OT:RR:NC:N:5:137
Schuyler Schouten
Jones Day
51 Louisiana Ave NW Washington, DC 20001
RE: The country of origin of a coated microporous polyethylene sheet
Dear Mr. Schouten:
In your letter dated October 18, 2024, you requested a country of origin ruling on a coated polyethylene microporous sheet on behalf of your client, SEMCORP America Inc.
The product under consideration is referred to as a High-Performance Coated Separator for EV batteries. The product is composed of a high molecular weight polyethylene substrate with a single-application coating of polymer and ceramic materials. It is intended for use as a battery separator in electric vehicle (EV) batteries.
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).
The product is the result of a multi-phase production process that includes initial processing in China and additional processing in Hungary.
In China, polyethylene powder is processed through a feeding system in which the powder is mixed with antioxidants and paraffin oil-based solvent. The mixture is extruded using a die into a thin sheet-like form, cooled, stretched and then run through a tub of methylene chloride with extracts the paraffin oil to create micropores into the membrane. The microporous sheet is then slit to sizes that can be processed by coating machines. The microporous polyethylene sheet is then shipped to Hungary for final processing.
When received in Hungary, the microporous polyethylene sheet will be coated with a Proprietary Coating, manufactured in Hungary using imported materials. The coating is comprised of a proprietary mix or organic and inorganic materials, including multiple polymer binders and ceramics that confer the desired performance to the final product.
The coating is pumped into the coating machine. A device unwinds the roll of microporous sheet. The microporous sheet goes through a flattening system to ensure that it is sufficiently flat when passing through the coating roller so that the slurry coating is evenly transferred. After the sheet is coated with the slurry, it is subject to drying in an oven to remove solvent and then cooled so that the shape can be set. It is inspected and wound back into rolls and packaged for shipment to customers.
There is no dispute that the proprietary coating may enhance the performance of the sheet, however, both coated and uncoated microporous polyethylene sheets have the same function as battery separators and are not recognized as different products within the Harmonized Tariff Schedule of the United States (HTSUS). Therefore, coating the microporous polyethylene sheet in Hungary does not substantially transform it into a new and different product. Therefore, the country of origin of the coated microporous polyethylene sheet remains China.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 3921.19.0000, 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., 9903.88.02, in addition to subheading 3921.19.0000, 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, including information on exclusions and their effective dates, 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/programs-administration/trade-remedies, respectively.
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 Christina Allen at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division