TVD) is described as being designed for a specific engine application, and in this instance, the TVD is used with a Ford Nano 3.0 liter engine. The TVD is a concentrically arranged item that is installed onto the crankshaft of an engine of a motor vehicle. The TVD consists of three components: an iron inner hub, a center rubber ring, and an iron inertia ring that is grooved on its outer circumference. In use, the vibration damper is a pulley that provides rotational power to the drive belt and absorbs torsional vibrations from the engine’s rotating crankshaft.
You mention that in New York ruling N299112, dated August 14, 2018, CBP classified the TVD under subheading HTSUS 8483.50.9040, which provides for transmission shafts (including camshafts and crankshafts) and cranks; bearing housings, housed bearings and plain shaft bearings; gears and gearing; ball or roller screws; gearboxes and other speed changers including torque converters; flywheels and pulleys, including pulley blocks; clutches and shaft couplings (including universal joints); parts thereof: Flywheels and pulleys, including pulley blocks: Other: Other: Grooved pulleys.
You have described two country of origin scenarios, in which the TVD is assembled in Mexico from components that are produced in China, and the United States or Mexico.
In scenario one, the hub is manufactured in China, the inertia ring is produced in the United States, and the rubber ring is manufactured in Mexico.
In scenario two, the hub is manufactured in China, and the rubber and inertia rings are produced in Mexico.
The iron hub is machined in China using a casting process. The center bore of the hub is then machined, allowing for it to be installed onto the engine crankshaft. The inner and outer lead-in diameter of the TVD are also machined on the front and back faces. The outer diameter is machined to mate with an engine seal. The rubber collar area is partially machined on the outer diameter side and on the front and rear faces to provide a smooth interface to the rubber ring. The machined hub is then coated for corrosion resistance, and then exported to Mexico.
The iron inertia ring is also formed using a casting process and afterwards, it is machined on its inner and outer diameters. The outer diameter is machined to incorporate “Poly-V” grooves. The completed ring is then coated.
The rubber ring is formed from a specific rubber compound that is mixed in the United States and subsequently imported into Mexico as a raw compound material. In Mexico, the compound is molded using a tube-molding process. Afterwards, the molded rubber tube is cured, cut to specific lengths, shaped into rings and subsequently, soaked.
The assembly process of the TVD, which occurs in Mexico, commences by applying a liquid substance onto the hub, the rubber ring, and the inertia ring. The three pieces are then placed and aligned in the assembly tool. Once the three pieces are lined up, the assembly press squeezes or presses the three parts together. Sequentially, the completed TVD is balanced, etched, measured, inspected, oiled, and packaged.
When determining the country of origin for purposes of applying trade remedies under Section 301, the substantial transformation analysis is applicable. Headquarters ruling 735009, dated July 30, 1993, in relevance, states that “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 country of origin scenarios 1 and 2, the Chinese hub, and components from the United States or Mexico are squeezed or press-fitted to each other during the final assembly in Mexico. Headquarters ruling H303864, December 26, 2019 explains that final processes, such as press-fitting components to each other, is simple assembly. Thus, it is our view that the hub in scenarios 1 and 2 is not subjected to any further operations other than simple assembly, and is not transformed in Mexico into a new and different article of commerce with a name, character, and use distinct from the article exported. Furthermore, we believe the hub, which receives and transmits power received from the crankshaft, imparts the essence of the TVD. As such, the country of origin of the TVD in both scenarios will be China for the purpose of applying current 301 trade remedies.
In regards to marking, 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 United States 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 United States the English name of the country of origin of the article. Part 134 of the U.S. Customs and Border Protection (“CBP”) Regulations (19 C.F.R. Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. § 1304.
CBP continues to utilize the marking rules in 19 C.F.R. Part 102, with the exception of 19 C.F.R. § 102.19, for purposes of country of origin marking with respect to goods of those countries. Title 19, C.F.R. § 102.11(a) provides that the country of origin of a good is the country in which:
The good is wholly obtained or produced;
The good is produced exclusively from domestic materials; or
(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in § 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
“Foreign material” is defined in Section 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 TVD is neither “wholly obtained or produced” nor “produced exclusively from domestic materials.” Therefore, paragraphs (a)(1) and (a)(2) cannot be used to determine the country of origin of the TVD, and paragraph (a)(3) must be applied next to determine the origin of the finished article. The tariff shift requirement in Section 102.20 for the TVD at issue states:
A change to subheading 8483.30 through 8483.60 from any other subheading, including another subheading within that group.
The foreign material in this case is the hub. However, in considering whether the tariff shift can occur from any other subheading, including within the aforementioned 8483 subheading group, the tariff shift rule is met. Accordingly, the country of origin of the TVD for marking purposes is Mexico.
You have also requested for consideration under the USMCA trade agreement. General Note (GN) 11 of the HTSUS implements the USMCA, and GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA. GN 11(b) states: For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, is eligible for the preferential tariff treatment provided for in the applicable subheading and quantitative limitations set forth in the tariff schedule as a "good originating in the territory of a USMCA country" only if (i) the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries; (ii) the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials; (iii) the good is a good produced entirely in the territory of one or more USMCA countries using nonoriginating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o)); Since the TVD contains non-originating materials, they are not considered goods wholly obtained or produced entirely in a USMCA country under GN 11(b)(i) and GN 11(b)(ii). We must next determine whether the TVD qualifies under GN 11(b)(iii).
The applicable change in tariff classification under subdivision (o) for goods of subheading 8483.50 is a change to subheadings 8483.40 through 8483.90 from any other subheading, including another subheading within that group.
In noting whether the tariff shift can occur from any other subheading, the hub, which is the non-originating material of the TVD, meets the requisite tariff shift rule. Accordingly, the TVD qualifies as a USMCA originating good.
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