H306336

HQ H306336 February 11, 2020 OT:RR:CTF:VS H306336 JW CATEGORY: Origin Maureen E. Thorson Wiley Rein LLP 1776 K Street NW Washington, DC 20006 RE: Reconsideration of NY N306161; Country of Origin of Battery Packs; Section 301 Trade Remedy Dear Ms. Thorson: This is in response to your request for reconsideration of New York Ruling Letter (“NY”) N306161 issued on October 4, 2019. Your request for consideration, dated October 30, 2019, is filed on behalf of your client Inventus Power (“Inventus”). Your request includes a copy of Inventus’s original ruling request dated September 9, 2019. In addition to your written submission, U.S. Customs and Border Protection (“CBP”) personnel met with you and Inventus on December 10, 2019. During the meeting Inventus provided additional written information and you followed up with an email dated December 12, 2019. You request the revocation of NY N306161, which found that Inventus’s medical battery packs may be marked as made in Mexico; however, the country of origin for the battery packs for Section 301 purposes was China. You argue that it should be “replaced with a determination that Inventus’s medical battery packs originate, for Section 301 purposes, in the country where final assembly operations take place, or otherwise in the country in which the PCBAs, and particularly the main board assembly, are produced through surface mounting operations.” See Request for Reconsideration at 3-4. We reviewed your request for reconsideration and determined that New York Ruling Letter N306161 (“NY N306161”) is correct for the reasons set forth herein. The items at issue are battery packs for mobile medical carts (“items at issue” or “battery packs”). Inventus’s original ruling request states that “[t]hese battery packs incorporate a main board assembly, a communications board assembly, wiring/wiring harnesses, fasteners, plastic housing components and, depending on the configuration of the pack, 48, 56, or 64 lithium-ion cells.” Attachment A at 1. In addition it appears that there are screws and washers, a communications cable and a plastic separator. The main board assembly is sourced from China. It is a printed circuit board assembly (“PCBA”) created by mounting individual electronic components onto a raw printed circuit board through the use of surface mounting technology. The communications board assembly is also sourced from China. The communications board assembly consists of two data connector components and about 10 electronic components, all mounted onto a printed circuit board. The surface mounting operations for the main board assembly and communication board assembly are done in China; however Inventus notes that they anticipate re-sourcing the main board assembly and communications board assembly, inclusive of the surface mounting operations, to another country, and in all likelihood the country for sourcing the assemblies will be the same non-China country. The lithium-ion cells, nickel contact strips and thermistors/tape are also sourced from China. The brass terminals, wiring/wiring harnesses, fasteners, insulating paper, and housing components are sourced from Mexico or the United States. The screws and washers are sourced from Mexico or the United States. The communications cable and the plastic separator are sourced from Mexico. For ease of reference, a chart of where the components within the items at issue are sourced is provided below: China Mexico or the United States  main board assembly (includes surface mounting operations) brass terminals  communications board assembly (includes surface mounting operations) wiring/wiring harnesses  lithium-ion cells fasteners (includes screws and washers)  nickel contact strips insulating paper  thermistors/tape housing components (includes a top housing and a bottom housing)   plastic separator   screws and washers   communications cable   Once the main board assembly and the communications board assembly are created in China, they are sent to Mexico. In Mexico, brass terminals are mounted, with screws, washers and nuts, into the top housing of the battery pack. The communications board assembly is then screwed into the underside of the top housing. This process takes about two minutes. The main board assembly is then installed into the top housing with screws and washers and a communications cable is attached to link the communications module on the communications board assembly with the main board assembly. This process takes about two minutes. The lithium-ion cells are then connected to each other and the finished battery packs contain either 48, 56, or 64 cells. Washers are then attached to the lithium-ion cells and the lithium-ion cells are then connected using nickel contact strips. There is also further insulating paper separating groups of lithium-ion cells. Wiring/wiring harnesses are then attached to the full groups of lithium-ion cells and the connection points are sealed with tape. Thermistors are then installed along the wiring/wiring harnesses. This process takes about twenty minutes. It is also noted that these operations are performed by workers that have soldering experience. The joined group of lithium-ion cells is then inserted into the bottom housing, a plastic separator is placed on top of the lithium-ion cells, and the wiring harness connected to the lithium-ion cells is fed through gaps in the plastic separator. The wiring harness is then connected with the main board assembly and the top housing, which already has the communications board assembly and main board assembly installed, is screwed to the bottom housing, which already has the lithium-ion cells and plastic separator installed. This process takes about two minutes. Finally the battery pack is subjected to electrical testing. This process takes about three minutes. Your request for reconsideration does not appear to dispute the finding in NY N306161 that the battery packs may be marked as made in Mexico. The dispute centers on whether China should be the country of origin for the battery packs for Section 301 purposes. Specifically, the request argues that the country of origin for the battery packs for Section 301 purposes should be in the country where (a) final assembly operations take place; or (b) the PCBAs, and particularly the main board assembly, are produced through surface mounting operations. See Request for Reconsideration at 3-4. There is no dispute that 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., Request for Reconsideration at 2-3; Attachment A at 1; NY N306161 at 3; and Headquarters Ruling (“HQ”) H303279 at 3. Inventus argues that “[g]iven the complexity of the assembly processes performed in Mexico . . . the country of origin of the battery packs at issue here, under the substantial transformation test, is Mexico.” Attachment A at 10. However, we disagree that the assembly processes performed in Mexico result in a substantial transformation of these components sourced from China. The test for determining whether a substantial transformation has occurred 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); see also Belcrest Linens v. United States, 741 F.2d 1368, 1372 (Fed. Cir. 1984). 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). First, we find that the components sourced from China do not undergo a change in name when they are assembled into a battery pack in Mexico. The name of each article, as imported, remains the same as that article in the completed battery pack. See e.g., National Hand Tool, 16 C.I.T. at 311. As the constitutiv

is applicable. See e.g., Request for Reconsideration at 2-3; Attachment A at 1; NY N306161 at 3; and Headquarters Ruling (“HQ”) H303279 at 3. Inventus argues that “[g]iven the complexity of the assembly processes performed in Mexico . . . the country of origin of the battery packs at issue here, under the substantial transformation test, is Mexico.” Attachment A at 10. However, we disagree that the assembly processes performed in Mexico result in a substantial transformation of these components sourced from China. The test for determining whether a substantial transformation has occurred 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); see also Belcrest Linens v. United States, 741 F.2d 1368, 1372 (Fed. Cir. 1984). 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). First, we find that the components sourced from China do not undergo a change in name when they are assembled into a battery pack in Mexico. The name of each article, as imported, remains the same as that article in the completed battery pack. See e.g., National Hand Tool, 16 C.I.T. at 311. As the constitutive components imported from China do not lose their individual names as a result of the post importation assembly in Mexico, no name change has occurred.Turning to character, we find that there is no change in character as a result of the assembly operations in Mexico. For courts to find a change in character, there often needs to be a substantial alteration in the characteristics of the articles or components. See e.g., National Hand Tool, 16 C.I.T. at 311. Courts have not found a change in character when the “form of the components remained the same.” Id. In other cases, courts have looked to the “essence” of a completed