H326072

H326072 January 25, 2024 OT:RR:CTF:VS H326072 JMV CATEGORY: Origin Lauren Wyszomierski White & Case LLP 701 Thirteenth Street, NW Washington, DC 2005-3807 RE: Country of Origin; Refrigerator Compressors; Section 301 Measures Dear Ms. Wyszomierski, This is in response to your letter, dated June 6, 2022, and supplemental letter dated February 1, 2023, on behalf of GMCC and Welling Appliance Component (Thailand) Co., Ltd. (“GAT”). In your letter, you request a binding ruling pursuant to 19 C.F.R. Part 177 on the country of origin for purposes of the Section 301 measures of a refrigerator compressor that will be imported from Thailand. 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), the request for confidentiality is approved. The information contained within brackets and all attachments to this ruling request, forwarded to our office, will not be released to the public and will be withheld from published versions of this decision. FACTS: The product at issue is the H series refrigerator compressor, which is sold to home appliance manufacturers for installation in refrigerators and freezers. This compressor is a reciprocating hermetic compressor, which uses pistons driven by a crankshaft to increase the pressure of a gas by decreasing volume. The compressor consists of six major subassemblies: case A andcase B assembly (which together make up the exterior shell of the compressor), a transmission, a crankcase, a suction-discharge assembly, and a motor. You state that the refrigerator compressor is classified under subheading 8414.30.40 of the Harmonized Tariff Schedule of the United States (“HTSUS”). In your initial request, you present two manufacturing scenarios. In each scenario, the compressor is assembled in Thailand from components of Chinese and Thai origin with oil from Japan. However, under scenario two the motor rotor is subjected to additional processing in Thailand. You also provided a supplemental request asking us to consider a third manufacturing scenario that differentiates from the first only in that the motor stator is subjected to additional processing in Thailand. In all scenarios, the components of Thai origin are the case A and B assemblies, the transmission shaft, and the crankcase. The case A and B assemblies create the outer housings of the compressor. To create each case, a steel coil is fed into a die and is then stretched, formed, trimmed, flanged, and punched. Waste material is removed, and the housing is rinsed and dried. Finally, a base support; Chinese suction, process, and discharge pipes; a Chinese terminal; and a Chinese terminal box are welded to the case A assembly. The transmission shaft assembly process begins in Thailand by pouring and smelting materials into a mold. The molded shaft is cooled, cleaned, drilled, grinded, and brushed to final measurements. The shaft is then subjected to a phosphating process. The crankcase is sourced from Thailand and further processed by honing and brushing the cylinder hole in which the shaft will be inserted. Afterwards, the crankcase is cleaned and dried. Additional Chinese components are subject to further processing in Thailand prior to the final assembly. The outer circle of the Chinese piston is subjected to grinding, brushing, and phosphating processes, before it is baked in a furnace, brushed, and subjected to an ultrasonic cleaning. The Chinese manufactured rod is subjected to ultrasonic cleaning, then matched to a corresponding piston-pin. The Chinese valve plate is subjected to ultrasonic cleaning then assembled to the discharge valve and Chinese stopper. A riveting place is then pressed onto the riveting point of the valve plate and a muffler cover is curved into place. Chinese lower and upper balance weights and rivets are assembled to the shaft. The Chinese pump assembly is then riveted to the shaft with balance weights, which is then frame mounted. The assembly for all three scenarios occurs in Thailand and begins by installing and pre-tightening the cover A assembly and cover A bolt. The air blowing and suction ports are aligned with the applicable crankcase bores. The corresponding piston is then placed into the cylinder hole of the crankcase. Afterwards, a bearing assembly and the Chinese shaft, which were previously connected to the Chinese pump assembly, are inserted into the shaft hole. Next, the corresponding connecting rod piston pin is inserted into the ends of the connecting rod and the ends of the shaft. The piston pin hole is aligned with the spring pin hole of the piston and a spring pin is inserted then compressed. The valve P packing from China is installed on the crankcase and the cylinder cover is bolted into place. The suction muffler, cover packing, valve assembly and Chinese suction valve are then installed, which creates the suction-discharge assembly. The components are tightened and afterwards, the pump body is rotated. For scenario two, the rotor is subject to additional processing in Thailand. Specifically, a steel Chinese rotor core is blued, then placed in a die-casting mold. Molten aluminum is poured into cavities of the steel rotor as it is a better conductor of electricity. Afterwards, the inner bore is manually formed, the outside diameter is cut, and the rotor subassembly is returned to the bluing furnace. In scenarios one and three, the Chinese rotor core is not subject to any of the steps described in scenario two. Under the third scenario, the rotor assembly is sourced from China, but the stator undergoes additional processing in Thailand. Specifically, stator laminates from China are stacked, then bound by an insulating insert, which is fed through a machine into the center of the stacked stator laminates. However, the insulating insert alone does not keep the laminates together. The stator laminates are then wound with enamel wire, which in addition to the insulating insert, keeps the stator laminates together. This wound enamel coil is machine shaped and now makes up the main coil. Then an additional interlayer insulation is inserted. An auxiliary coil of enamel wire is wound, shaped, then connected to the coil by terminal crimping. The terminal is covered with heat-shrunk insulating sleeves and buried in the wire package. The coil is shaped again before tying the wire package. An inner and outer insulation film are added for protection and the coil is shaped a final time. Then a roller polishing tool is used to grind the inner surface of the stator and another tooling to shape the wedge. The stator then undergoes visual inspection and testing. In scenarios one and two, the Chinese stator is not subject to any of the steps described in scenario three. The assembly process for all scenarios continues in Thailand with the assembly of the motor, which starts with the rotor being heated, aligned, and installed to the shaft. Afterwards, the shaft is cooled and bolted into place. The stator is then bolted into place and secured with the bolt assembly. Subsequently, a stator ring is installed, a protective cover is placed over the stator coil and a gap piece is rotated. Next, spring bushes from China are installed into the case A assembly. The motor and pump assembly are then installed into the case assembly. Afterwards, one end of the muffler, case B assembly is installed onto the discharge pipe A assembly and the other end on the muffler packing. The muffler cover is bolted and soldered to discharge pipe A. Later, the compressor is sealed by welding the case B assembly to the case A assembly. Upon completion, each compressor is labeled and painted. ISSUE: What is the country of origin of the refrigerator compressors 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 du

The United States Trade Representative (“USTR”) has determined that an additional ad valorem duty of 25 percent will be imposed on certain Chinese imports pursuant to its 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 8414.30.40, HTSUS. When determining the country of origin for purposes of applying current 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). The substantial transformation determination is based on the totality of the evidence. See Nat’l Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993). CBP considers factors such as the nature of the operation (including the number of components assembled) and the number of different operations involved. 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 & C.S.D. 90-97. In Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308 (2016), the Court of International Trade (“CIT”) interpreted the meaning of “substantial transformation” as used in the Trade Agreements Act of 1979 (“TAA”) for purposes of government procurement. Energizer involved the determination of the country of origin of a flashlight, referred to as the Generation II flashlight, under the TAA. All the components of the Generation II flashlight were of Chinese origin, except for a white LED and a hydrogen getter. The components were imported into the United States where they were assembled into the finished Ge