OT:RR:NC:N1:105
Mike Packard
Compliance Specialist
Green Worldwide Shipping LLC
3131 South Vaughn Way, Suite 605
Aurora, Colorado 80014
RE: The country of origin of an Air Purifier.
Dear Mr. Packard:
In your letter dated November 8, 2021, on behalf of your client, Lasko Products, LLC, you requested a country of origin ruling determination on an air purifier.
The merchandise under consideration is an air purifier described as the GermGuardian Elite 5-in-1 Air Purifier with Pet Pure (model No. AC4300BPTCA). The device utilizes a fan, a UV-C light, a carbon pre-filter and a HEPA filter to help remove allergens from the air. The HEPA filter captures 99.97% of particles like pet dander, dust mites and pollen. The carbon filter reduces common odors from pets, smoking and cooking. The UV-C light helps reduce airborne bacteria, viruses, mold spores and works with Titanium Dioxide to reduce volatile organic compounds. It is recommended that the HEPA filter be replaced every 6-8 months, depending on the use, indicated by the filter change indicator. The dimensions are 8.88” x 6.38” x 22” and is recommended for use in rooms up to 153 square feet.
According to your submission, Lasko Products, LLC is considering two proposed manufacturing scenarios, which are described as follows:
Manufacturing Scenario 1:
In manufacturing scenario 1 numerous components are purchased in China including the HEPA filter, motor assembly, light assembly, PCBA assembly, power cable, starting capacitor, most UV lamp parts and the color carton for packaging. The PCBA assembly is purchased in China as a complete assembly and is loaded with Chinese firmware containing product controls and safety features. The functions of the PCBA are to turn on/off the machine and UV lamp, control the working speeds, the timer for UV and HEPA working time and the UV and HEPA replacement reminder. The HEPA filter is composed of a plastic frame, PU foam, hot melt glue, tape, white non-woven fabric as well as anti-bacterial and antiallergic non-woven fabric. These Chinese-origin materials are shipped to Vietnam for assembly into finished air purifiers. There is no assembly work done at the factory in China except for some minor assembly of the wiring. The processes done at the Chinese factory include inspections, testing and handling of purchased components.
The wire assembly in China is completed using an automatic wire stripping machine. An automatic terminal playing/tin dipping/sheath wearing machine and automatic terminal playing/tin dipping/terminal shell wearing machine are also used in the wire assembly. The PCBA assembly is tested using a test fixture machine. A motor inspection is done, which includes noise, RPM and temperature rise in a quiet room using an RPM meter and sound level meter. A UV lamp inspection is done using an air leakage testing machine. There is also a filter inspection, metal parts inspection and packaging inspection.
The remaining parts will be manufactured in Vietnam including the housing components, fan, motor frame, control panel, PCB box, brackets and switches, screws and fasteners, Microswitch boxes; and packaging components such as labels, product manual and brochure, paper pallets and bags. The front and rear housing and covers provide air flow channels, aesthetic appeal and protection for the interior components.
The assembly process in Vietnam includes the following steps: Unpack and combine the front cover components, attach the decorative lamp component and lock fixing the frame. The next steps involve installing the motor assembly, place air duct cover, and attach motor brackets. This is followed by attaching the air duct cover, aligning and installing the UV lamp (including plugging in the terminals), rear housing assembly (inserting terminal wires, plug terminal and apply glue), fix the voltage-reduce capacitor, fix the top cover, align and combine the front and rear covers, fix the rear housing, and install the filter. The final processes include packing the air purifiers, applying logos and labels, and sealing the box. Installation of each of the Chinese assemblies (including microswitch, UV lamp, rear housing, decorative lamp, top cover, motor and light) involve several steps which include plugging in devices, screwing, gluing, and manipulation of wires (separating, straightening, or twisting). The overall production process in Vietnam will involve 94 workers and inspectors and take approximately 64 minutes to assemble the electrical and non-electrical components to each air purifier.
Manufacturing Scenario 2:
In this scenario, additional components made in China are sent to Vietnam for final assembly of the air purifier. Additional components sourced in China include the top and bottom fan housing, fan, switch boxes, frames, control panel, brackets and switches. This is a temporary scenario and once additional Chinese component inventory is taken to zero, all these components will be made in Vietnam (same as Manufacturing Scenario 1).
The marking statute, 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 U.S. 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 U.S. the English name of the country of origin of the article.
The “country of origin” is defined in 19 CFR 134.1(b), in pertinent part, as “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.”
For tariff purposes, the courts have held that a substantial transformation occurs when an article emerges from a process with a new name, character or use different from that possessed by the article prior to processing. United States v. Gibson-Thomsen Co., Inc., 27 CCPA 267, C.A.D. 98 (1940); National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff’d, 989 F. 2d 1201 (Fed. Cir. 1993); Anheuser Busch Brewing Association v. The United States, 207 U.S. 556 (1908) and Uniroyal Inc. v. United States, 542 F. Supp. 1026 (1982).
Further, 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 air purifier, we would note that the finished device consists of several important subassemblies such as the motor, fan, UV lamp and PCB (with embedded Chinese software), which are previously manufactured in China. These items are not only the most expensive items that go into the manufacturing process but also imparts the critical functionality for the air purifier. The items do not lose their core abilities when assembled in Vietnam. In our view, the assembly operations performed in Vietnam, which consists of attaching, fastening, straightening wires, and gluing, is not complex. The air purifier is produced by joining these subassemblies together to form an air purifier, but the Chinese subassemblies do not undergo a physical change as a result. While we acknowledge that the assembly operations performed in Vietnam are plentiful, they are all still considered simple assembly.
In your cited ruling, HQ H303177 (dated May 4, 2020), most of the parts are produced in Indonesia and many of the subassemblies are also completed in Indonesia. In your request, the most important subassemblies described above, as well as the vast majority of the additional key components (other than the front and rear housing/covers) are produced in China and are simply assembled in Vietnam.
Therefore, based upon the facts presented, it is the opinion of this office that the assembly process performed in Vietnam for both Scenarios 1 and 2 do not result in a substantial transformation of the Chinese components. The components themselves are not transformed in Vietnam into a new and different article of commerce with a name, character, and use distinct from the components exported from China. Therefore, the GermGuardian Elite 5-in-1 Air Purifier with Pet Pure (model No. AC4300BPTCA), assembled under both Scenarios 1 and 2, given the pre-determined end-use, number and value of the Chinese origin components, is considered a product of China for origin and marking purposes at time of importation into the United States.
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 Jason Christie at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division