CLA-2-85:OT:RR:NC:N2:220
Karlamari Rodriguez
Inter-World Customs Brokers, Inc.
Centro Mercantil Internacional
No.61 Edificio #6 Piso 1 Carr 165 KM 2.4 Sector
Pueblo Viejo
Guaybano, PR 00965
RE: The classification, country of origin and status under the Dominican Republic-Central America-United States Free Trade Agreement (DR-CAFTA) of a photovoltaic (PV) generator
Dear Ms. Rodriguez:
In your letter dated August 8, 2024, you requested a country of origin ruling on behalf of your client, Dazi Solar.
The merchandise under considered is identified as the PV Panel, Item Number DZM550W-72-182P, which is described as a monocrystalline PV panel consisting of an aluminum frame, glass, encapsulant, PV cells, a back sheet, and a junction box. You state that the PV Panel has the ability to supply electricity directly to an electrical load and provide examples, such as an inverter, a regulating device, a battery, and/or lights. The submitted technical specifications indicate that the maximum output of the panel is 550 W. The subject PV Panel is said to be manufactured in the Dominican Republic, as described below, from foreign sourced materials/components.
Initially, we would note that your request letter suggests the subject PV Panel is classifiable under subheading 8541.10, Harmonized Tariff Schedule of the United States (HTSUS). As the panel is capable of supplying generated electricity directly to an electrical load, it is classified as an electrical generator and not merely a panel of heading 8541, HTSUS. See HQ H314110.
The applicable subheading for the PV Panel, Item Number DZM550W-72-182P, will be 8501.72.1000, HTSUS, which provides for Electric motors and generators (excluding generating sets): Photovoltaic DC generators: Of an output exceeding 50 W: Of an output not exceeding 750 W. The general rate of duty will be 2.5% ad valorem.
Effective January 23, 2018, Presidential Proclamation 9693 imposed safeguard measures on imports of crystalline silicon photovoltaic (CSPV) cells and certain products incorporating CSPV cells in the form of additional tariffs or tariff rate quotas for a period of three years. The safeguard measures were subsequently extended by Presidential Proclamation 10339, dated February 4, 2022, for an additional four years. As a result, products classified under subheading 8501.72, HTSUS, unless specifically excluded, are subject to the additional duties. See Note 18 to Chapter 99 and subheadings 9903.45.21 through 9903.45.27, HTSUS.
In your request, you state that the manufacturing process for each of the solar panels occurs in the Dominican Republic and involves the stacking and placing the solar glass, the EVA encapsulation materials, and the cut/welded PV cells into a laminating machine. Under vacuum and high temperature, the stacked layers are inseparably fused. The PV subassembly is then sent to a framing machine where silicone sealant, the aluminum frame, and the junction box are affixed to the panel to produce an electricity generating apparatus. You state that the PV cells, the back sheet, and the EVA encapsulant are manufactured in Indonesia, while the cables and junction box are manufactured in India. The remaining materials are sourced from various countries.
The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), 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.
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).
Regarding the country of origin of the PV Panel, in our view, the assembly of the PV cells by soldering electrical connections and laminating in the Dominican Republic is not complex and does not substantially transform the PV cells into a new and different article of commerce with a new name, character, and/or use. Furthermore, it is our opinion that the PV Cells impart the character of the finished electrical generator. Thus, the subject PV Panel, Item Number DZM 72-182P, is considered a product of Indonesia for origin and marking purposes at the time of importation into the United States.
In your letter, you inquire whether the PV Panel is eligible for preferential treatment under the DR-CAFTA. General Note 29, HTSUS, sets forth the criteria for determining whether a good is originating under the DR-CAFTA. General Note 29(b), HTSUS, (19 U.S.C. 1202) states, in pertinent part:
For the purposes of this note, subject to the provisions of subdivisions (c), (d), (m) and (n) thereof, a good imported into the customs territory of the United States is eligible for treatment as an originating good under the terms of this note if
(i) the good is a good wholly obtained or produced entirely in the territory of one or more of the parties to the Agreement;
(ii) the good was produced entirely in the territory of one or more of the parties to the Agreement, and
(A) each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (n) of this note; or
(B) the good otherwise satisfies any applicable regional value content or other requirements specified in subdivision (n) of this note;
and the good satisfies all other applicable requirements of this note; or
(iii) the good was produced entirely in the territory of one or more of the parties to the Agreement exclusively from originating materials.
As the PV Panel contains non-originating materials, it requires an applicable change in tariff classification in order to meet the requirements of General Note (GN) 29(b)(ii)(A).
We would note that because the DR-CAFTA rules of origin have not been updated to reflect the 2007 or the 2012 changes to the Harmonized System, the pre-2007 tariff classifications for the goods at issue must be used in order to ascertain the eligibility under the DR-CAFTA. See HQ H237563.
The pre-2007 tariff classification for electrical DC generators with a maximum output of 550 W was 8501.31.8000, HTSUS, which provided for Electric motors and generators: Other DC motors; DC generators: Of an output not exceeding 750 W: Generators.
The relevant DR-CAFTA tariff shift rule states:
A change to subheadings 8501.20 through 8501.64 from any other heading.
Based on the facts presented, all of the components and/or materials that make up the PV Panel, which are assembled in the Dominican Republic, are classifiable outside of heading 8501, HTSUS, and the requisite tariff shift rule is met. As a result, the finished PV Panel, Item Number DZM550W-72-182P, is considered originating goods under the DR-CAFTA and eligible for preferential treatment upon importation into the United States.
This ruling is being issued under the provisions of Part 177 of the Customs 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, contact National Import Specialist Karl Moosbrugger at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division