CLA-2-84:OT:RR:NC:N1:104
Jorge A. Torres
Interlink Trade Services
6500 South 35th Street
MacAllen, TX 78503
RE: The classification and preferential status under the United States-Mexico-Canada Agreement of a Miter Saw.
Dear Mr. Torres:
In your letter dated May 11, 2021 you requested a country of origin on behalf of your client, Jiangsu Jinfeida Power Tools Co., Ltd. Descriptive information was provided with your request.
The Jinfeida Miter Saw, model number MS10400, consists of (1) a 15-amp motor which generates 4500 RPM, (2) a Sliding head with maximum crosscut capacity up to 12 inches, (3) a LED cut line, (4) a 10-inch carbide tipped blade, and (5) a dust bag.
The applicable subheading for the Jinfeida Miter Saw, model number MS10400 will be 8465.91.0047, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Machine tools (including machines for nailing, stapling, glueing or otherwise assembling) for working wood, cork, bone, hard rubber, hard plastics or similar hard materials: Other: Sawing machines…Woodworking machines: Other: Miter saws.” The rate of duty is 3 percent ad valorem.
Regarding the country of origin of the MS10400 Miter Saw, you indicate that the 77 components are made in China and then shipped to Mexico for assembly into the final Miter Saw.
In Mexico there are three sub-assembly processes which include:
(1) the Table Sub-Assembly
(2) the Exterior Table Sub-Assembly
(3) the Arm Sub-Assembly
Next, there are eight assembly steps which include:
(1) the Rip Fence Assembly
(2) the Sliding Bar Assembly
(3) the Motor Assembly
(4) the Dust Port Assembly
(5) the Saw Blade Assembly
(6) the Pointer Assembly and Fence Adjusting
(7) the Link Plate and Low Blade Guard Assembly
(8) the Carry Handle and Cord Clip Assembly
Lastly, final packaging operations are completed for export to the United States.
Regarding your request for the appropriate country of origin of the Miter Saw, 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 United States Trade Representative has determined that an additional ad valorem duty of 25% will be imposed on certain Chinese imports pursuant to its authority under Section 301(b) of the Trade Act of 1974 (Section 301 measures). When determining the country of origin for purposes of applying current trade remedies under Section 301, the substantial transformation analysis is applicable. The test for determining whether a substantial transformation will occur is whether an article emerges from a process with a new name, character, or 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). To determine whether a substantial transformation has occurred, CBP considers the totality of the circumstances and makes such determinations on a case-by-case basis. CBP has stated that a new and different article of commerce is an article that has undergone a change in commercial designation or identity, fundamental character, or commercial use.
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 Miter Saw, we note that the finished Miter Saw consists of 77 components that are previously manufactured in China. In our view, the assembly operations performed in Mexico are not complex. The Miter Saw is produced by joining these components together, but the Chinese components do not undergo a physical change as a result of assembly operations performed.
Therefore, based upon the facts presented, it is the opinion of this office that the assembly process performed in Mexico does not result in a substantial transformation of the Chinese goods. The components themselves are not transformed in Mexico into a new and different article of commerce with a name, character, and use distinct from the articles exported from China. Thus, for purposes of 301 trade remedies, the country of origin of the Miter Saw, model number MS10400, is China at the time of importation into the United States.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8465.91.0047, HTSUS, unless specifically excluded, are subject to an additional 25 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.03, in addition to subheading 8465.91.0047, HTSUS, listed above.
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
the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries;
the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials;
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 Miter Saw 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 Miter Saw qualifies under GN 11(b)(iii).
The applicable tariff shift rule for merchandise classifiable under heading 8465. HTSUS, is in GN 11(o), HTSUS, which provides, in relevant part:
A change to heading 8465 from any other heading, except from subheading 8466.92;
or
(B) A change to heading 8465 from subheading 8466.92, whether or not there is also a change from any other heading, provided there is a regional value content of not less than:
(1) 60 percent where the transaction value method is used; or
(2) 50 percent where the net cost method is used
As a result of the Chinese origin components that are classified in subheading 8466.92., HTSUS, the requisite tariff shift rule is not met. Additionally, since all the components are non-originating, the regional value content rule is not met. Thus, the Miter Saw is not eligible for the preferential duty treatment under USMCA.
The HTSUS is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Note cited above and the applicable Chapter 99 subheading. For background information regarding the Section 301 trade remedy, you may refer to the relevant parts of the USTR and CBP websites, which are available at https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions and https://www.cbp.gov/trade/remedies/301-certain-products-china, respectively.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at https://hts.usitc.gov/current.
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 Denise Hopkins at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division