OT:RR:NC:N1:102
Leonard Fleisig
Liebherr America, Inc.
440 Monticello Avenue, Suite 2200
Norfolk, VA 23510
RE: The country of origin of slew bearings
Dear Mr. Fleisig:
In your letter dated May 8, 2024, you requested a country of origin ruling on slew bearings. Descriptive information was provided in your submission.
The merchandise under consideration is referred to as slew bearings or slew rings. The slew bearings are described as rotational-element bearings that support heavy, slow rotating loads. The bearings consist of a four-point ball and/or roller elements situated between races that feature teeth, either in the center bore or the outside diameter. The bearings may be in single or double row configurations. In use, the teeth of the race mesh with gear drives. The applications of the slew bearings are construction machines, maritime applications, machine tools, and wind turbines.
In your letter, you suggest the slew bearings are classified within heading 8482, Harmonized Tariff Schedule of the United States (HTSUS), which provides for ball or roller bearings. We disagree, as Headquarters ruling 083066 (April 6, 1989) determined that the principal function of slewing rings is the gear function completed by the teeth. The balls used in slewing rings provide a secondary function of reducing friction. Gears and gearing are provided for within heading 8483.
Accordingly, the applicable subheading of the slew bearings will be 8483.90.5090, HTSUS, which provides for Transmission shafts (including camshafts and crankshafts) and cranks; bearing housings, housed bearings and plain shaft bearings; gears and gearing; ball or roller screws; gear boxes and other speed changers, including torque converters; flywheels and pulleys, including pulley blocks; clutches and shaft couplings (including universal joints); parts thereof: Toothed wheels, chain sprockets and other transmission elements presented separately; parts: Parts of gearing, gear boxes and other speed changers: Other. The general rate of duty is 2.5 percent ad valorem.
301 Trade Remedies:
In regard to origin, two scenarios are provided for review. In both scenarios, the final assembly of the slew bearings occurs in Mexico. The Chinese steel rings enter Mexico in one of two forms: Ready for Hardening or Ready for Hard Turning.
In the first scenario (Ready for Hardening), the rings are subject to raceway induction hardening, gear cutting, gear hardening, and drilling in Mexico. Once complete, the rings are ready for the hard turning processes in Mexico. Such processes consist of hard turning and soft spot grinding. It is mentioned that during the hard turning process the raceways of the rings are machined and hardened to final dimensions, creating raceways. The soft spot grinding creates relief from the hardening process.
The final assembly of the slew bearings occurs in Mexico. Balls and/or rollers from China are situated into the rings and pressed in place. Afterwards, seals from Germany are cut to fit the bearing circumference and the joint is hot vulcanized or glued in place. Grease from Germany is then applied accordingly. Threaded screws from Germany are screwed in place as needed. Each bearing undergoes various testing and inspections, and is subsequently painted, surfaced cleaned, and surface treated.
In the second scenario, Chinese steel rings undergo the above-described ready for hard turning processes (raceway induction hardening, gear cutting, gear hardening, and drilling) in China and enter Mexico, in Ready for Hard Turning form. The rings described as Ready for Hard Turningundergo hard turning and soft spot grinding. The hard turning process the raceways of the rings are machined and hardened to final dimensions, creating raceways. The soft spot grinding creates relief from the hardening process. Afterwards, the rings are sent forward for final assembly in Mexico, in which the processes described in the final assembly of first scenario are also completed.
The "country of origin" is defined in 19 CFR 134.1(b) 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."
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).
This determination is based on the totality of the evidence. See National Hand Tool Corp. v. United States, 16 C.I.T. 308 (1992), aff'd, 989 F.2d 1201 (Fed. Cir. 1993).
In the instance case, the final assembly processes that occur in Mexico are rather simple and do not constitute a substantial transformation. The processes of placing, pressing, gluing and screwing components to each other are not considered to be complex. The final assembly processes performed in Mexico do not change the shape, character or predetermined use of the inputs. Instead, we rely on the country in which the rings are transformed into a gear, which is the essence of the slew bearing, as the gear teeth complete the principal function of the slew bearing. In scenario one, it is noted that the grinding of the ring's teeth occurs in Mexico. In scenario two, the grinding of the ring's teeth occurs in China. Thus, the country of origin in scenario one for 301 Trade Remedies is Mexico. The country of origin in scenario two for 301 Trade Remedies is China.
For the Chinese slew bearings, please note that pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8483.90.5090, 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 8483.90.5090, HTSUS, listed above.
Eligibility for preferential treatment under the USMCA:
In your letter, you inquire whether the slew bearings are eligible 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, Pub. L. 116-113, 134 Stat. 11, 14 (19 U.S.C. 4511(a)). General Note (GN) 11, 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, in relevant part:
For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA countryis 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 -
(i) the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries;
(ii) the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials;
(iii) the good is a good produced entirely in the territory of one or more USMCA countries using non-originating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o)); .
Here, the slew bearings consist exclusively of non-originating materials and are 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 slew bearings are not a good produced entirely in Mexico exclusively from originating materials. Therefore, we must 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 tariff shift rule for merchandise classifiable under subheading 8483.90, HTSUS, is in GN 11(o), HTSUS, which provides, in relevant part:
251. A change to subheadings 8483.40 through 8483.90 from any other subheading, including another subheading within that group.
Since all the foreign materials are classified outside of subheading 8483.90, HTSUS, including another subheading within that group, the requisite tariff shift rule is met. As a result, the slew bearings are considered originating goods under the USMCA and eligible for preferential treatment upon importation into the United States for both scenarios.
Marking:
Regarding your request for the country of origin of the slew bearings for marking purposes, we note the marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), which 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) 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; however, for a good of a NAFTA or USMCA country, the marking rules set forth in part 102 of this chapter (hereinafter referred to as the part 102 Rules) will determine the country of origin.
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. See 19 C.F.R. 102.11.
Applied in sequential order, 19 CFR Part 102.11(a) provides that the country of origin of a good is the country in which:
(1) The good is wholly obtained or produced;
(2) The good is produced exclusively from domestic materials; or
(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in Part 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
Since the slew bearings are neither wholly obtained or produced nor produced exclusively from domestic materials, paragraphs (a)(1) and (a)(2) cannot be used to determine the country of origin of and paragraph (a)(3) must be applied to determine the origin of the finished article. As the slew bearings are classified under subheading 8483.90.5090, HTSUS, the applicable tariff shift requirement in Part 102.20 for the assemblies under consideration states:
A change to subheading 8483.90 from any other heading.
In the instances in which the rings are imported in Mexico without teeth, the identified foreign components used in the production of the slew bearings are all classified outside of subheading 8483.90, HTSUS. As a result, the country of origin of the slew bearings for marking purposes will be Mexico at the time of importation into the United States and should be marked accordingly.
In the instances in which the rings are imported into Mexico featuring teeth, the rings are classified as articles of heading 8483, HTSUS. Noting such, Part 102.11(a) does not apply in this scenario.
Section 102.11(b) states, in relevant part:
Except for a good that is specifically described in the Harmonized System as a set, or is classified as a set pursuant to General Rule of Interpretation [("GRI")] 3, where the country of origin cannot be determined under paragraph (a) of this section:
(1) The country of origin of the good is the country or countries of origin of the single material that imparts the essential character to the good, or
(2) If the material that imparts the essential character to the good is fungible, has been commingled, and direct physical identification of the origin of the commingled material is not practical, the country or countries of origin may be determined on the basis of an inventory management method.
In order to determine essential character, we refer to 19 CFR 102.18(b), which states:
(b)(1)For purposes of identifying the material that imparts the essential character to a good under 102.11, the only materials that shall be taken into consideration are those domestic or foreign materials that are classified in a tariff provision from which a change in tariff classification is not allowed under the 102.20 specific rule or other requirements applicable to the good.
For purposes of this paragraph (b)(1):
(i) The materials to be considered must be classified in a tariff provision from which a change in tariff classification is not allowed under the specific rule or other requirements applicable to the good under consideration.
(ii) Materials that may be considered include materials produced by the producer of the good and incorporated in the good. For example, if a producer of a good purchases raw materials and converts those raw materials into a component that is incorporated in the good, that component is a material that may be considered for purposes of identifying the materials that impart the essential character to the good, provided that the component is classified in a tariff provision from which a change in tariff classification is not allowed under the specific rule or other requirements applicable to the good; and
(iii) If there is only one material that is classified in a tariff provision from which a change in tariff classification is not allowed under the 102.20 specific rule or other requirements applicable to the good, then that material will represent the single material that imparts the essential character to the good under 102.11.
With respect to the material that imparts the essential character to the good, section 102.18(b)(1)(iii) states if there is only one material that is classified in a tariff provision from which a change in tariff classification is not allowed under the rule or other requirements applicable to the good, then that material will represent the single material that imparts the essential character to the good under section 102.11. The one material that does not undergo a change in tariff classification for the slew bearings are the rings with teeth, which are classified within heading 8483. Therefore, in the instances in which the Chinese rings are imported into Mexico featuring teeth, the country of origin of the slew bearings for marking purposes will be China at the time of importation into the United States and should be marked accordingly.
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, 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 Sandra Martinez at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division