N325943

N325943 May 25, 2022 OT:RR:NC:N2:220 CATEGORY: Origin Laurie Montizambert Price Industries 638 Raleigh Street Winnipeg, R2K 3Z9 Canada RE: The country of origin of LED Drivers and the applicability of certain trade remedies under Section 301 Dear Ms. Montizambert: In your letter dated May 6, 2022, you requested a country of origin ruling. The merchandise under consideration is identified as the Ultra Remote Driver Cabinets (URDCs), that are described as steel electrical enclosures housing one or more LED drivers, terminal blocks, cable assemblies, and fuses, etc. The LED Drivers convert AC mains power into various output DC voltages, depending on the model, which you provided Model Numbers URDC-CD-020, URDC-CD-120, URDC-CD-001, URDC-CD-002, and URDC-CD-042 as examples, and supply the DC electricity to power commercial lighting apparatus. You suggest that the URDCs are classifiable under subheading 8504.40.9540, Harmonized Tariff Schedule of the United States (HTSUS). We agree to the eighth digit only. The principal function of the URDC is to supply power to LED lighting. The LED Drivers are the primary source of electricity to the connected lights, and the additional electrical apparatus mounted inside the enclosure is present to facilitate the supply of rectified power to the lights. As such, we are of the opinion that the URDCs are classified according to their function as a power supply. However, power supplies of subheading 8504.40.95, HTSUS, are further classified by their corresponding maximum power output as indicated in Watts. As a result of the foregoing, URDC Model Number URDC-CD-020 is classifiable under subheading 8504.40.9530, HTSUS, which provides for "Electrical transformers, static converters…: Static converters: Other: Rectifiers and rectifying apparatus: Power supplies: With a power output exceeding 150W but not exceeding 500W." URDC Model Numbers URDC-CD-120, URDC-CD-001, URDC-CD-002, and URDC-CD-042 are classifiable under 8504.40.9540, HTSUS, which provides for “Electrical transformers, static converters…: Static converters: Other: Rectifiers and rectifying apparatus: Power supplies: Other.” In your request, you state that the assembly of the URDCs occurs in Canada and involves the laser cutting, machine pressing, welding, and powder coating of steel sheet to form an enclosure. Next, LED Drivers of Chinese origin are bolted inside the cabinet, along with terminal/fuse blocks of Mexican origin and various wires and hardware. The URDCs are tested and packaged for shipping. The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. The "country of origin" is defined, in pertinent part, in 19 CFR 134.1(b) as [T]he 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; however, for a good of a NAFTA or USMCA country, the marking rules set forth in part 102 of this chapter (hereinafter referred to as the part 102 Rules) will determine the country of origin. Pursuant to section 102.0, interim regulations, related to the marking rules, tariff-rate quotas, and other USMCA provisions, published in the Federal Register on July 6, 2021 (86 FR 35566), the rules set forth in §§ 102.1 through 102.18 and 102.20 determine the country of origin for marking purposes with respect to goods imported from Canada and Mexico. Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes, with the exception of textile goods which are subject to the provisions of 19 C.F.R. § 102.21. See 19 C.F.R. § 102.11. Applied in sequential order, 19 CFR Part 102.11(a) provides for: (a) The country of origin of a good is the country in which: (1) The good is wholly obtained or produced; (2) The good is produced exclusively from domestic materials; or (3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20 and satisfies any other applicable requirements of that section, and all other requirements of these rules are satisfied. The URDCs are neither “wholly obtained or produced” nor “produced exclusively from domestic materials.” Therefore, paragraphs (a)(1) and (a)(2) cannot be used to determine the country of origin of the cabinets, and paragraph (a)(3) must be applied next to determine the origin of the finished article. The URDCs are classified under subheading 8504.40, Harmonized Tariff Schedule of the United States (HTSUS). The tariff shift requirement in Part 102.20 for the URDCs at issue states: A change to subheading 8504.10 through 8504.50 from any other subheading outside that group. As the LED Drivers from China are classified under subheading 8504.40.9530 and 8504.40.9540, HTSUS, they do not meet the tariff shift. As a result, Part 102.11(a) does not apply. Section 102.11(b) states, in relevant part: Except for a good that is specifically described in the Harmonized System as a set, or is classified as a set pursuant to General Rule of Interpretation [(“GRI”)] 3, where the country of origin cannot be determined under paragraph (a) of this section: The country of origin of the good is the country or countries of origin of the single material that imparts the essential character to the good…. In determining the “essential character” of the finished good, Section 102.18(b)(1) provides, in relevant part: (b) (1) For purposes of identifying the material that imparts the essential character to a good under Part 102.11, the only materials that shall be taken into consideration are those domestic or foreign materials that are classified in a tariff provision from which a change in tariff classification is not allowed under Part 102.20 specific rule or other requirements applicable to the good … (ii) Materials that may be considered include materials produced by the producer of the good and incorporated in the good. For example, if a producer of a good purchases raw materials and converts those raw materials into a component that is incorporated in the good, that component is a material that may be considered for purposes of identifying the materials that impart the essential character to the good, provided that the component is classified in a tariff provision from which a change in tariff classification is not allowed under the specific rule… The LED Drivers from China are the articles classified in a tariff provision from which a change in tariff classification is not allowed. Further, it is the opinion of this office that the LED Drivers provide for the essential character of the assembled URDCs, where the assembly operations conducted in Canada are not sufficiently complex so as to substantially transform the LED Drivers as a result of those operations. Accordingly, the country of origin of the URDCs, Model Numbers URDC-CD-020, URDC-CD-120, URDC-CD-001, URDC-CD-002, and URDC-CD-042, will be China upon importation into the United States. Regarding the applicability of Section 301 trade remedies to the URDCs described, CBP relies on the substantial transformation analysis when determining the country of origin for purposes of applying Section 301 trade remedies. The courts have held that a substantial transformation occurs when an article emerges from a process with a new name, character or use different from that possessed by the article prior to processing. United States v. Gibson-Thomsen Co., Inc.,

when determining the country of origin for purposes of applying Section 301 trade remedies. The courts have held that a substantial transformation occurs when an article emerges from a process with a new name, character or use different from that possessed by the article prior to processing. United States v. Gibson-Thomsen Co., Inc., 27 CCPA 267, C.A.D. 98 (1940); National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff’d, 989 F. 2d 1201 (Fed. Cir. 1993); Anheuser Busch Brewing Association v. The United States, 207 U.S. 556 (1908) and Uniroyal Inc. v. United States, 542 F. Supp. 1026 (1982). However, if the manufacturing or combining process is merely a minor one that leaves the identity of the article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983) (Uniroyal). Substantial transformation determinations are based on the totality of the evidence. See Headquarters Ruling (HQ) W968434, date January 17, 2007, citing Ferrostaal Metals Corp. v. United States, 11 CIT 470, 478, 664 F. Supp. 535, 541 (1987). It is the view of this office that the LED Drivers impart the essence of the finished cabinet. Further, we are of the opinion that the work performed in Canada does not substantially transform the LED Drivers as a result of mounting inside a steel enclosure and connecting them electrically to terminal and/or fuse blocks. The assembly work, as described, is not complex so as to produce a new and different article. As such, the URDCs described will be subject to the additional duties applicable to products of China under Section 301 of the Trade Act of 1974, as amended, upon importation into the United States.Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by r