OT:RR:NC:N2:201
Michael Dahm
Cole International
1775 Baseline Road Grand Island, NY 14072
RE: The tariff classification and country of origin of a crane truck
Dear Mr. Dahm:
In your letter dated May 15, 2023, you requested a classification and country of origin ruling determination on a completed crane truck on behalf of your client, Cambria Automotive Companies Inc., located in Elizabeth, New Jersey.
The crane portion is made in China, while the truck chassis is a 2020 Peterbuilt made in the United States. You state that the crane portion is imported into Canada for assembly with the imported US truck chassis, and then exported back into the United States. Descriptive literature and pictures were provided with your request.
The item under consideration is identified as Crane Truck, model number XCTU40 and serial number LXGDLA325LA006017. The manufacturer is Xuzhou Heavy Machinery Co., Ltd. XCMG located in China. You state the maximum rating lifting capacity is 80,020 pounds. This truck crane features a 50-foot boom, a long fixed or hydraulic arm that is attached to the crane cab and is used to lift heavy objects. The Crane Truck features hydraulics, a winch with components, a closed compartment for operating, H-shaped outriggers, optional two-section truss-type jib, built-in winch, fixed counterweight and new energy-saving hydraulic system.
Section 134.1(b), Customs Regulations (19 C.F.R. § 134.1(b)), defines "country of origin" 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 to render such other country the “country of origin.”
To determine whether a substantial transformation occurs when components of various origins are assembled into completed products, CBP considers the totality of the circumstances and makes such determinations on a case-by-case basis. 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).
Additionally, factors such as the resources expended on product design and development, the extent and nature of post-assembly inspection and testing procedures, and worker skill required during the actual manufacturing process will be considered when determining whether a substantial transformation has occurred. No one factor is determinative.
Regarding the country of origin of the crane truck, the components/materials and the vast assembly operations are performed in China. This consists of the production/packing list diagram provided. All the components and subassemblies are manufactured in China. The subassemblies and other components from China will then be assembled onto the truck chassis into the finished product in Canada. In this case, the complex assembly process occurs when producing the subassemblies in China. With respect to the final assembly, we find the manufacturing processes of the subassemblies in Canada do not rise to the level of complex processes necessary for a substantial transformation to occur. Further, the components and subassemblies from China have a pre-determined end-use and do not undergo a change in use due to the assembly process in Canada. Accordingly, we find that based on the information provided, the subassemblies and the Chinese parts that are imported to Canada are not substantially transformed because of the assembly operations performed in Canada.
You suggest that when the Crane Truck is completed and exported to the United States, the vehicle should be classified in Heading 8705, as a “special purpose” mobile crane, rather than in Heading 8426, as a “cable crane”. We agree.
The applicable subheading for the Crane Truck will be 8705.10.0010, HTSUS, which provides for “Special Purpose motor vehicles, other than those principally designed for the transport of persons or goods … Mobile cranes: Cable operated.” The duty rate is Free.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8705.10.0010, 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., 9903.88.02, in addition to subheading 8705.10.0010, HTSUS, listed above.
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 trade remedy initiated pursuant to Section 301 of the Trade Act of 1974, including information on exclusions and their effective dates, 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.
This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection 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, please contact National Import Specialist Matthew Sullivan at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division