H312745

 HQ H312745 June 15, 2021 OT:RR:CTF:VS H312745 RSD CATEGORY: Origin Mr. Kertis Heidt Diamond Equipment 102-30488 Great Northern Ave Abbotsford, BC V2T 6Y6 Canada RE: USMCA Eligibility; Country of Origin Marking under 19 U.S.C. 1304, and Applicability of Section 301 Trade Remedy Duties to a Lower Bearing Assembly Dear Mr. Kertis: This is in response to your request dated July 4, 2020, on behalf of Diamond Equipment for a ruling concerning the country of origin of machines known as lower bearing assemblies for the purposes of country of origin marking, and the applicability of Section 301 trade remedy duties. In addition, in an email sent on July 30, 2020, you indicated that Diamond Equipment is also interested in finding out whether the products under consideration would be eligible for preferential tariff treatment under the U.S.-Mexico-Canada Agreement (“USMCA”). FACTS: The products under review are lower bearing assemblies for sand and gravel washing machines. There are five specific lower bearing assemblies under review. They have been assigned the model numbers: TA08285, TA08286, TA08287, TA08288, and TA13479. The bearing assemblies are only used on machines that wash sand and gravel in a tub of water. The lower bearing assemblies incorporate a mounting base that is specifically designed to mount to the end wall of the tub, and the stub shaft is specifically designed to attach to the auger shaft within the tub. Furthermore, each bearing assembly supports the auger shaft at the lower end of the machine and allows it to turn. The spinning auger shaft agitates and conveys the cleaned sand or gravel out of the bed of water, and thereby separates the sand or gravel from the dirty water. The top end of the auger shaft is directly powered by a motor which drives a large reduction gear reducer via a belt drive. The gear reducer is then coupled to the auger shaft on one end, while the bearing assembly supports the auger on the opposite end of the shaft. According to the information submitted, the lower bearing assemblies consist of the following major components: stub shaft (China), mounting ring (China), bearing and adapter sleeve (China), bearing housing (China), slinger (U.S.), wear sleeve (China), donut seal (China); gaskets (Canada), oil seal (Taiwan), and clamp plate (Canada). You have indicated that the only difference between the five assemblies listed is the size of their stub shaft, mounting base, bearing, and bearing housing. There are different sizes of machines to wash sand and gravel. Larger machines have larger capacity for washing larger gravel sizes. The larger machines have larger auger shafts, and therefore require a larger stub shaft for the bearing assembly, and they also have a larger bearing to handle the larger loading. All the lower bearing assemblies are produced using the same procedure. Independent of the size of each component, they are sourced through the same vendors. You have also submitted a bill of materials showing the parts with their classifications in the Harmonized Tariff Schedule of the United States (HTSUS) that are used in the production of the lower bearing assemblies: Part Number Description HS Code TB06123 Stub Shaft 8474.90.00 TB06127 Mounting Ring 8474.90.00 TB06128 Bearing Housing 8483.30.00 TD09090 Gasket 4016.93.99 TD09109 Gasket 4016.93.99 TD09115 Clamp Plate 8474.90.00 TD09116 Oil Seal 4016.93.50 TD09575 Gasket 4016.93.99 TD09876 Slinger 4016.99.90 TD12896 Bearing 8482.10.90 TD12899 Bearing Sleeve Assembly 8482.90.21 TD26461 Donut Seal 4016.93.19 TD30877 Wear sleeve - stainless steel 8474.90.00 TD32751 Gasket 4016.93.99 GREASE EP2 grease 3403.99.00 2X2 SKID BO2' x 2' Skid Box Hardware Plow, Carriage, Cap bolts 7318.15.00 You explain that several of the significant parts used to make the lower bearing assemblies are first manufactured in China before they are further processed in Canada. In China, the mounting ring, bearing housing, and stub shaft are cast at a foundry out of ductile iron. All parts are then machined to specification. The donut seal is made from injection molded rubber. The stainless wear and bearing adaptor sleeves are machined to specification from a stainless-steel pipe. In Canada, the Chinese components are inspected, cleaned, and painted, and not further manufactured in Canada. Next, all components, including the components from the U.S., Taiwan, and Canada are assembled resulting in a complete lower bearing assembly. As stated above, each item number (TA08285, TA08286, TA08287, TA08288, and TA13479) is manufactured using the same procedure. The bill of materials that you have submitted also shows that 83.6 percent of the costs of the parts for the lower bearing assemblies are attributable to China, while 14.5 percent and 1.9 percent of the costs of the parts for the lower bearing assemblies can be ascribed to Canada and Taiwan. ISSUES: Whether the Lower Bearing Assemblies qualify for duty-free treatment under the U.S.-Mexico-Canada Agreement? What is the country of origin of the Lower Bearing Assemblies for country of origin marking purposes under 19 U.S.C. 1304? Whether the Lower Bearing Assemblies are subject to Section 301 Trade Remedy Duties? LAW AND ANALYSIS: Eligibility for USMCA Duty-free Treatment The United States-Mexico-Canada Agreement (“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 of the Harmonize Tariff Schedule of the United States (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: For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, 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— 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 nonoriginating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o)); or … Since the lower bearing assemblies contain nonoriginating materials, they are not considered goods wholly obtained or produced entirely in a USMCA country under GN 11(b)(i) and GN 11(b)(ii). Thus, we must next determine whether the lower bearing assemblies qualify under GN 11(b)(iii). The National Commodity Specialist Division has determined that the applicable subheading for the Lower Bearing Assemblies, as described above, is 8474.90.00, Harmonized Tariff Schedule of the United States (HTSUS), which provides for: Machinery for sorting, screening, separating, washing, crushing, grinding, mixing, or kneading earth, stone, ores, or other mineral substances, in solid (including powder or paste) form, machinery for agglome rating, shaping or molding solid mineral fuels, ceramic paste, unhardened cements, plastering materials or other mineral products in powder or paste form; machines for forming foundry molds of sand; parts thereof: The applicable rule of origin for merchandise under subheading 8474.90, HTSUS, is in GN 11(o), HTSUS, which provides, in relevant part: 223. (A) A change to subheading 8474.90 from any other heading; or (B) No change in tariff classification to a good of subheading 8474.90, provided there is a regional value content of not less than: (1) 60 

Eligibility for USMCA Duty-free Treatment The United States-Mexico-Canada Agreement (“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 of the Harmonize Tariff Schedule of the United States (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: For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, 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—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 nonoriginating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o)); or… Since the lower bearing assemblies contain nonoriginating materials, they are not considered goods wholly obtained or produced entirely in a USMCA country under GN 11(b)(i) and GN 11(b)(ii). Thus, we must next determine whether the lower bearing assemblies qualify under GN 11(b)(iii). The National Commodity Specialist Division has determined that the applicable subheading for the Lower Bearing Assemblies, as described above, is 8474.90.00, Harmonized Tariff Schedule of the United States (HTSUS), which provides for: M