H339179

HQ H339179 September 25, 2024 OT:RR:CTF:VS H339179 AM CATEGORY: Origin, Marking Mark Heusel Dickinson Wright PLLC 350 S. Main St., Ste. 300 Ann Arbor, Michigan 48103 RE: Country of Origin of Exhaust and Intake Valves; Substantial Transformation; Section 301 Trade Remedy Duties Dear Mr. Heusel: This is in response to your request, dated April 16, 2024, filed on behalf of your client, [ ] (“Company A”). In your letter, you request a binding ruling on the country of origin of intake valves and exhaust valves (collectively, “valves”) for purposes of marking and the applicability of Section 301. Your request, submitted as an electronic ruling request, was forwarded to this office from the National Commodity Specialist Division (“NCSD”) for response. You have asked that certain information submitted in connection with this ruling 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 in the attachments to the ruling request, forwarded to our office, will not be released to the public and will be withheld from published versions of this ruling. FACTS: The merchandise at issue are intake valves and exhaust valves. You state that these valves are mechanical components assembled within internal combustion engines and are responsible for controlling the flow of fluid or gas during internal combustion. You describe the two utilitarian categories of valves: (1) intake valves that open to let air in, then close immediately to keep the cylinder airtight, allowing them to build compression, and (2) exhaust valves that allow the gas to exhaust out after the combustion process occurs following ignition. The valves are both designed for use in Caterpillar’s series 3500 diesel engines. In response to a request from U.S. Customs & Border Protection (“CBP”) for additional information, you submitted a chart showing the names, location, and types of materials supplied by Company A’s suppliers for the valves. Intake valves Company A currently manufactures the intake valves in China and is considering shifting part of this process to Mexico. In China the following operations would take place: Cutting material: the cylindrical is cut short to remove excess materials Grind chamfer: Remove the burrs at both ends of the cutting cylindrical stem. Electric upsetting & Extrusion: Stamping the bar plating into the rough shape of the valve (referred to as the “valve blank”) Bar stock hardening: heat treatment (the blank is heated to a certain temperature for a period of time and then cooled in oil) Bar stock temper: heat treatment by tempering (heat the blank for a certain temperature for a period of time and then air cooling) Shot blasting: used to remove dirt, grime and imperfections from the valve Straightening the stem and head, and inspect the stem and head runout In Mexico the following operations would take place: Grind of the valve tip end Rough grind of the valve stem Rough turn top of head (“TOH”) Semi-grind tip end: Partial grind of valve tip end to remove excess materials and imperfections Rough grind and finish grinding valve stem: grinding the valve stem to remove excess materials and imperfections Magnetic detection Rough turn head fillet Rough grind and finish grinding of grind fillet, valve head, seat face, keeper groove, and tip end: grinding multiple parts of the fillet, seat face, keeper grove, and tip end to remove excess materials and imperfections Inspection before chrome plating is conducted Valve stem receives chrome plating Stem polishing Comprehensive inspection of valve Comprehensive inspection of intake valve Visual inspection of the finished valve Marking the top of valve head Demagnetize valve Clean, pack, and store valves for shipping Exhaust Valves Company A currently manufactures the exhaust valves in China and is considering shifting part of this process to Mexico. In China, the following operations would take place: For the “head material”: Cutting material: the cylindrical is cut short to remove the excess material Grind chamfer: Remove the burrs at both ends of the cutting cylindrical stem Electric upsetting & Extrusion: Stamping the bar plating into the rough shape of the valve (referred to as the “Valve blank”) Aging treatment: heat the valve blank to a certain temperature and maintain for a period of time, followed by air cooling Cutting and grinding tip end face: remove excess material from the bar and grind the cutting surface For the “stem material”: Cutting material: the cylindrical is cut short to remove excess material Bar stock hardening: heat treatment (the blank is heated to a certain temperature for a period of time and then cooled in oil) Bar stock temper: heat treatment by tempering (heat the blank for certain temperature for a period of time and then air cooling) Rough grind stem: grinding the stem to remove excess material Cutting and grinding tip end face: remove excess material from the bar and grind the cutting surface Magnetic detection: Magnetic particle inspections conducted by running a magnetic current through the material that is being inspected. For the “head and stem materials” welded together: Friction welding: the head material is welded together with the stem Friction weld clean up: remove excess material in the welding Welding temper: heat the welding valve to a certain temperature, heat insulation, and then air cool to remove the stress of the welding position Grinding welding line: grinding welding position with grinding machine In Mexico, the following operations would take place: Rough grind of the valve stem Rough turns of Outside Diameter (“OD”) 1, top of valve head, and plasma transferred arc (“PTA”) groove Cutting and rough grind valve tip end Ultrasonic inspection PTA seat facing welding process Stress relief and stress reversal Rough grind of valve head Fluorescence detection Tip end hardening Induction tempering: heat treatment by tempering (the blank is heated to ascertain temperature for a period of time and then cooled in oil) Grind stem: grinding the stem to remove excess materials and imperfections Semi-grind tip end: Partial grind of valve tip end to remove excess materials and imperfections Rough turn head fillet Magnetic detection Rough grind head face and finish grind of top head: grinding the valve head face and top of head to remove excess materials and imperfections Finish grinding of grind fillet, stem, seat face, keeper groove, and tip end: grinding multiple parts of the valve stem, seat face, keeper grove, and tip end to remove excess materials and imperfections Inspection before chrome plating is conducted Valve stem receives chrome plating Fluorescence detection to identify any imperfections following the valve stem chrome plating Stem polishing Comprehensive inspection of the valve to ensure environmental regulations are met, productions is met, and that all chroming and inspection equipment is sufficiently advanced to handle the requirements of the chroming process Visual inspection of the finished valve Marking top of valve head Demagnetize valve Clean, pack, and store the valves for shipping You assert the country of origin for the valves is Mexico. ISSUES: What is the country of origin of the exhaust valves and intake valves as described for purposes of section 301 trade remedies? What is the country of origin of the exhaust valves and intake valves as described for marking purposes? LAW & ANALYSIS: Country of Origin for Purposes of Section 301 Trade Remedies 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 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, Harmonized Tariff Schedule o

Country of Origin for Purposes of Section 301 Trade Remedies 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 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, Harmonized Tariff Schedule of the United States (“HTSUS”).When determining the country of origin for purposes of applying current trade remedies under Section 301, the substantial transformation analysis is applicable. See, e.g., Headquarters Ruling (“HQ”) H301619, dated November 6, 2018. 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, 681 F.2d 778 (C.C.P.A. 1982). This 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). If the manufacturing or combining process is a minor one which leaves the identity of the article intact, a substantial transformation has not occurred. See United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 (1940).To determine whether a substantial transformation occurs, 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, and 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 m