OT:RR:NC:N2:206
Porfirio Waters
TradeFlex Supply Chain Solutions
6620 South 33rd Street, Building J, Dock 9 McAllen, TX 78503
RE: The country of origin of brake assemblies
Dear Mr. Waters:
In your letter, dated October 16, 2024, you requested a country of origin ruling on brake assemblies for purposes of applying trade remedies under Section 301 of the Trade Act of 1974, as amended, from China, which you filed on behalf of TRP International, LLC.
The article under consideration is the 12" Light Duty Brake Assembly (Part Number BK-12E-01SA), which is used with electric brakes in utility trailers. The brake assembly consists of fifteen (15) main components: brake backing plate, brake reinforcing plates (front and back), pivot joint pin, pivot actuating lever pin, actuating levers (left and right), actuating block, magnet device, primary and secondary brake shoes, brake adjuster assembly, adjusting wheel, adjuster housing, and shoe retainer.
You state that the above components from China are imported into Mexico for further assembly with miscellaneous components from the United States and Mexico to produce a finished brake assembly. The assembly process begins by greasing the pivot pins on the backing plate assembly, and attaching a spring to the actuating left-hand or right-hand lever preassembly. After that, the preassembled secondary brake shoe lining is placed over the actuating lever and the adjuster cable, hold down spring retaining pin, shoe hold down spring, and hold down spring retaining cup are pressed on. Then, the shoe return spring is connected from the shoe to the pin using a hand lever tool, and the retaining clip is placed on the shoe. Next, the preassembled primary brake shoe lining, and the hold down spring retaining pin, shoe hold down spring, and hold down spring retaining cup are pressed down.
The shoe return spring is then attached to the primary brake shoe lining and to the pivot pin upper. Then, a preassembled brake adjuster assembly, adjuster screw, adjuster wheel, adjuster housing, and adjuster spring are connected to the brake shoe. The spring is placed on to the actuator lever and the magnet is placed over the spring and the magnet retaining clip is tapped into the magnet and onto the actuator. The magnet lead wires are then threaded through the hole in the backing plate. The assembly is flipped over and the adjuster hole area is tapped into place on the back of the plate. The lead wire grommet (backing plate) is attached to the wire retaining clip, and the wire clips on the lever arm are adjusted to ensure correct lead wire length. A hand tool is used to crimp the clip to the wire and affix a grommet to the backing plate. Finally, the product is tested and packed ready for import.
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 will determine the country of origin."
However, regarding the applicability of Section 301 trade remedies to the brake assembly under consideration, CBP relies on the substantial transformation analysis when determining the country of origin for purposes of applying Section 301 trade remedies. The courts have held that a substantial transformation occurs when an article emerges from a process with a new name, character or use different from that possessed by the article prior to processing. United States v. Gibson-Thomsen Co., Inc., 27 CCPA 267, C.A.D. 98 (1940); National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff’d, 989 F. 2d 1201 (Fed. Cir. 1993); Anheuser Busch Brewing Association v. The United States, 207 U.S. 556 (1908) and Uniroyal Inc. v. United States, 542 F. Supp. 1026 (1982). However, if the manufacturing or combining process is merely a minor one that leaves the identity of the article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983) (Uniroyal). Substantial transformation determinations are based on the totality of the evidence. See Headquarters Ruling (HQ) W968434, date January 17, 2007, citing Ferrostaal Metals Corp. v. United States, 11 CIT 470, 478, 664 F. Supp. 535, 541 (1987). In Uniroyal case, the court held that an upper was not substantially transformed when attached to an outsole to form a shoe and that the upper was "the very essence of the completed shoe". Further, in Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308 (2016), the Court of International Trade (“CIT”) interpreted the meaning of “substantial transformation” as used in the Trade Agreements Act of 1979 (“TAA”) for purposes of government procurement. In Energizer, the court reviewed the “name, character and use” test in determining whether a substantial transformation had occurred in determining the origin of a flashlight, and reviewed various court decisions involving substantial transformation determinations. The court noted, citing Uniroyal, Inc. v. United States, 3 C.I.T. 220, 226, 542 F. Supp. 1026, 1031, aff’d, 702 F.2d 1022 (Fed. Cir. 1983), that when “the post-importation processing consists of assembly, courts have been reluctant to find a change in character, particularly when the imported articles do not undergo a physical change.” Energizer at 1318. In addition, the court noted, “…when the end-use was pre-determined at the time of importation, courts have generally not found a change in use.” Energizer at 1319, citing as an example, National Hand Tool Corp. v. United States, 16 C.I.T. 308, 310, aff’d 989 F.2d 1201 (Fed. Cir. 1993). Furthermore, courts have considered the nature of the assembly, i.e., whether it is a simple assembly or more complex, such that individual parts lose their separate identities and become integral parts of a new article.
In the present case, none of the components from China undergo any physical change. Rather, they are assembled together to become parts of a whole brake assembly. The components from China have a pre-determined use when they are imported into Mexico. The assembly performed in Mexico is not complex enough to be a substantial transformation of Chinese components imported into Mexico. As a result, it is the opinion of this office, that no substantial transformation occurs in Mexico. Therefore, the country of origin of the brake assembly will be China for purposes of applying trade remedies under Section 301 of the Trade Act of 1974, as amended, from China.
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 Liana Alvarez at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division