OT:RR:NC:N1:104
Jay Cho
Aprio LLP
2002 Summit Boulevard, Suite 120 Atlanta, GA 30319
RE: The country of origin of an ingot grower
Dear Mr. Cho:
In your letter dated October 9, 2023, on behalf of Hanwha Corporation, you requested a country of origin ruling for an ingot grower produced in two countries, China and South Korea.
The subject ingot grower, also referred to as a crystal grower or crystal pulling machine, is a machine used in the manufacturing of monocrystalline silicon ingots. It measures 13.4 meters in height and 2.9 meters in width. Monocrystalline silicon is used in the photovoltaic industry to produce conventional solar cells, which are composed of semiconductor material.
The subject machine employs the Czochralski (Cz) method of crystal growth in which a seed crystal, mounted on a rod, is dipped into a crucible containing raw molten silicon quartz metal that has been melted using a heater within the machine’s main chamber. The seed crystal is positioned to touch the surface of the molten material, initiating the “seeding” process. As the rod is subsequently pulled upward through a pull chamber, crystal growth begins as a thin film of the molten material adheres to the seed and cools. Along with the pulling action, the seed crystal and the crucible are simultaneously being rotated in opposite directions during the growth process. This growing procedure shapes cylindrical silicon boules from the molten material. See NY N061759 (May 27, 2009).
The applicable subheading for the ingot grower will be subheading 8486.10.0000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Machines and apparatus of a kind used solely or principally for the manufacture of semiconductor boules or wafers, semiconductor devices, electronic integrated circuits or flat panel displays; machines and apparatus specified in Note 11(C) to this chapter; parts and accessories: Machines and apparatus for the manufacture of boules or wafers.
Country of Origin
As explained below, the subject machine is comprised of several core subassemblies, most of which are produced in China, with assembly operations completed in Korea. You also state that certain “installation” steps will be performed in either Korea or the U.S.
The pull head helps control the growth of the monocrystalline silicon ingot via horizontal rotation and vertical lifting of the seed. The pull head subassembly is situated at the top of the ingot grower and is comprised of both structural components and functional units. The structural components (steel housings, frames, and fittings) are fully fabricated and formed in Korea. The functional units are mainly produced in China and consist of both mechanical parts, including a spool drum, wire pulley, and ball spline, and electrical parts, including servo motors, gear motors, and a worm reducer. In Korea, the main structural steel components are fastened or welded together, while the functional units are simply mounted or fastened to the steel structures and housings. Testing and adjustment of the completed pull head in Korea completes the assembly operations. Finally, in either Korea or the U.S., the pull head is connected to the pull chamber through operations mainly involving aligning and fastening using brackets and bolts.
The pull chamber’s function is to provide a temperature-controlled space for ingot growth. It is described as a long, stainless-steel, double-walled tubular enclosure linking the pull head to both the dome and main chambers. It utilizes a cooling mechanism to maintain optimal conditions for ingot growth. The pull chamber is raised by a hydraulic cylinder and rotated by an inverter motor. All the pull chamber’s components are Chinese, and its assembly is fully completed in China. In Korea or the U.S., the pull chamber subassembly is connected to the dome chamber via a sealing/docking mechanism with an isolation valve unit installed to connect the two chambers and then attached to a column using bolts.
The main chamber, comprised of a lower and upper chamber produced in China, is a complete enclosure that houses the heater, crucible, and reflector insulation, none of which will be included with the ingot grower at the time of importation. The dome chamber sits atop the main chamber, sealing and closing the main chamber. Virtually all components of the main and dome chambers are of Chinese origin, and the subassemblies are fully completed in China. After the subassemblies arrive in Korea or the U.S. for installation, the lower main chamber is bolted onto the base plate using an industrial torque wrench, and the upper chamber is bolted together with the lower chamber. The dome/main chambers work together with other functional components that are not part of these chambers to maintain the controlled environment, including a cooling manifold, a vacuum system, and an Ar gas system.
The next subassembly is the main frame and base plate, constructed entirely of Chinese-origin components and produced in China. The main frame is a square-like steel structural support for the chambers and includes a steel column wall and main bottom frame. The base plate is located atop the bottom frame supporting the dome/main chamber. This finished subassembly is sent to Korea or the U.S. for installation into the ingot grower, which entails bolting the column and bottom frame together using an industrial torque wrench.
The crucible lift sits beneath the main chamber and is designed to rotate, raise, or lower the crucible within the main chamber. You state that raising and rotating the crucible, along with rotating and lifting the seed by the pull head, are the most important processes in the Cz method. The crucible lift subassembly is comprised of a main steel guide shaft connected to the crucible pedestal, and mechanical and electro-mechanical components, including crucible shaft tooling, guide screw module, servo motor, geared motor, and worm reducer. It also includes structural components and minor electrical items such as sensors. The structural components of this subassembly are produced entirely in Korea from raw steel material; however, most of the core mechanical/electrical components are produced in China. The assembly operations in Korea entail bolting the crucible lift to the bottom frame and leveling the position of the assembled crucible lift using a special tool and centering the lift. Like the pull head assembly, the crucible lift assembly requires skilled technicians and is somewhat time-consuming but not particularly complex.
Other subassemblies and components include a programmable logic controller (PLC) panel, a control console that functions as the primary controller for the ingot grower, a power distribution panel, junction boxes, various electrical panels and enclosures, a wire harness, a coolant manifold, and other separately purchased subsystems and components including a hydraulic pump, vacuum system, dust filter, Ar gas system, and a CCD camera (for monitoring ingot growth in the main chamber). All PCBAs are made in China and integrated into the PLC panel and control console. With the exception of the main software and programs for the control console (Korea), vacuum pump (Taiwan), and wire harness (Korea), these subassemblies and components are produced in China and are fully finished when they arrive in Korea, requiring only minor adjustments for installation purposes.
With regard to your request for the appropriate country of origin of the ingot grower, 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, “[t]he 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.” In addition, “[a] substantial transformation occurs when an article emerges from a manufacturing process with a name, character, or use which differs from those of the original material subjected to the process.” Texas Instruments, Inc. v. United States, 681 F.2d 778, 782 (CCPA 1982). However, if the manufacturing or combining process is merely a minor one that leaves the identity of the article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983).
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. Substantial transformation determinations are based on the totality of the evidence, and no one factor is decisive. Assembly operations that are minimal will generally not result in a substantial transformation: when the “processing consists of assembly, courts have been reluctant to find a change in character, particularly when the . . . articles do not undergo a physical change.” Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308, 1318 (CIT 2016). In order for there to be a change in character, the courts instruct that there often needs to be a substantial alteration in the characteristics of the articles or components. Where the “form of the components remained the same[,]” the courts have not found a change in character. Id. at 1318. In other cases, courts have looked to the “essence” of a completed article to determine whether an imported article has undergone a change in character as a result of post importation processing. See Id.
In this case, while the pull head and the crucible lift subassembly are important subassemblies and are partially produced and assembled in Korea, the production operations there involve only the fabrication of frames and other structural components, not the core functional components which are fabricated in China. All other core subassemblies are almost entirely produced in China.
You state that assembling and installation of the various subassemblies and other subsystems and components in Korea could take four to five business days, employing a team of five to eight technicians and engineers. However, as noted many of the core subassemblies are largely finished and complete before they arrive in Korea, requiring mainly alignment and positioning, testing, and non-complex fastening together with other subassemblies and components. While certain assembly and installation operations in Korea do appear to be time-consuming, in totality they do not appear particularly complex. The form and identity of the subassemblies and their Chinese components remain intact after the Korea assembly and installation (Korea or U.S.) operations. It is worth repeating that virtually all of the mechanical and electrical components of the ingot grower’s critical subassemblies, i.e., those functional units that are responsible for the growth of the ingots using the Cz method, are fully produced in China.
Finally, we note that the cost attributed mainly to Chinese-origin components and production amounts to 60-70 percent of the ingot grower’s price, while the remaining 30-40 percent is attributable to Korean-origin components and production.
Accordingly, and based on the totality of the evidence, we find that for the production and assembly scenario presented above, there has not been a substantial transformation in Korea of the foreign-origin components and subassemblies resulting in a change to their name, character, or use. Our conclusion is the same whether the particular referenced installation operations are performed in the U.S. or Korea. In view of these facts, the country of origin of the ingot grower is China.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8486.10.0000, 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 8486.10.0000, 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.
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.
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 Arthur Purcell at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division