H315296

HQ H315296 July 30, 2021 OT:RR:CTF:VS H315296 JMV CATEGORY: Origin Jeremy R. Page Page-Fura PC 939 W. North Avenue, Suite 750 Chicago, IL 60642 RE: Country of origin of an Automotive Seat Back Frame; Section 301 trade remedy; USMCA Marking Dear Mr. Page: This is in response to your request, dated October 19, 2020, filed on behalf of your client Yanfeng Seating Mexico S.A. de C.V. (“YFS”). In your letter, you request a binding ruling on the applicability of Section 301 trade remedies and country of origin for marking for an automotive seat back frame. FACTS: The product at issue is an automotive seat back frame produced under four manufacturing scenarios. Assembly takes place in Mexico in each scenario, but the country of origin of the components varies in each scenario. The assembly operations for the subject seat back frames under each scenario are largely the same: In the first scenario, all the parts will be of Mexican origin, other than the two recliner cores, which will be of Chinese origin. The first production step involves the production of the left- and right-hand recliner arm subassemblies, which are each created from three steel components – an upper bracket, a lower bracket, and a recliner core. The two brackets and recliner core will be combined through a laser weld process by which all three items will be directly bonded. The second step is to create a side member subassembly from the left- and right-hand recliner subassemblies. A side bracket will be welded to each subassembly. Then, the two side member subassemblies are welded to a lower crossmember and top crossmember, which collectively create the external structure for the back frame that provides the structure and rigidity. Finally, after painting and a quality verification, a spring mat seat that forms the internal backing for the back frame, a quick fastener (schnellbefestiger), and a transmission tube are incorporated into the back frame assembly. These operations first require the plugging of the transmission tube and then manual assembly of the quick fastener. Under the second scenario, YFS will source the left- and right-hand recliner subassemblies, produced in the first step above, from China fully assembled. All other components would remain sourced from Mexico. In addition, all welding operations and final assembly will occur in Mexico. Under the third proposed scenario, all components other than the side brackets, which are attached to the left- and right-hand recliner subassemblies in step two above, would be sourced from Mexico. Those two brackets would be sourced from China instead. Additionally, the left- and right-hand recliner subassemblies would not be produced at YFS but would be sourced from a third-party producer in Mexico and would be of Mexican origin. From that point forward, all production steps would be completed by YFS in Mexico. Under the fourth and final proposed scenario, all components other than the lower and upper cross members would be sourced from Mexico. The two cross members would be sourced from China. As in the third scenario, the left- and right-hand recliner subassemblies would be of Mexican origin, sourced from a third-party supplier in Mexico. The same production steps would be involved: two stages of welding and final assembly of the spring mat seat, the quick fastener (schnellbefestiger), and the transmission tube into the back frame assembly to result in the complete automotive seat back frame. The automotive seat back frame is classified under subheading 9401.90.10 of the Harmonized Tariff Schedule of the United States (“HTSUS”). Additionally, in the first scenario, the left- and right-hand recliner cores from China and the spring mat seat will be classified under 9401.90.10, HTSUS. In the second and third scenarios, the left- and right-hand recliner subassemblies from China and the spring mat seat from Mexico will be classified in 9401.90.10, HTSUS. Finally, in the fourth scenario, the left- and right-hand recliner subassemblies and the spring mat seat from Mexico will be classified in 9401.90.10, HTSUS. ISSUE: What is the country of origin of the automotive seat back frame in each of the four scenarios for purposes of applying Section 301 trade remedies? What is the country of origin of the automotive seat back frame for marking purposes ? LAW AND ANALYSIS: Section 301 Duties The United States Trade Representative (“USTR”) has determined that an additional ad valorem duty of 7.5% will be imposed on certain Chinese imports pursuant to USTR’s authority under Section 301(b) of the Trade Act of 1974 (“Section 301 measures”). The Section 301 measures apply to products of China enumerated in Section XXII, Chapter 99, Subchapter III, U.S. Note 20(s), HTSUS. Among the subheadings listed in U.S. Note 20(s) of Subchapter III, Chapter 99, HTSUS, is 9401.90.10, HTSUS. When determining the country of origin for purposes of applying trade remedies under Section 301, the substantial transformation analysis is applicable. 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, 69 C.C.P.A. 151 (1982). In deciding whether the combining of parts or materials constitutes a substantial transformation, the determinative issue is the extent of operations performed and whether the parts lose their identity and become an integral part of the new article. Belcrest Linens v. United States, 573 F. Supp. 1149 (Ct. Int’l Trade 1983), aff’d, 741 F.2d 1368 (Fed. Cir. 1984). Assembly operations that are minimal or simple, as opposed to complex or meaningful, will generally not result in a substantial transformation. Factors which may be relevant in this evaluation may include the nature of the operation (including the number of components assembled), the number of different operations involved, and whether a significant period of time, skill, detail, and quality control are necessary for the assembly operation. See C.S.D. 80-111, C.S.D. 85-25, C.S.D. 89-110, C.S.D. 89-118, C.S.D. 90-51, and C.S.D. 90-97. If the manufacturing or combining process is a minor one which leaves the identity of the article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 C.I.T. 220, 542 F. Supp. 1026 (1982), aff’d 702 F.2d 1022 (Fed. Cir. 1983). The Court of International Trade more recently interpreted the meaning of “substantial transformation” in Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308 (2016). Energizer involved the determination of the country of origin of a flashlight, referred to as the Generation II flashlight. All of the components of the flashlight were of Chinese origin, except for a white LED and a hydrogen getter. The components were imported into the United States and assembled into the finished Generation II flashlight. The Energizer court reviewed the “name, character and use” test utilized in determining whether a substantial transformation had occurred and noted, citing Uniroyal, Inc., 3 C.I.T. at 226, that when “the post-importation processing consists of assembly, courts have been reluctant to find a change in character, particularly when the imported articles do not undergo a physical change.” Energizer at 1318. In addition, the court noted that “when the end-use was pre-determined at the time of importation, courts have generally not found a change in use.” Energizer at 1319, citing as an example, National Hand Tool Corp. v. United States, 16 C.I.T. 308, 312 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993). Similarly, when processing consists primarily of assembly, CBP closely examines what that assembly entails. In Headquarters Ruling Letter (“HQ”) H290528, dated February 21, 2018, CBP considered whether aluminum panels, which were used as an architectural finish, were substantially transformed by pro

Section 301 DutiesThe United States Trade Representative (“USTR”) has determined that an additional ad valorem duty of 7.5% will be imposed on certain Chinese imports pursuant to USTR’s authority under Section 301(b) of the Trade Act of 1974 (“Section 301 measures”). The Section 301 measures apply to products of China enumerated in Section XXII, Chapter 99, Subchapter III, U.S. Note 20(s), HTSUS. Among the subheadings listed in U.S. Note 20(s) of Subchapter III, Chapter 99, HTSUS, is 9401.90.10, HTSUS. When determining the country of origin for purposes of applying trade remedies under Section 301, the substantial transformation analysis is applicable. 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, 69 C.C.P.A. 151 (1982). In deciding whether the combining of parts or materials constitutes a substantial transformation, the determinative issue is the extent of operations performed and whether the parts lose their identity and become an integral part of the new article. Belcrest Linens v. United States, 573 F. Supp. 1149 (Ct. Int’l Trade 1983), aff’d, 741 F.2d 1368 (Fed. Cir. 1984). Assembly operations that are minimal or simple, as opposed to complex or meaningful, will generally not result in a substantial transformation. Factors which may be relevant in this evaluation may include the nature of the operation (including the number of components assembled), the number of different operations involved, and whether a significant period of time, skill, detail, and quality control are necessary for the assembly operation. See C.S.D. 80-111, C.S.D. 85-25, C.S.D. 89-110, C.S.D. 89-118, C.S.D. 90-51, and C.S.D. 90-97. If the manufacturing or combining process is a minor one which leaves the identity of the article intact, a substantial transformation has not occ