N318162

N318162 April 7, 2021 CLA-2 OT:RR:NC:N1:102 CATEGORY: Origin, USMCA Yuka Miura Nachi America Inc. 715 Pushville Road Greenwood, Indiana 46143 RE: The country of origin of transmission bearings assembled in Mexico, and USMCA Dear Yuka Miura: In your letter dated March 8, 2021, you requested a ruling on the country of origin of transmission bearings. A description of the assembly process was submitted for our review. The articles under consideration are referred to as 33BC and 50BC transmission ball bearings. The radial ball bearings are made of steel and are designed for use in transmissions of automobiles. Each ball bearing consists of inner and outer races, a retaining cage assembly, and a single row of balls. The 33BC ball bearings feature an outside diameter that measures 48 mm, and a width that measures 7 mm. The 50BC ball bearings feature an outside diameter that measures 68 mm and a width that measures 7 mm. In your submission, you suggest that the finished transmission bearings are classified under subheading 8482.10.5052, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Ball or roller bearings, and parts thereof; Ball bearings; Other: Radial Ball Bearings; Single row Bearings; Other bearings have an outside diameter of Over 52 mm but not over 100 mm. We agree that the 50BC transmission bearings meet the terms of the subheading. However, based on the measurement of the outside diameter, the 33BC bearings do not meet the terms of the subheading and therefore, are classified in an alternative 8482 subheading. The applicable subheading for the 33BC transmission bearings will be 8482.10.5048, HTSUS, which provides for Ball or roller bearings, and parts thereof; Ball bearings; Other: Radial Ball Bearings; Single row Bearings; Other bearings have an outside diameter of Over 30 mm but not over 52 mm. The general rate of duty is 9 percent ad valorem. The applicable subheading for the 50BC transmission bearings will be 8482.10.5052, HTSUS, which provides for Ball or roller bearings, and parts thereof; Ball bearings; Other: Radial Ball Bearings; Single row Bearings; Other bearings have an outside diameter of Over 52 mm but not over 100 mm. The general rate of duty is 9 percent ad valorem. In your letter, you describe three country of origin scenarios. In all three scenarios, the bearings are assembled in Mexico. Prior to the assembly process the inner and outer races are forged in China. Raw steel rod is subjected to a forging process to form the inner and outer races. The forging process consists of cold-rolling processes and rough grinding processes. The forged rings are then turned to be formed into a ring shape in either China or Japan. Afterwards, the rings are subjected to a heat-treating process in either China or Japan, and then exported to Mexico. As previously mentioned, the processes that occur in between the forging and assembly processes take place in either China or in Japan. In scenario one, the races are turned, and heat treated in China. In scenario two, the races are turned in China and heat treated in Japan. In scenario three, the races are turned, and heat treated in Japan. In Mexico, the inner and outer races are subjected to surface grinding processes, where material is removed from the horizontal surfaces of the races to create a flat surface. The races then undergo a honing process and final grinding processes that remove material from the raceways of races, allowing the races to feature precision raceways with the required depths and required performance tolerances to perform as anti-friction ball bearings used in the transmission of an automobile. During the final assembly process in Mexico, the balls, which are manufactured in either Indonesia or China are inserted into the inner and outer races. Afterwards, the retaining cages produced in Japan are installed to form a retaining cage assembly. Each completed ball bearing is subjected to demagnetization, a clean processing, degreasing, various inspections, is labeled and packaged for importation. With regard to your request for the appropriate country of origin of the ball bearings, 19 C.F.R. § 134.1(b) provides in pertinent part as follows: Country of origin means the country of manufacture, production, or growth of any article of foreign origin entering the United States. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the “country of origin” within the meaning of this part. As stated in HQ 735009, dated July 30, 1993, “The country of origin is the country where the article last underwent a ‘substantial transformation’ that is, processing which results in a change in the article's name, character, or use.” The test for determining whether a substantial transformation will occur is whether an article emerges from a process with a new name, character, and 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). This determination is based on the totality of the evidence. See National Hand Tool Corp. v. United States, 16 C.I.T. 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993). In order to determine whether a substantial transformation occurs when components of various origins are assembled into completed products, all factors such as the components used to create the product and manufacturing processes that these components undergo are considered in order to determine whether a product with a new name, character, and use has been produced. No one factor is decisive, and assembly operations that are minimal will generally not result in a substantial transformation. In the three scenarios, the assembly of the inner and outer races, the retaining cage assembly, and balls in Mexico would not entail the type of processing required to meet the substantial transformation test. The assembly processes that occur in Mexico involve processes such as inserting and installing components to each other. The assembly of the ball bearings is considered simple assembly, and the Japanese, Chinese, or Indonesian components are not “substantially transformed” by the assembly operations that occur in Mexico. Instead, the country of origin of the races, which are the essence of a ball bearing, are considered when determining the country of origin of ball bearings for the purpose of applying 301 trade remedies. In this instance, the inner and outer races are forged and undergo an initial grinding process in China and are later subjected to surface and finishing grinding processes in Mexico. Headquarters (HQ) ruling 562528, dated December 10, 2002, discusses the country of origin of a ball bearing, and states that the fundamental character and use of the bearings is determined after the steel rings are ground and finished into races with precision raceways and they are no longer considered steel rings. This rational is also discussed in HQ rulings 731968, March 19, 1990, and 731969, dated March 19, 1900, where rings are heat treated and polished in one country and the races are created, and superfinishing occurs in the second country. In these rulings, the country of origin of the bearings was determined to be the country in which the rings become races with precision raceways. Likewise, in these three scenarios, the rings of the ball bearings become races with precision raceways for anti-friction ball bearings in Mexico, as the final grinding and honing processes occur in Mexico. The final grinding and honing processes in Mexico substantially transform the rings, which were forged and subjected to an initial grinding in China, into precision races for ball bearings. The simple assembly processing of the ball bearings performed in Mexico is not sufficient to be a substantial transformation; it is the additional processing also performed in Mexico consisting of honing and final grinding that substant

set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request.  This position is clearly set forth in Title 19, Code of Federal Regulations (CFR), Section 177.9(b)(1).  This section states that a ruling letter is issued on the assumption that all the information furnished in the ruling letter, whether directly, by reference, or by implication, is accurate and complete in every material respect.  In the event that the facts are modified in any way, or if the goods do not conform to these facts at time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and submit a request for a new ruling in accordance with 19 CFR 177.2.  You should also be aware that the material facts described in the foregoing ruling may be subject to periodic verification by CBP.A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Sandra Martinez at Sandra.Martinez@cbp.dhs.gov.Sincerely,Steven A. MackDirectorNational Commodity Specialist Division