OT:RR:NC:N1:102
Kimberly Chapa
ChampionX
2445 Technology Forest Blvd.
Building 4, 12th Floor The Woodlands, TX 77381
RE: The classification, country of origin, and marking of a rod rotator device
Dear Ms. Chapa:
In your letter dated September 3, 2024, you requested a country of origin and marking ruling on a rod rotator device.
The product at issue is a rod rotator device used in the oil and gas industry to extend the service life of sucker rods and related tubing. Fitted to sucker rods in a sucker rod pump oil production system, rod rotators ensure that wear on both the sucker rod and the surrounding tubing is evenly distributed by alleviating friction which occurs during the reciprocating motion of an oil pump.
The housing of the rod rotator, which sits between the polished rod clamp and carrier bar of a conventional polished rod and bridle arrangement, is connected to the pump beam by a wire rope. During operation, the reciprocating motion of the pump beam pulls on the wire rope which actuates a lever extending from the rod rotator housing. The up and down motion of the lever causes a worm shaft to turn and an articulating worm gear to rotate. The rotation of the worm gear transmits rotational force (torque) to the sucker rod, creating the desired rotation. Once rotation is initiated, an attached thrust bearing facilitates the maintenance of rotation by creating a near-frictionless articulation between the rotating and fixed components.
Classification under the Harmonized Tariff Schedule of the United States (HTSUS) is in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods will be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 will then be applied in order.
In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes may be utilized. The Explanatory Notes (ENs), although not dispositive nor legally binding, provide a commentary on the scope of each heading of the HTSUS, and are the official interpretation of the Harmonized System at the international level. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
Note 2(a) to Section XVI, HTSUS, eliminates classification as a part of a machine because the rod rotator is a good included in a heading of chapter 84 and is to be classified in its respective heading. Heading 8483, HTSUS 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:” The ENs to heading 8483 clarify “The goods covered by this heading are mainly:…(ii) Certain internal parts of a machine, used to transmit power to the various parts of the same machine.”
Moreover, the ENs elaborate on gears, “In an assembly of such gears, the teeth of one engage with the teeth of another so that the rotary movement of the first is transmitted to the next…the rotary movement may be transmitted at the same rate, or at a faster or slower rate; according to the type of gear and the angle at which it meshes with the next, the direction of transmission may be changed, or a rotary movement converted into a linear movement or vice versa…The group covers all types of gears including simple cog wheels, bevel gears, conical gears, helical gears, worms, rack and pinion gears, differential gears, etc., and assemblies of such gears.”
In summary, the detailed description of the rod rotator provided with your request and summarized above, meets the terms of heading 8483, HTSUS, as elaborated on by the explanatory notes. Specifically, the described purpose and function of the rod rotator is rotating a sucker rod. This rotation is principally accomplished by the internal worm gear in transmitting power from the articulating worm shaft to the sucker rod. This function is specifically described in the 8483 ENs.
In accordance with GRI 1 and Note 2(a) to Section XVI, the applicable subheading for the rod rotator will be 8483.90.8080, 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: Other: Other: Other. The general rate of duty is 2.8 percent ad valorem.
Section 301 Trade Remedies
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 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. No one factor is decisive, and assembly operations that are minimal will generally not result in a substantial transformation.
With regard to country of origin four scenarios are discussed. In all scenarios, the rod rotator unit undergoes assembly process in Canada where 27 components of differing origin are fitted and secured together by skilled workers. After assembly, the device undergoes testing to ensure quality and functionality. It is the view of this office that the assembly operations undertaken in Canada are simple assembly operations consisting of connecting and attaching components to each other and do not constitute a substantial transformation. Therefore, in determining the country of origin for all scenarios, the essence of the article is considered.
In your letter, you propose the origin of the rod rotator should be the United States, as the origin of the thrust bearing is the United States. We disagree. Although the thrust bearing plays a key complementary role in maintaining rotation by reducing friction once motion is initiated, the product relies on adequate torque transmission by the worm gear directly to the sucker rod to drive the rotation. The purpose and principal function of the article, as reflected by its name, is “rod rotator,” and the component which ultimately delivers this action with each stroke of the pump beam is the worm gear. It is the opinion of this office that the worm gear is the component which is the essence of the rod rotator device.
As a result, the country of origin of the rod rotator for the purposes of Section 301 Trade Remedies will be controlled by the country of origin of the worm gear. In scenarios one and two, the country of origin of the worm gear is China, thus the country of origin of the rod rotator is China. In scenarios three and four, the country of origin of the worm gear is Canada, thus the country of origin of the rod rotator is Canada.
In the cases of scenarios one and two, please note that pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8483.90.8080, 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., 9903.88.01, in addition to subheading 8483.90.8080, 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, 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.
Marking
Regarding your request for the country of origin of the rod rotator 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.
In all proposed country of origin scenarios, since the rod rotator is not “wholly obtained or produced,” not “produced exclusively from domestic materials,” and does not “undergo an applicable change in tariff classification” (not all foreign materials are changing to subheading 8483.90 from any other heading), paragraphs (a)(1), (a)(2), and (a)(3) cannot be used to determine the country of origin. Noting such, Part 102.11(a) does not apply to these scenarios.
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)(i) states “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.” In all scenarios, the domestic or foreign materials that are not allowed a change in tariff classification are the worm shaft, worm gear, and clutch bearing of heading 8483, HTSUS.
Section 102.18(b)(2) states “For the purposes of determining which one or two or more materials described in paragraph (b)(1) of this section imparts the essential character to a good under § 102.11, various factors may be examined depending upon the type of good involved. These factors include, but are not limited to, the following: (i) the nature of each material, such as its bulk, quantity, weight or value; and (ii) the role of each material in relation to the use of the good.
As mentioned above, the primary role and principal purpose of the rod rotator is to transmit force and deliver torque to rotate a sucker rod. The component which ultimately drives and directs this action with each stroke of the pump beam is the worm gear. As a result, this office finds that the worm gear imparts the essential character of the rod rotator device in accordance with section 102.18(b)(1).
For marking purposes, the country of origin of the rod rotator in all scenarios is the country of origin of the worm gear because it is 1) one of three materials classified in a tariff provision from which a change in tariff classification is not allowed, and 2) it imparts the essential character of the rod rotator device. Specifically, in proposed scenarios one and two, the country of origin of the rod rotator for marking purposes will be China at the time of importation into the United States and should be marked accordingly. In proposed scenarios three and four, the country of origin of the rod rotator for marking purposes will be Canada at the time of importation into the United States and should be marked accordingly.
In your submission, you propose engraving “Assembled in Canada” onto the rod rotator housing and fixing a label onto the outside of the container (box) which reads “COO:(country), Assembled in Canada.” 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.
Assuming that the ultimate purchaser will receive the product in its box, your proposed marking satisfies the statutory requirements for scenarios three and four. However, since the country of origin for marking purposes in scenarios one and two is China, the presence of “Assembled in Canada” on the label triggers different requirements per 19 CFR 134.46. As noted in ruling N337694 (February 6, 2024), in any case in which the name of any foreign country or locality other than the country or locality in which the article was manufactured or produced, appears on an imported article or its container, there shall appear, legibly and permanently, in close proximity to such words, letters, or name, and in at least a comparable size, the name of the country of origin preceded by “Made in,” “Product of,” or other words of similar meaning. In addition to the other requirements noted, the letters “COO” should be amended to read the phrase “Country of Origin” because the abbreviation “COO” is potentially misleading.
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 Paul Taylor at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division