OT:RR:NC:N1:102
Leo Hu
Shanghai TeDu Mechanical And Electrical Co., Ltd.
No. 36, Wujiang Road WUYI 321200 China
RE: Country of origin determination for a gearbox
Dear Mr. Hu:
In your letter dated August 17, 2024, you requested a country of origin ruling on a gearbox. Technical information was submitted with your request.
The merchandise at issue is an aluminum gearbox, part number 99524. It will be used in a winch. Once in use, the gearbox transmits a rotary movement that allows the drum to turn in a forward or reverse motion. This operation allows for the cable that is wrapped around the drum to be extended and retracted. The gearbox will be affixed to the front of an all-terrain vehicle (ATV).
You suggest that the subject gearbox is classified under subheading 8431.10.0010, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Parts suitable for use solely or principally with the machinery of headings 8425 to 8430: Of machinery of heading 8425: Of machinery of subheading 8425.11 or 8425.19. We disagree. Although the gearbox is incorporated into a winch, it is more specifically a part of a power transmitting mechanism. As a result, classification in subheading 8431.10.0010, HTSUS, is precluded.
You mention that the gearbox is unfinished as it needs to be connected to additional power transmitting components. The item at importation is functionally a gearbox and heading 8483 specifically provides for gearboxes. Therefore, in accordance with Note 2(a), Section XVI, the applicable subheading of the gearbox 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.
In viewing the submitted illustrations, the aluminum casting and polishing of the gearbox teeth with the injection gate occur in Thailand. Additionally, two small holes are cast on either side of the gearbox for future mounting. The gearbox features teeth prior to export from Thailand to China for further processing. The gearbox and injection gate are then lathed and painted in China, both minor processes, and subsequently exported to the U.S.
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).
It is noted that the gearbox is cast in Thailand and afterwards undergoes additional processes China. In determining whether machining operations effect a substantial transformation, Customs distinguishes between the kind and amount of further processing performed, i.e., between machining operations performed to achieve a specified form and those performed to achieve more cosmetic or minor processing operations. See C.S.D.s 89-121 and 90-53. Customs consistently has found that embellishment and finishing operations, such as polishing, enameling and cleaning, are not regarded as extensive processes that result in a new and different article of commerce. See HQ 554689(August 21, 1987) and HQ071314 (May 10, 1983).
In our view, the Thai gearbox casting is discernable as a gearbox, as it features teeth that transmit power prior to being exported from Thailand. It has a pre-determined end use prior to being subjected to the described finishing processes in China. As such, the processes completed in China do not substantially transform the casting, nor do they change the shape, character, or predetermined use of the casting. The gearbox casting is not transformed in China into a new and different article of commerce with a name, character, and use distinct from the article exported from Thailand. Accordingly, for origin and marking purposes, the gearbox would be considered a product of Thailand at the time of importation into the United States and is not subject to Section 301 duties.
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.
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/.
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 Paul Taylor at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division