OT:RR:NC:N1:102
Lynne Wendt
Wendt and Temples, LLC
Westpark Pointe, Suite 200
401 Westpark Court
Peachtree City, GA 30269
RE: The country of origin of hermetic compressors
Dear Ms. Wendt:
In your letter dated November 13, 2024, you requested a country of origin ruling on hermetic compressors on behalf of Jiaxipera Mexico S. de R.L. de C.V. Technical information was submitted with your request.
The items for consideration are described as hermetic compressors for refrigeration appliances, models TB1114HY, TH1114HY, and TU1112HY. During operation, the compressors function to move refrigerant through the cooling system of an attached appliance. The primary components of hermetic compressors are the stator, rotor, housing, crankcase, crankshaft, piston, piston pin, connecting rod, internal discharge tube, oil pump, valve components, nameplate, and cover. Additional components incorporated during assembly include, but are not limited to, screws, washers, wire, gaskets, and ball bearings.
The shell of the compressor is constructed from steel sheet. The top portion is welded to the bottom portion, creating a hermetically sealed connection which prevents refrigerant from leaking to the outside. The stator is a lamination stack of steel sheet together with two windings of copper wires. The rotor is a lamination stack that is cast in aluminum. The crankshaft is connected to the rotor and transmits the rotation of the motor into reciprocating strokes of the piston. As a result, the cylinder moves up and down and allows refrigerant to be drawn in, compressed, and discharged. Refrigerant is pulled into the compressor through a suction connector, and it is routed out by a discharge connector. Valves assist with opening and closing the valve plates during the suction and discharge actions. In addition, the compressors are fitted with internal springs to reduce vibration and a muffler to reduce noise.
Assembly of the hermetic compressors will occur in Mexico of mostly Chinese origin components, with the exception of aluminum ingot purchased in Mexico but sourced from India, assembly oil sourced from the U.S., and packing materials sourced from Mexico. Of note, the stators and rotors will be manufactured in Mexico from Chinese-origin materials. The mechanical unit consisting of the motor, cylinder, and valves will be assembled into the bottom housing in Mexico. In your submission, you state the manufacturing process requires several trained employees and various machinery to complete 86 separate operations that cover the stator, rotor, lower housing, and compressor.
Stator production begins with the loading of steel lamination sheet into the feeder of a lamination stacker machine to produce a lamination stack to specifications. The formed lamination stack is placed on a transfer rack where slot insulation of polyester film is inserted into 24 slots on the lamination stack. A main coil winding machine places the main phase winding of enameled wire and inserts the main winding into the lamination slots. In the first forming process, a coil forming machine forms the main winding ends to a specified sharpness. The winding is then manually checked by an employee for indentations and wedge integrity and a lead wire is placed into the correct location. Next, an employee winds the auxiliary winding into the lamination stack using an auxiliary winding machine. A laser marking machine marks the lamination stack with the stator model number, production date, and serial number.
During the second forming process, a coil forming machine forms the auxiliary winding. After that, an employee crimps the main, auxiliary and common ends of the stator together with the wire harness using a crimping machine. An employee assembles the heat shrink tubes and manually covers the crimped terminal ends. Four employees complete the lead finishing by manually sorting outgoing lines and inserting them into the windings. In the third forming process, a coil forming machine starts to form the winding ends of the stator. Following that, two lacing machines lace the winding ends. In final forming, the stator is put into reshaping tooling of a coil forming machine to reshape the winding end size. Using an inner hole rolling machine, burrs from the stator hole are rolled and removed. After final shaping, four employees perform visual inspection of the stator for defects. Finally, an employee performs several tests for quality assurance and places the qualified stator in a storage box.
Centrifugal casting rotor production begins with an employee attaching a cap to a rotor lamination stack and placing it on a conveyor belt of the production line. The following step is the centrifugal casting process in which the rotor lamination stack is heated to 320 degrees Centigrade. Using an aluminum melting furnace and a centrifugal casting machine, liquid aluminum is poured into the lamination stack rotating at high speed. Pouring the aluminum in this manner allows it to fill the lamination slots and solidify under the action of centrifugal force. Utilizing a combined processing machine and a roller, the centrifugally cast rotor is air cooled and undergoes processing such as removal of the casting port, marking, and inner hole rolling. In the last step of rotor production, an employee performs a waveform test utilizing a waveform detector and places the qualified rotor in a storage box.
The lower housing welding line begins with an employee taking a lower compressor housing from its storage location and placing it on the production line. Then, an employee welds four ejector pins and two foot plates to the lower housing. Employees weld the process tube, suction tube, and discharge tube to the housing in succession and position each to the upper electrode. The hermetic terminal and terminal fence are then welded to the lower housing. Following that, the inner discharge tube is bent as required and the lower housing is laser marked using a laser marking machine. In the final step, an employee installs an insulation sheet onto the hermetic terminal as specified.
The compressor production line is comprised of three different lines connected to each other with a transfer mechanism. First, an employee loads a crankcase onto a fixed board in the assembly line and brushes and cleans the piston hole. After measuring the piston hole diameter, an employee selects an appropriately sized piston, measures the fit clearance, and inserts it into the crankcase using an air gauge. Washers and ball bearings are attached to the crankcase using a bearing assembly machine. After measuring the crankshaft hole, an employee selects the correct crankshaft, applies assembly oil, and inserts it into the crankcase.
Next, an employee selects the correct connecting rod and piston pin and assembles them using an air gauge. An elastic pin is then placed inside the piston and piston pin. A machine presses the elastic pin into final position and adds an appropriate amount of assembly oil to the connecting rod and piston surface. Subsequently, four employees pre-assemble the valve group by manually connecting the cylinder head, gasket, valve plate, security clip, suction motor, and suction valve with four screws. Once measurements are obtained, a gasket selection machine selects the corresponding valve plate gasket and uses a manipulator to place it on the crank case.
The selected valve plate gasket and pre-assembled valve group is manually put together by an employee and then pre-tightened using a cylinder head pre-tightening machine. Four screws of the cylinder head are then finely tightened using four torque machines. At this point, a robot turns the mechanical kit upside down and places it on the tooling plate of the next assembly line. Insulation sheets are placed on the crankcase using an insulation sheet placement machine. An employee takes a stator from the storage location and assembles screws and washers to the stator. Measurements are taken to ensure specific axial clearance between the crankshaft and crankcase.
Then, two employees heat a rotor in an inductive heating furnace to expand the rotor’s inner hole diameter. Once appropriately heated, the rotor is inserted into the crankshaft using specialized tooling. The rotor is then cooled using an air curtain machine to 120 degrees Centigrade. Thereafter, an employee verifies the airgap clearance between the stator and rotor using an axial clearance feeler. Using an insert machine, the oil pick-up is inserted into the crankshaft hole and pressed into place. Four upper springs are fitted to the head of the stator screws. A machine then presses the support spring and the lower spring sleeve together and presses the assembled components to the lower housing. A robot moves the mechanical kit into the lower housing.
An employee assembles the motor wiring harness to the hermetic terminal and places a gasket on the discharge chamber. The inner discharge tube is taken from its storage location and placed on the compressor crankcase. A screw is placed on the internal discharge tube, and it is attached to the discharge chamber of the crankcase using a torque gun. Then, an employee welds the internal discharge tube to the inner discharge using a welding machine. After checking the compressor pump position, impurities are removed using a dust blower and vacuum cleaner. The height of the compressor pump in the lower housing is checked, and further testing is conducted for electrical strength, performance, and pressure leakage. An employee places the upper housing onto the lower housing to verify height clearance. Following that, the upper housing is laser marked with a serial number and the upper and lower housings are welded together.
Using a machine, the process tube, suction tube, and discharge tube are bent according to the required angle. The compressor then undergoes additional leakage testing using compressed air in a water tank test. After surface painting in an electrophoresis paint oven, the compressor is sent via conveyor to a drying furnace for 90-120 minutes of heating to cure the paint. The final processes consist of vacuuming the compressor to remove moisture, oil charging, rubber plug and grommet installation, and labeling. Employees perform final benchmark testing and visual inspection, and the finished compressor is placed by a stacking robot for packaging.
In addition to the manufacturing and assembly processes, the hermetic compressors undergo individual benchmark tests for quality assurance. In the “wear test,” the compressor is run for a period of time under hard operating conditions such as high pressure. For the “on/off test,” the compressor undergoes a large number of “start/stop inputs” to evaluate the fatigue of the elastic suspension and shock-loop tube. In the “high-temperature test,” the compressor is operated for a long duration with the motor windings artificially heated to abnormally high values. This test is used to evaluate the lubricating oil, refrigerant, metals, and to identify traces of material used in manufacturing.
In your letter, you suggest the three hermetic compressor models are classified in subheading 8414.30, HTSUS, which provides for Air or vacuum pumps, air or other gas compressors and fans; ventilating or recycling hoods incorporating a fan, whether or not fitted with filters; gas-tight biological safety cabinets, whether or not fitted with filters; parts thereof: Compressors of a kind used in refrigerating equipment (including air conditioning).
Eligibility for preferential treatment under the USMCA:
In your letter, you inquire whether the hermetic compressors are eligible for preferential treatment under the USMCA. The USMCA was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018. The USMCA was approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act, Pub. L. 116-113, 134 Stat. 11, 14 (19 U.S.C. § 4511(a)). General Note (“GN”) 11, HTSUS, implements the USMCA. GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA.
GN 11(b) states, in relevant part:
For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country…is eligible for the preferential tariff treatment provided for in the applicable subheading and quantitative limitations set forth in the tariff schedule as a “good originating in the territory of a USMCA country” only if -
i) the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries;
(ii) the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials;
(iii) the good is a good produced entirely in the territory of one or more USMCA countries using non-originating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o)); ….
Here, the hermetic compressors consist of originating and non-originating materials and are not considered a good wholly obtained or produced entirely in a USMCA country under GN 11(b)(i). Moreover, under GN 11(b)(ii), the hermetic compressors are not a good produced entirely in Mexico exclusively from originating materials. Therefore, we must determine whether the non-originating materials undergo the tariff shift and other requirements provided for in GN 11(b)(iii) and GN 11(o).
The applicable tariff shift rule for merchandise classifiable under subheading 8414.30, HTSUS, is in GN 11(o), HTSUS, which provides, in relevant part:
Chapter 84 - 44: A change to subheading 8414.30 from any other subheading, except from tariff item 8414.90.30. Since the finished rotors and stators are produced in Mexico, and the remaining foreign materials are classified outside of subheading 8414.30, HTSUS, the requisite tariff shift rule is met. As a result, the three hermetic compressor models are considered originating goods under the USMCA and eligible for preferential treatment upon importation into the United States.
Origin Marking:
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).
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.
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 sections 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 and apparel goods which are subject to the provisions of 19 CFR 102.21. See 19 CFR 102.11.
Applied in sequential order, 19 CFR 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.
The hermetic compressors are neither “wholly obtained or produced” nor “produced exclusively from domestic materials.” Therefore paragraphs (a)(1) and (a)(2) cannot be used to determine country of origin and paragraph (a)(3) must be considered.
As previously noted, the hermetic compressors are classified in HTSUS subheading 8414.30. The tariff shift requirement that applies to subheading 8414.30 is a change to subheading 8414.10 through 8414.80 from any other subheading, including another subheading within that group. Since all foreign materials incorporated in the hermetic compressors undergo an applicable change in tariff classification as set out in Part 102.20, the tariff shift requirement is satisfied. Accordingly, the country of origin of the three hermetic compressor models for marking purposes is Mexico.
Section 301 Trade Remedies:
When determining the country of origin for purposes of applying current trade remedies under Section 301, the substantial transformation analysis is applicable. See, e.g., Headquarters Ruling Letter (“HQ”) H301619, dated November 6, 2018. 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, 681 F.2d 778 (C.C.P.A. 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 headquarters ruling H326072, dated January 25, 2024, CBP considered the country of origin of a reciprocating hermetic compressor sold to home appliance manufacturers for installation in refrigerators and freezers, which is similarly configured to the subject compressors. In part, ruling H326072 held that the country of origin of the hermetic compressors is controlled by where the stator and rotor, the two most essential components of an electric motor, are made. Furthermore, the extent of processing that occurs after the stator and rotor cores are created must also be taken into account. See also NY N309707, dated March 11, 2020; NY N308827, dated January 21, 2020; and NY 316151, dated December 18, 2020.
In scenario two of H326072, a rotor lamination stack from China underwent extensive additional processing in Thailand such as injection with molten aluminum, creation of the rotor assembly, and assembly with a stator and other parts to create the motor. In combination with the other extensive assembly operations that occurred in Thailand to create the rest of the compressor, the country of origin was determined to be Thailand. In scenario three, the stator laminates from China were combined to create the stator core, bound, then wound with enameled wire in Thailand. The wire was then shaped, insulated, reshaped, and tied. Additionally, the inner surface of the stator was ground, tested, and assembled with the rest of the motor for incorporation into the compressor. Due to the extensive additional processing of the stator combined with the rest of the compressor assembly in Thailand, the country of origin was determined to be Thailand.
Here, both the stator and rotor laminations undergo processing in Mexico to make them suitable electric motor components. Similar to scenario three of H326072, in part, the stator laminations are combined, insulated, and wound with enameled wire before the windings are shaped, tied, crimped, and covered with terminal ends. The inner surface is also rolled to remove burs, and each stator undergoes testing and inspection before further assembly. Like scenario two of H326072, in part, the rotor laminations are cast with aluminum, the inner surface is rolled to shape, and each rotor undergoes testing and inspection before further assembly.
In summary, based upon your description of the extensive manufacturing operations and sum of the final assembly operations in Mexico, a substantial transformation occurs because the individual components lose their separate identities and become a new article, i.e., hermetic compressors. As such, we find that the country of origin for Section 301 purposes is Mexico. Therefore, the three hermetic compressor models are not subject to additional duties pursuant to Section 301 upon importation into the United States.
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