CLA-2 OT:RR:NC:N1:102
Jonathan M. Freed
Trade Pacific PLLC
700 Pennsylvania Ave, SE.
Suite 500
Washington, DC 20003
RE: The country of origin of portable air conditioning units and the applicability of certain trade remedies under Section 301
Dear Mr. Freed:
In your letter dated February 19, 2021, on behalf of New Widetech Industries Co. Ltd., you requested a ruling on the country of origin of portable air conditioning units. A description of the assembly process was submitted for our review.
The products under consideration are portable AC units (PAC), referred to as the WAP-06, WAP-07 and WAP-407 series. The self-contained units contain a hermetically sealed system designed to cool and have an output that ranges between 850 to 1200 Kilowatts per hour. Some units are designed to complete both, a cooling and heating process, and incorporate a 4-way valve. The units of the WAP-407, WAP-07, and WAP-06 series are similar in structure. It is noted that the WAP-07 units are larger in size. The portable units are imported packaged with an air filter, a plug, plates, an exhaust hose assembly, connectors, and a remote-control assembly.
In regard to country of origin, it is explained that each air conditioning unit is assembled in Taiwan from components that originate in China and Taiwan.
The assembly of each AC unit begins with the assembly of the compressor, which occurs in Taiwan. The first step in this process consists of a rotor being assembled to a pump. These components are assembled to a compressor shell. Afterwards, the upper and bottom shells of the compressor are installed and welded to a tripod foot shell. Next, an accumulator is welded to the casing of the compressor. The compressor shell is then coated, refrigerant oil is then injected into the compressor and the completed compressor undergoes testing.
The final assembly of each air conditioning unit, which also occurs in Taiwan, begins by plugging in lead in wiring into the compressor. Next, a gasket and anti-vibration rubber are installed onto the Chinese base pan with Chinese castors. A Chinese power cord is installed, and the compressor is then screwed onto the base pan. Afterwards, the Chinese outdoor blower housing assembly is screwed into place and the condenser bracket is assembled. The Chinese discharge pipes are then connected and welded to the outlet and inlet of the compressor. The bulkhead assembly is screwed to the Chinese condenser and an outdoor blower assembly. The evaporator and blower assembly, which are of Chinese origin, are installed onto the bulkhead and the piping connections to the evaporator and condenser are connected and welded. Chinese copper and temperature sensors are tied to the evaporator’s U-shaped copper pipe. Throughout the steps that occur during the final assembly, electrical Chinese components, such as wiring capacitors, a control board, a PCB board, are installed and connected. Also, for each unit that heats and cools, a Chinese 4-way valve is installed into its location and connected.
The unit is then subjected to a vacuuming process and charged with refrigerant. The charging pipes are then sealed, and the Taiwanese front and back panels are then screwed to the base pan and bulkhead. Once complete, each unit undergoes testing, is labeled, and is packaged with an air filter, an exhaust hose assembly, a plug, plates, connectors, and a remote-control assembly from China.
With regard to your request for the appropriate country of origin of the portable air conditioning units, 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 the scenario described above, components from Taiwan and China are joined or assembled to each other during the final assembly that occurs in Taiwan. However, in determining the country of origin of air conditioning units for the purpose of applying 301 trade remedies, the country of origin of the cooling unit, which is the essence of an air conditioning unit, is considered. In this instance, the cooling unit, which consists of a compressor from Taiwan, and a condenser and evaporator from China, are not substantially transformed in Taiwan. The assembly operations to make each unit in Taiwan are not complex and meaningful enough.
As such, the country of origin of the portable air conditioning units, the WAP-06, WAP-07 and WAP-407 series, will be China for the purpose of applying current 301 trade remedies, as two of the cooling unit components are from China. Accordingly, the country of origin of the portable air conditioning units, the WAP-06, WAP-07 and WAP-407 series, will be China for the purpose of applying current 301 trade remedies.
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