CLA-2-87:OT:RR:NC:N:206
James Allan
Amsted Industries/Consolidated Metco
5701 SE Columbia Way Vancouver, WA 98661
RE: The tariff classification and country of origin of an oil seal and tapered roller bearing cone assembly
Dear Mr. Allan:
In your letter dated November 7, 2024, you requested a tariff classification ruling, country of origin determination for marking purposes and for purposes of applying trade remedies under Section 301, as amended, from China, when the final assembly occurs in China, and applicability of the United States-Mexico-Canada Agreement (USMCA). Please note that you will receive a separate letter addressing the USMCA eligibility from the Valuation and Special Programs Branch in Regulations and Rulings, Headquarters.
The article under consideration is an automotive Oil Seal and Tapered Roller Bearing Cone Assembly (Part Number 20009899), designed to be used with motor vehicles. This item consists of an automotive rubber, donut-shaped oil seal, and a tapered roller bearing cone of steel. You note that no tapered roller bearing cup, which is a necessary component for the bearing cone to function correctly, is imported with this assembly. The bearing cone is therefore not capable of effectively reducing friction at the time of importation without the corresponding bearing cup.
In a follow up meeting on November 15, 2024, you stated that the item will be produced in Taiwan, Mexico, and China simultaneously, and imported into the United States. The assembly process includes permanently joining the oil seal to the bearing cone. The oil seal and bearing cone are placed on corresponding specialized assembly tools, and with the bearing cone stationary, the oil seal is pressed onto the bearing cone with a significant force, beyond 1,000 ft. pounds of force, achieving a permanent connection.
In the first manufacturing scenario, when the item is produced in Taiwan, the following process will occur:
The oil seal will be produced in Taiwan using Taiwan locally sourced raw materials, and as needed, raw materials sourced and imported into Taiwan. Sheet steel, rods of steel and vulcanized rubber injection molding pellets will be cut and stamped (the sheet steel), cut and formed, (the steel rod), and melted (vulcanized rubber pellets). A rubber injection “over molding” process will inject the melted vulcanized rubber into the cavity of a hardened steel mold tool that is carved out into the shape of the oil seal. The vulcanized rubber will fully engulf the cavity of the mold tool where the steel components have been inserted into the cavity of the oil seal mold tool prior to injecting the vulcanized rubber, hence “over molding.” When the vulcanized rubber is cooled, the final oil seal will be removed from the cavity of the mold tool, and inspected for use in producing the final product in Taiwan, namely the 20009899. The bearing cone raw materials are processed from a rod of steel and other profile types of steel in India. The components of the bearing cone are subjected to finish grinding, polishing, and heat treatment prior to the bearing cone assembly in India. The India bearing cone will be sent to Taiwan, and received as a component into the Taiwan inventory warehouse portion of the plant, where part number 20009899 will be produced.
In the second scenario, when the item is produced in Mexico, the following process will occur:
ConMet Mexico will receive the completed oil seal from the Taiwanese oil seal producer and the bearing cone from India, and both will be placed into its Mexico inventory warehouse. The Taiwan oil seal and the India bearing cone will be assembled together in Mexico, creating part number 20009899.
In the third scenario, when producing the item in China the following process will occur:
The China factory will receive the completed Taiwan oil seal directly from Taiwan, and similarly will directly receive the bearing cone from India. The Taiwan oil seal and the India bearing cone will be assembled together in China producing part number 20009899.
After production of part number 20009899 in Taiwan, Mexico, or China, the item will be imported into the US directly from any of these countries.
In your letter, you discussed a possible classification of the assembly in heading 8482, Harmonized Tariff Schedule of the United States (HTSUS), which provides for tapered roller bearings or headings 3926, 4016, and 8484, HTSUS, which provides for plastic, rubber, and mechanical seals, respectively.
CBP has historically held that a design feature or features which impart a significant additional non-friction reducing capability to a ball or roller bearing will remove that bearing from the scope of heading 8482. The combined tapered roller bearing cone assembly and attached (not incorporated) rubber oil seal becomes a larger assembly that carries significant additional non-friction capabilities. Namely, the oil seal: 1) articulates with other wheel hub components via its threaded section (outer spindle surface at minimum), 2) seals the inner wheel hub chamber to retain lubricating fluids, 3) blocks outside contaminants from being introduced into the wheel hub cavity, and 4) impacts the performance of the oil, bearing, axle spindle, and hub. Of note is the articulation and positioning of the oil seal with other wheel hub components and its functioning to protect their integrity. Sealing and protection functions are particularly unrelated to friction reduction. As a result, classification of part number 20009899 in heading 8482, HTSUS is precluded. Considering that it is a composite good consisting of different materials and it is an article that has a function beyond sealing, it cannot be classified as a seal of any kind.
The applicable subheading for the Oil Seal and Tapered Roller Bearing Cone Assembly (Part Number 20009899) will be 8708.99.8180, HTSUS, which provides for “Parts and accessories of the motor vehicles of headings 8701 to 8705: Other parts and accessories: Other: Other: Other: Other: Other: Other.” The general rate of duty will be 2.5% ad valorem.
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/.
Regarding the origin of your product, Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that unless excepted, every article of foreign origin imported into the United States 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 United States, the English name of the country of origin of the article. Congressional intent in enacting 19 U.S.C. 1304 was “that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will.” See United States v. Friedlander & Co., 27 C.C.P.A. 297, 302 (1940).
Part 134 of the U.S. Customs and Border Protection (“CBP”) Regulations (19 CFR 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.1(b), CBP Regulations (19 CFR 134.1(b)), defines “country of origin” 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 the marking laws and regulations. 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.
For the first and third scenario, where the assembly of the oil seal and bearing cone occurs in Taiwan and China, we will be applying 19 CFR Part 134.1(b) requirements to determine the country of origin of part number 20009899. Since the oil seal is from Taiwan and the bearing cone is from India, we must apply a substantial transformation analysis to determine the correct country of origin of part number 20009899.
A substantial transformation occurs when, as a result of manufacturing process, a new and different article emerges, having a distinct name, character or use, which is different from that originally possessed by the article or material before being subjected to the manufacturing process. See United States v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940).
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). 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 the 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."
In the present case, the pressing of the oil seal into the bearing cone is not a complex process and does not result in a substantial transformation of the components. As a result, no substantial transformation occurs in Taiwan, for the first scenario, or China, for the third scenario. You argue that the character of part number 20009899 is imparted by the oil seal. We disagree. Although the oil seal is an important component of the item that complements the functionality of the bearing cone, it is the bearing cone which is an integral part of the wheel hub assembly that reduces friction. As a result, it is the opinion of this office that the character of part number 20009899 is the bearing cone, and thus, the country of origin in the first and third scenarios will be India for marking purposes and for purposes of applying trade remedies under Section 301, as amended, from China.
For the second scenario, where the assembly of the oil seal and bearing cone occurs in Mexico, we will be applying 102 Rules.
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.
Part number 20009899 is neither "wholly obtained or produced" nor "produced exclusively from domestic materials." Therefore, paragraphs (a)(1) and (a)(2) cannot be used to determine the country of origin of the item, and paragraph (a)(3) must be applied next to determine the origin of the finished article. Part number 20009899 is classified under subheading 8708.99, HTSUS. The tariff shift requirement in Part 102.20 for the item at issue states:
A change to subheading 8708.99 from any other subheading, except from parts or accessories of the goods of subheading 8708.40, 8708.50, 8708.80, 8708.91, 8708.92, 8708.94, or 8708.95.
The oil seal and bearing cone are not classified in any of the listed subheadings. As a result, the tariff shift is met. Therefore, the country of origin of part number 20009899 in the second scenario will be Mexico for marking purposes.
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