CLA-2-94:OT:RR:NC:N5:433
Jeremy Page
Page Fura, P.C.
939 W. North Avenue, Suite 750 Chicago, IL 60642
RE: The United States-Mexico-Canada Trade Agreement (USMCA), country of origin marking, and the applicability of Section 301 trade remedy of an automobile seat component.
Dear Mr. Page:
In your letter dated October 2, 2023, on behalf of Keiper Seating Mechanisms Co., Ltd., you request a USMCA and country of origin marking binding ruling for an automobile seat lock mechanism. The request also seeks confirmation that the automobile seat lock mechanism is not subject to China Section 301 duties. In lieu of samples, illustrative literature, a product description, and manufacturing processes were provided.
The item that is the subject of this ruling request is constructed of foreign sourced raw materials. A description of the item immediately follows.
The “Lock3000 Mechanism” is a seat component constructed of metal and plastic that will be permanently affixed to the metal frames of automobile seats according to Original Equipment Manufacturer (OEM) specifications. Documentation provided states, “the mechanism will be incorporated into the seat frame for the driver and front passenger captain seats of the motor vehicle and will enable the user to secure each seat to maximize safety, comfort and user positioning.” Additionally, “the lock mechanism will be incorporated into the second-row seat frame, with one 40% and one 60% mechanism per car set.” For the second-row seat frame, when the lock mechanism is engaged, “…the seat splits either singularly or in total may be placed in a horizontal or vertical position to allow for passenger seating and/or use of the second row as a platform for additional storage space.” The lock mechanism contains no upholstery or cushions.
The applicable subheading for the subject merchandise will be 9401.99.1085, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Seats (other than those of heading 9402), whether or not convertible into beds, and parts thereof: Parts: Other: Of seats of a kind used for motor vehicles: Other.”
Sourcing Scenario:
The ruling request outlines an operation where (10) metal components (bearing bolt, coupling sheet “A,” comfort cam, safety cam, spring pin driver, latch ASM, torsion spring, tension spring, coupling sheet “B,” assembly bolt) and (3) plastic components (bushing, casing, striker end stop) are sourced from China. In China, these components were produced through cold heading, forming, injection molding, and stamping manufacturing operations. The components are shipped and exported to Mexico. No additional components are sourced in Mexico. Collectively, each mechanism is constructed of 13 discrete components comprising 13 total pieces. The production process undertaken in Mexico follows.
Joining of the bearing bolt, assembly bolt, and coupling sheet “A” via a calibration press to form the initial level subassembly.
Joining, greasing, and integration of the initial level subassembly to the safety cam.
Loading, pressing, cutting and riveting of the comfort cam, spring pin driver, and the safety cam subassembly.
A bushing is added to secure and prevent vibration and slippage of the assembled components.
Integration and pressing of the latch and casing components.
Integration of the tension spring and torque spring components.
Joining, pressing, riveting and integration of the striker end stop, assembly bolt, and coupling sheet “B” components to form the final seat lock mechanism.
The assembled “Lock3000 Mechanism” will then be greased, tested and packaged for onward shipment to Keiper's customer.
Each unassembled component is integrated in a specific sequence and each operation results in a more complex subassembly. The final article is a unified automobile seat lock mechanism. Information provided cites the design and development period is 2 months.
Eligibility for preferential treatment under the USMCA:
The USMCA was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018. The USMCA was approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act. General Note (GN) 11 of the HTSUS implements the USMCA. 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)); or…
The subject merchandise contains non-originating materials, therefore it is not considered a good wholly obtained or produced entirely in a USMCA country under GN 11(b)(i). Moreover, under GN 11(b)(ii), the subject merchandise is not a good produced entirely in Mexico, exclusively from originating materials. Therefore, we must next determine whether the non-originating materials undergo the tariff shift and other requirements provided for in GN 11(b)(iii) and GN 11(o).
The applicable rule of origin for merchandise under subheading 9401.99 HTSUS, is in GN 11(o), HTSUS, which provides, in relevant part:
Chapter 94
…2. A change to subheading 9401.90 from any other heading.
As an initial matter, the following “Compiler’s Note” is identified in part on page 2 of the General Notes (GN) of the HTSUS (2023) (Rev. 11):
“COMPILER’S note: Multiple sets of changes to the Harmonized System have caused heading and subheading numbers and product coverage in some rules of origin for free trade agreements to be inconsistent with those in current tariff schedule chapters. Negotiations are required to enable agreement partners to update each text, plus domestic actions to implement agreed changes. As a result, the rules of origin provisions for certain United States free trade agreements have NOT been updated since major changes to the HTS were proclaimed. Where not updated for HS changes, be aware that the rule you try to apply may contain HTS numbers as in effect in 2002, 2007 or 2012. You can find U.S. proclamations updating rules in the Federal Register (see annexes for operative language). Changes in rules of origin reflecting HS 2022 modifications are generally not yet negotiated and proclaimed for FTAs.”
Based on the documentation submitted, a tariff shift occurs with the 13 discrete foreign origin Chinese material components; they are classified in a subheading other than 9401.99, HTS, at the time of importation into Mexico. Therefore the requisite tariff shift rule under GN 11(o), Rule 2 to Chapter 94, HTSUS, is met. In view of these facts, the subject merchandise described above qualifies for USMCA preferential tariff treatment.
Country of Origin Marking:
The marking statute, Section 304(a), Tariff Act of 1930, as amended (19 U.S.C. § 1304(a)), provides that unless excepted, every article of foreign origin imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit in such manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article. Congressional intent in enacting 19 U.S.C. § 1304 was “that the ultimate purchaser should be able to know by an inspection of the marking on imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will.” (See United States v. Friedlaender & Co., 27 C.C.P.A. 297, 302 (1940)).
Pursuant to section 102.0, interim regulations, related to the marking rules, tariff-rate quotas, and other USMCA provisions, published in the Federal Register on July 6, 2021 (86 FR 35566), the rules set forth in §§ 102.1 through 102.18 and 102.20 determine the country of origin for marking purposes with respect to goods imported from Canada and Mexico.
Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes, with the exception of textile goods which are subject to the provisions of 19 C.F.R. § 102.21. Applied in sequential order, the required hierarchy establishes that:
The country of origin of a good is the country in which:
(a)(1) The good is wholly obtained or produced; (a)(2) The good is produced exclusively from domestic materials; or (a)(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20 and satisfies any other applicable requirements of that section, and all other requirements of these rules are satisfied.
As the subject merchandise is not wholly obtained or produced in a single country, Rule (1) of § 102.11(a)(1) is inapplicable.
As the subject merchandise is not produced exclusively from domestic materials, Rule (2) of § 102.11(a)(2) is inapplicable. Accordingly, Rule (3) applies.
Section 102.20 sets forth specific rules by tariff classification. The pertinent tariff shift rule for subheading 9401.99, states:
A change to subheading 9401.91 through 9401.99 from any other heading, except from
subheading 9403.91 through 9403.99.
The Chinese origin components are classified in a heading other than heading 9401, HTSUS, therefore, the tariff shift requirement of section 102.11(a)(3) is met. The country of origin of the “Lock3000 Mechanism” for origin and marking purposes is Mexico.
Section 301 Trade Remedy:
The substantial transformation analysis is applicable when determining the country of origin for purposes of applying Section 301 trade remedies. (See HQ H301494 (Oct. 29, 2019); HQ H301619 (Nov. 6, 2018); and Belcrest Linens v. Unites States, 741 F.2d 1368, 1370-71 (Fed. Cir. 1984)). 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 United States v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (1940)). This determination is based on the totality of the evidence. (See National Hand Tool Corp. v. United States 16 Ct. Int’l Trade 308, 312 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993)).
In the instant case, the foreign Chinese components lose their identity in Mexico and undergo a substantial transformation, thereby, taking on a new name, character, and identity. The joining, pressing, assembly, cutting, riveting, and greasing of individual components into more substantial subcomponents that are then integrated into a larger more complex subassembly is distinguishable from the individual components sourced from China. Only through the integration of the material components into a more substantial subassembly is the functional end product created. In view of these facts, the Lock3000 mechanism is not subject to the additional duties under Section 301 of the Trade Act of 1974, as amended, upon importation into the United States.
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 at https://hts.usitc.gov/current.
This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection Regulations (19 C.F.R. 177).
The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in Title 19, Code of Federal Regulations (CFR), Section 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, whether directly, by reference, or by implication, is accurate and complete in every material respect. In the event that the facts are modified in any way, or if the goods do not conform to these facts at time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and submit a request for a new ruling in accordance with 19 CFR 177.2. Additionally, we note that the material facts described in the foregoing ruling may be subject to periodic verification by CBP.
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 Dharmendra Lilia at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division