H310543

HQ H310543 May 18, 2020 OT:RR:CTF:VS H310543 AP CATEGORY: Origin Mr. Donald Gross Counsel to DeHeng Law Offices 1519 33rd Street, N.W. Washington, D.C. 20007 RE: Request for Reconsideration of NY N309148; Country of origin of an automotive suspension system (Items Numbers SQ10821, SQ11042, SQ11060, SQ11100 and SQ14302) Dear Mr. Gross: This is in response to your letter of April 20, 2020, on behalf of Gold Suspension System Malaysia SON BHD (“GSSM”), requesting reconsideration of New York Ruling Letter (“NY”) N309148, dated Feb. 4, 2020, regarding the country of origin of an automotive suspension system (items numbers SQ10821, SQ11042, SQ11060, SQ11100 and SQ14302) assembled in Malaysia from components of Chinese and Malaysian origin. We reviewed your request and we believe that NY N309148 is correct for the reasons set forth herein. NY N309148 describes the subject automotive suspension system as follows: The item under consideration is a vehicle Suspension System (Item Numbers SQ10821, SQ11042, SQ11060, SQ11100, and SQ14302), which consists of an elastic component (suspension spring and airbag), a damping component (shock absorber), steering gears (bearings), and joints and linkage (elastic rubber plate). The elastic components reduce the bumping, the shock absorber reduces the vibration and dampen the motion of the springs, while the steering gears convert the energy of vibration to heat. As most parts of any suspension must be movable and flexible, the linkages are connected by a flexible connection, including the bushing and bearing. These impact the system to adapt to the damping and vibration. You state that the shock absorber is sourced in China, and imported into Malaysia, where it gets assembled with the rest of the components of Malaysian origin. Below are the submitted images of each item number: NY N309148 determined that the assembly process in Malaysia did not result in a substantial transformation of the items and that the shock absorber sourced from China was the “very essence” of the entire suspension system. Therefore, the vehicle suspension system (items numbers SQ10821, SQ11042, SQ11060, SQ11100 and SQ14302) was considered a product of China for origin and marking purposes. In your April 20, 2020 request for reconsideration, you describe the function of the individual components and the assembly process. The nuts fasten the connection between the piston rod and the rubber cap of the shock absorber to prevent it from loosening. The bumber buffers and reduces shock. The dust cover prevents dust, mud, and mud water from causing piston rod erosion. The spring seat reduces buffering while fixing the installation direction and position of the spring, and reduces the noise generated by the spring operation. The spring seat provides spring support and fastening. The bearing part supports spinning and reduces steering friction. The suspension strut (shock absorber) accelerates and attenuates the vibration of the frame and body, and improves the ride balance, comfortability, maneuverability, and safety of the vehicle. The spring reduces buffering and provides support, bears and transmits the vertical load, and alleviates and inhibits the impact caused by uneven road surfaces. The strut mount connects and reduces buffering, connects the shock absorber to the frame, adapts steering action, connects the nonlinear flexibility with the shock absorber to produce the complete dampening function, and has a transmission role. The holders in item number SQ11042 reduce the steering friction. The assembly process involves combining, mounting, and screwing the individual components together. You assert that none of the individual components used to manufacture the final product could possibly perform the function of a comprehensive automobile suspension system. You argue that the essence of the suspension system is not comparable to the nature of any of the individual parts used to produce it. According your submission, the value of the suspension system far exceeds the value of its total parts and the cost of their production. It is your position that a product does not need to experience a change in character and use to be substantially transformed, and cite to Koru North America v. United States, 12 CIT 1120, 701 F. Supp. 229 (1988) and SDI Techs., Inc. v. United States, 21 CIT 895, 977 F. Supp. 1235 (1997), aff’d, 155 F.3d 568 (Fed. Cir. 1998). Further, it is your contention that unlike in Ran-Paige Co. v. United States, 35 Fed. Cl. 117 (1996), a substantial transformation occurred here because GSSM allegedly undertook a “complex and sophisticated” manufacturing operation to produce an entirely new product that improved on the capability and value of any individual part. 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 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. By enacting 19 U.S.C. § 1304, Congress intended to ensure “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 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.” United States v. Friedlaender & Co., 27 C.C.P.A. 297, 302, C.A.D. 104 (1940). The country of origin marking requirements and the exceptions of 19 U.S.C. § 1304 are set forth in Part 134, U.S. Customs and Border Protection (“CBP”) Regulations (19 C.F.R. Part 134). Section 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. A substantial transformation occurs when an article emerges from a manufacturing process with a name, character, or use which differs from the original material subjected to the process. United States v. GibsonThomsen Co., 27 C.C.P.A. 267, C.A.D. 98 (1940); Texas Instruments, Inc. v. United States, 681 F.2d 778, 782 (1982). In order to determine whether a substantial transformation occurs when components of various origins are assembled into completed products, CBP considers the totality of the circumstances and makes such determinations on a case-by-case basis. The country of origin of the item’s components, extent of the processing that occurs within a country, and whether such processing renders a product with a new name, character, or use are primary considerations in such cases. Additionally, factors such as the resources expended on product design and development, the extent and nature of post-assembly inspection and testing procedures, and worker skill required during the actual manufacturing process may be considered when determining whether a substantial transformation has occurred. No one factor is determinative. Substantial transformation, including the “name, character and use” test, was at issue in Nat’l Hand Tool Corp. v. United States, 16 CIT 308, aff’d, 989 F.2d 1201 (Fed. Cir. 1993). The Court of International Trade (“CIT”) determined that the mechanics’ tools in Nat’l Hand Tool did not undergo substantial transformation in the United States and were not exempt from the marking requirements in 19 U.S.C. § 1304. The court found that there was no change in name because each article in its condition as imported had the same name in the completed tool. There was no change in character