OT:RR:NC:N2:201
Neil Helfand
GDLSK LLP
599 Lexington Avenue Floor 36 New York, NY 10022
RE: The country of origin of Ultimate Terrain Vehicles (UTVs) from Vietnam
Dear Mr. Helfand:
In your letter dated June 26, 2024, you requested a country of origin ruling on three styles of Utility Terrain Vehicles (UTV) assembled/manufactured in Vietnam from Chinese components and raw materials.
We have reviewed the information submitted on behalf of your client, Speed UTV LLC (Speed UTV), located in Concord, North Carolina.
For the reasons discussed in greater detail below, you state that the country of origin for marking and duty purposes for the subject vehicles is Vietnam. You state:
You provided detailed documentation indicating that the production of one vehicle in Vietnam involves more than 510 individual parts and requires 258 employees who expend more than 84 labor hours.
Speed UTV designs, develops, and distributes utility terrain vehicles for sale and use in the United States. The products under consideration are three (3) models of UTVs. These models are 2 to 4-person utility task vehicles that are used for driving in off-road conditions (i.e., hilly, rocky terrain, unpaved, and uneven surfaces where a normal automobile cannot safely function). The three models are:
You state that the production process for all three models is identical and thus the information provided below for the El Diablo UTV is representative of the production process for all three models. The quantity of specific component parts can very slightly among the three models of UTVs. The factory in Vietnam that builds the frame, chassis, ROPS, and the major vehicle systems fully assemble the finished UTVs for export to the United States.
The Vietnamese plant procures the requisite raw materials used in production from China. These materials include steel tubing and plates for manufacturing the frame, chassis, major suspension elements, and ROPS in Vietnam; parts, subcomponents, and components to be assembled into the vehicle systems; hardware (nuts, bolts, washers, etc.); and ancillary materials. The components are shipped to the Vietnamese facility. For each El Diablo vehicle, the plant receives into its warehouse inventory a total of:
These materials are identified on the bill of materials (BOM) for the vehicle, as are the subassemblies. The Vietnamese plant will utilize these parts and components listed on the BOM to assemble the below systems (amongst others):
All necessary manufacturing processes to construct the frame, chassis, major suspension elements, and ROPS; build the vehicle systems; integrate the systems into the frame, chassis, suspension, and ROPS; make all necessary electrical, mechanical, plumbing, and tubing connections; test the systems for compliance with the established specifications; inspect the finished vehicles; and pack them for export to the United States are performed in Vietnam. In total there are 2,428 separate processes performed for the manufacture of each El Diablo vehicle.
You state that the imported UTV is a Product of Vietnam for Customs Country of Origin Marking Purposes because the parts and subcomponents undergo a substantial Transformation. This office concurs.
The manufacturing operations in Vietnam do not involve the simple assembly or re-assembly of a so-called knock down vehicle from imported components. Rather, the entire frame, ROPS, suspension elements, and chassis of the UTV are manufactured and welded in Vietnam from steel plates, tubing, tabs, and clips; and the other major components and 9 subassemblies undergo a series of complex manufacturing operations in Vietnam; such that a substantial transformation takes place making Vietnam the country of origin for the vehicles.
In determining whether an imported article is a product of China, CBP employs the definition of country of origin found in 19 CFR 134.1(b) and corresponding judicial and administrative rulings. This regulation defines country of origin as follows: The country of origin is 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. 19 C.F.R. 131.1(b). CBP uses this definition, and the administrative and judicial interpretations of the term substantial transformation, to determine whether an imported article containing one or more components from China is itself a product of China or is instead a product of the last country of manufacture.
In determining whether the combining of parts or materials constitutes a substantial transformation, the determinative issue is the extent of operations performed and whether the parts lose their identity and become an integral part of the new article. Belcrest Linens v. United States, 573 F. Supp. 1149 (Ct. Int'l Trade 1983), aff'd, 741 F.2d 1368 (Fed. Cir. 1984). Assembly operations that are minimal or simple, as opposed to complex or meaningful, will generally not result in a substantial transformation. See C.S.D. 80-111, C.S.D. 85-25, C.S.D. 89- 110, C.S.D. 89-118, C.S.D. 90-51, and C.S.D. 90-97. Whether an operation is complex and meaningful depends on the nature of the operation, including the number of components assembled, number of different operations, time, skill level required, attention to detail, quality control, the value added to the article, and the overall employment generated by the manufacturing process. CBP generally considers the manufacture of an automobile to be more than a mere simple assembly operation.
For example, in NY N320280 (July 22, 2021), CBP discussed the country of origin for an off-road vehicle, specifically an All-Terrain Vehicle, that was assembled in Thailand from parts that were manufactured entirely in China. The ATV was produced from 1,375 components and went through 22 main, 14 sub, and 3 inspection stations during the assembly process, which was indicated to take 94 workers an average of four (4) hours and (17) minutes per vehicle. CBP determined that Thailand was the country of origin because these manufacturing and assembly operations effected a substantial transformation. This was because the assembly process was complex and time-consuming, and the frame and other components [could not] function as an off-road vehicle on their own See also H118435, H133455, and H022169.
Similarly, in NY N318685 (April 23, 2021), CBP discussed the country of origin for a Utility Terrain Vehicle (UTV) that was assembled in Mexico from parts that were manufactured in China. The fabrication of the vehicle frame, which is its own subassembly made of 163 individual parts which are welded, finished, coated, and other processes required for use as the main frame for the Uforce 1000, CBP determined that Mexico became the country of origin as a result of these manufacturing and assembly operations, again, because the assembly was sufficiently complex to constitute a substantial transformation and resulted in an article with a new name, character, and use.
In this instance, the manufacturing and assembly operations performed by in Vietnam overwhelmingly exceed those performed by the origin-conferring countries in CBP Rulings NY N320280 and NY N318685.
For example, unlike assembly operations in the above rulings, the Vietnamese plant manufactures the components of the UTV frame, ROPS, chassis, and the key suspension elements from imported steel plates and tubing, and then welds them together to build the frame, chassis, suspension, and ROPS. This requires precise stamping of the steel plate, cutting the tubing, and then welding and forming the steel to build every component of the frame. Moreover, numerous smaller parts and sub-assemblies are assembled into functioning systems (e.g. the fuel system, etc.), which are then integrated with the frame and chassis to fully manufacture the El Diablo vehicle.
Once the frame is complete, the connection of all vehicle components and systems, including wiring, switch controls, fuse and monitoring systems, including the Electronic Control Unit (ECU), mechanical and plumbing systems, pipe-lines, gaskets, tubes, pumps, diverters are installed producing a functioning vehicle.
Based on CBP's determination in Rulings NY N320280 and NY N318685, it is evident that the Vietnamese operations represent a substantial transformation with Vietnam being the country of origin.
In accordance with HQ H330647, NY N320280 and NY N318685, the country of origin of the subject Speed UTV vehicles described above is Vietnam.
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 Matthew Sullivan at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division