H315735

HQ H315735 September 10, 2021 OT:RR:CTF:VS H315735 JMV CATEGORY: Origin Mr. David R. Hamill Mr. Robert A. Shervette Arent Fox LLP 1717 K Street NW Washington, DC 20006 RE: Country of origin of the PhotonBlade Electrosurgical Device; Section 301 trade remedy Dear Mr. Hamill: This is in response to your correspondence, dated December 22, 2020, filed on behalf of your client Stryker Corporation (“Stryker”). In your letter, you request a binding ruling on the applicability of Section 301 trade remedies for the PhotonBlade Electrosurgical Device. You have asked that certain information submitted in connection with this ruling request be treated as confidential. Inasmuch as this request conforms to the requirements of 19 C.F.R. § 177.2(b)(7), your request for confidentiality is approved. The information contained within brackets and all attachments to your request for a binding ruling, forwarded to our office, will not be released to the public and will be withheld from the published version of this ruling. FACTS: The PhotonBlade, classified in 9018.90.60 of the Harmonized Tariff Schedule of the United States (“HTSUS”), is a single use surgical cutting instrument that consists of a single blade with a rotatable and adjustable length shaft. It is described as an “advanced electrosurgical device with illumination, delivering precise energy and low thermal spread.” It is used in general purpose surgical procedures and operations performed on humans. The device includes the following functions: illumination, coagulation, and plasma cutting. The illumination is powered by a rechargeable battery and the coagulation and cutting are powered by a radio frequency (“RF”) wavelength generator. The PhotonBlade has a blade surrounded by an LED light assembly on one end and a tubular shaped handle on the other. The handle includes a telescoping extension that locks into position. The device is eight inches long when the telescoping shaft is retracted, and 11 inches long when fully extended. The handle has three buttons that activate the functions of illumination, coagulation, and cutting. When activated, the LED light assembly illuminates the tissue area directly in front and around the blade to improve visibility for the surgeon. The blade itself is a proprietary design made from steel with a special ceramic dielectric coating and insulation. The blade does not cut the tissue like a traditional scalpel. Instead, the ceramic blade focuses the RF Energy which cuts the tissue. The RF Energy alone cannot cut the tissue without the ceramic blade. Without the blade focusing the RF Energy, the RF Energy would disperse such that it would not be concentrated enough to cut the tissue and certainly not with any precision or accuracy. The tip of the device is rotatable such that the blade can be positioned in any plane without surgeons having to alter their grip and hand position while operating by manually rotating the blade shaft to put the blade in the desired position. At the end of the handle is a cable that has a plug at its end where a battery is stored. This battery powers the LED illumination. This plug also has three prongs that connect to an external power source, an Electrosurgery Generator Unit (“ESU”) that powers the coagulation and cutting functions. The ESU produces electrical waveforms that create the RF current. The blade’s special ceramic dialectic coating and design are what allows the blade to utilize the RF energy for cutting. The blade emits the RF energy into the tissue from the uncoated edges. The tissue that meets the blade undergoes RF induced intracellular oscillation of ionized molecules causing it to rapidly reach 100 degrees Celsius. This then causes the intracellular contents of the tissue to undergo a liquid to gas conversion, a massive volumetric expansion, and then explosive vaporization. This vaporization enables the blade to cut tissue. The combination of the special coating and the uncoated steel blade focuses the RF energy to facilitate the cutting function. Similarly, the blade’s dielectic coating and RF energy provide the coagulation function. RF energy is emitted from the blade at a particular frequency that heats the tissue to 60-99 degrees Celsius, which coagulates the soft tissue in the incision during cutting to reduce bleeding. Overall, there are three main subassemblies constructed in Country A [XX] that make up the final PhotonBlade device. These subassemblies are the following: (1) heatsink subassembly, which dissipates heat when the PhotonBlade is in use, (2) waveguide subassembly, which guides the RF energy to the blade, and (3) the telescoping subassembly. In Country A [XX], the LED package from Country B [XXX] is incorporated into the heatsink subassembly which also includes three other parts of Country A [XXXX] origin. Then the ceramic coated blade from [XXXXXX] and the heatsink subassembly are further assembled into the waveguide subassembly with four other parts of Country C [XXX] origin and one other part of Country A [XXX] origin. Finally, the waveguide subassembly is further processed into the telescoping subassembly with one part of Country C [XX] origin and 17 parts of Country A [XX] origin. The telescoping subassembly is then sent to China where the telescoping subassembly is combined with a cable and connector of Chinese origin, six parts of Country A [XXX] origin, and six other parts of Chinese origin, including a screw, polyolefin shrink tubing, heat shrink tubing, hook up wire, and a distal collar. The Cable and Connector subassembly connects the PhotonBlade to a power supply, in this case a battery and an RF generator. By value, the ceramic coated blade from Country C [XXXXXX] accounts for the largest percentage of material costs. After the PhotonBlade is assembled in China, the complete product is sent to the United States where it sterilized and packaged to be sold and shipped to customers. ISSUE: What is the country of origin of the PhotonBlade for the purposes of applying Section 301 trade remedies? LAW AND ANALYSIS: The United States Trade Representative (“USTR”) has determined that an additional ad valorem duty of 25% 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(b), HTSUS. Among the subheadings listed in U.S. Note 20(b) of Subchapter III, Chapter 99, HTSUS, is 9018.90.60, 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 art

The United States Trade Representative (“USTR”) has determined that an additional ad valorem duty of 25% 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(b), HTSUS. Among the subheadings listed in U.S. Note 20(b) of Subchapter III, Chapter 99, HTSUS, is 9018.90.60, 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, I