OT:RR:NC:N2:201
Kerry Wang
Braumiller Law
5220 Spring Valley Road, Suite 200 Dallas, TX 75254
RE: The country of origin of a hoverboard from Vietnam
Dear Ms. Wang:
In your letter dated November 6, 2024, you requested a country of origin ruling determination on behalf of your client, Golabs Inc., located in Carrollton, Texas on a PB 655 hoverboard.
In your request you state that GoLabs Inc. is currently restructuring its supply chain for efficiency and to ensure compliance with country-of-origin regulations. The information provided reflects the anticipated manufacturing process resulting from this restructuring and a cost breakdown of hoverboards that have yet been manufactured under this new process.
The key components of the hoverboard are as follows:
• Shaft Assembly (Core Component): Country of Origin: Vietnam
• Foot Pedal Surface Frame - Left (Core Component): Country of Origin: Vietnam
• Foot Pedal Surface Frame - Right (Core Component): Country of Origin: Vietnam
• Foot Pedal Bottom Frame - Left (Core Component): Country of Origin: Vietnam
• Foot Pedal Bottom Frame - Right (Core Component): Country of Origin: Vietnam
• Motor & Hardware Country of Origin: China
• Controller: Country of Origin: China
• Battery: Country of Origin: China
• Logic Board & Gyroscope: Gyroscope Country of Origin: CN/TW; assembled in China
The manufacturing and assembly of the shaft assembly, along with the associated frame components (foot pedal frames), occurs entirely in Vietnam. Specialized tools and custom-engineered screws and connectors are used to assemble the shaft to the left and right-side frames. The shaft connects essential components, including the gyroscope, motor controller, and steering mechanisms and facilitates signal transmission from the gyroscope and sensors to the motor controller. Further, the shaft assembly, aligned with both side frames, ensures proper balance and load distribution across the hoverboard. The shaft assembly and the frame components provide the foundational structure and essential functionality of the hoverboard.
Once the shaft assembly and frame components are fully assembled, they are imported into China to complete the assembly of the PB 655 hoverboard. In China the following steps are performed:
Headlight Installation: The headlight assembly is completed by attaching the light panel to the light cover, then securing it onto the shaft assembly.
Charging Port and Power Switch Installation: The charging port is mounted onto the bottom frame, while the power switch is installed on the shaft assembly.
Indicator Light Installation: Indicator lights are affixed to the left and right-side frames using screws.
Pedal Installation: The pedals are attached to the left and right-side frames and secured with screws.
Motor Installation: Each motor is installed on the left and right-side frames, secured to motor blocks that are attached to the frames.
Main Control Board and Gyroscope Installation: The main control board, equipped with a gyroscope to manage signals between the motor and other components, is mounted to the left and right-side frames. Motor wires are connected to the main control board to ensure correct electrical flow and communication.
Battery Installation: The battery is installed onto the partially assembled product and connected to the Control Logic Board.
Wiring Harness Installation: Communication lines and indicator light harnesses are connected to the Logic Board.
Final Product Testing: After assembly, the hoverboard undergoes rigorous testing to verify the functionality of balance control, motor performance, lighting, and axle flexibility. Upon passing all tests, the hoverboard is packaged and prepared for shipment.
In determining whether an imported article is a product of China, CBP employs the definition of “country of origin” found in 19 CFR §134.1(b) and corresponding judicial and administrative rulings. This regulation defines “country of origin” as follows: The “country of origin” is 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.” CBP uses this definition, and the administrative and judicial interpretations of the term “substantial transformation,” to determine whether an imported article containing one or more components from China is itself a product of China or is instead a product of the last country of manufacture. In determining whether the combining of parts or materials constitutes a substantial transformation, the determinative issue is the extent of operations performed and whether the parts lose their identity and become an integral part of the new article. Belcrest Linens v. United States, 573 F. Supp. 1149 (Ct. Int’l Trade 1983), aff’d, 741 F.2d 1368 (Fed. Cir. 1984). Assembly operations that are minimal or simple, as opposed to complex or meaningful, will generally not result in a substantial transformation. See C.S.D. 80-111, C.S.D. 85-25, C.S.D. 89- 110, C.S.D. 89-118, C.S.D. 90-51, and C.S.D. 90-97. Whether an operation is complex and meaningful depends on the nature of the operation, including the number of components assembled, number of different operations, time, skill level required, attention to detail, quality control, the value added to the article, and the overall employment generated by the manufacturing process.
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". You express the PB 655 hoverboard shaft assembly will be manufactured and assembled in Vietnam. You indicate the shaft assembly is integral to the hoverboard’s functionality, as it is responsible for balancing the hoverboard. It bears the rider’s weight and connects critical components such as the gyroscope and motor controller. The hoverboard would not be able to function as designed without those key components.
Based upon the facts presented, it is the opinion of this office the shaft assembly, which, in this case, is a product of Vietnam, along with the associated frame components manufactured in Vietnam, are the components of the PB 655 hoverboard that impart its “essence”. Based on the information provided, the production processes performed, and electronic components added in China to the Vietnam shaft assembly/components do not substantially transform the shaft and frame. Accordingly, the merchandise will remain a product of Vietnam. 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 Matthew Sullivan at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division