N335274

N335274 September 29, 2023 CLA-2-94:OT:RR:NC:N5:433 CATEGORY: Origin TARIFF NO.: 9401.99.1085 Jeremy Page Page Fura, P.C. 939 W. North Avenue, Suite 750 Chicago, IL 60642 RE: The United States-Mexico-Canada Trade Agreement (USMCA), country of origin marking, and the applicability of Section 301 trade remedy of an automobile seat component. Dear Mr. Page: In your letter dated September 12, 2023, on behalf of Keiper Seating Mechanisms Co., Ltd., you request a USMCA and country of origin marking binding ruling for an automobile seat track assembly. The request also seeks confirmation that the automobile seat track assembly is not subject to China Section 301 duties. In lieu of samples, illustrative literature, a product description, and manufacturing processes were provided. The item that is the subject of this ruling request is constructed of foreign sourced raw materials. A description of the item immediately follows. The “Track3000 Assembly” is a seat component constructed of metal and plastic that will be permanently affixed to the metal frame of an automobile seat. Documentation provided states “the assembly will serve two functions: (1) speed-controlled horizontal movement of an automotive seat through the conversion of motor rotation to the track system; and (2) longitudinal strength through the joinder of the car body to the seat to ensure passenger safety.” The assembly contains no upholstery, cushions, seat foundation, backrest, legs, or armrests. The assembly will be incorporated into the front and second seat rows of motor vehicles, according to Original Equipment Manufacturer (OEM) specifications. The applicable subheading for the subject merchandise will be 9401.99.1085, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Seats (other than those of heading 9402), whether or not convertible into beds, and parts thereof: Parts: Other: Of seats of a kind used for motor vehicles: Other.” Sourcing Scenario: The ruling request outlines an operation where (16) metal components (upper track, front bracket spindle, locating pin, wire harness bracket, 10mm spacer, 12mm spacer, lower rail, outer front bracket, outer rear bracket, ball, gear box, spindle, screw washers (2), spindle nut assembly, bolt, spring pin) and (2) plastic components (ball cage, bracket) are sourced from China. In China, these components were produced through cold forming, diecasting, injection mold, machining, and stamping manufacturing operations. The components are shipped and exported to Mexico. No additional components are sourced in Mexico. Collectively, each assembly unit is constructed of 18 discrete components comprising 19 total pieces. The production process undertaken in Mexico follows. Arc-welding and joining of the upper track and the front bracket spindle to form the upper track subassembly. Laser-welding and combining of the outer front bracket and the outer rear bracket to form the upper rail subassembly. Project welding and joining of the locating pin, wire harness bracket, 10MM spacer, 12MM spacer, and the lower rail to form the lower rail subassembly. Joining of the ball cage and ball to form the ball cage subassembly. The “track marriage assembly” entails the combining, lubrication, bending, alignment and multiple sub-operations of the upper rail subassembly, the ball cage subassembly, and the lower rail subassembly to ensure free movement of the ball stop. The resulting unified subassembly is then gauged and supplemental bending occurs prior to final assembly. Combining of the gearbox, spindle, screw washer, and the spindle nut assembly through pressing operations to form the horizontal transmission assembly. Combining of the horizontal transmission subassembly, bolt, spring pin, and plastic bracket to form the final unified automobile seat track assembly. The automobile seat track assembly will then be greased, tested and packaged for onward shipment to Keiper's customer. Each unassembled component is integrated in a specific sequence and each operation results in a more complex subassembly. The final article is a unified seat track assembly component. Information provided cites the design and development period is between 6 months to 2 years. Eligibility for preferential treatment under the USMCA: The USMCA was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018. The USMCA was approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act. General Note (GN) 11 of the HTSUS implements the USMCA. GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA. GN 11(b) states: For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, is eligible for the preferential tariff treatment provided for in the applicable subheading and quantitative limitations set forth in the tariff schedule as a “good originating in the territory of a USMCA country” only if - i. the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries; ii. the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials; iii. the good is a good produced entirely in the territory of one or more USMCA countries using nonoriginating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o)); or… The subject merchandise contains non-originating materials, therefore it is not considered a good wholly obtained or produced entirely in a USMCA country under GN 11(b)(i). Moreover, under GN 11(b)(ii), the subject merchandise is not a good produced entirely in Mexico, exclusively from originating materials. Therefore, we must next determine whether the non-originating materials undergo the tariff shift and other requirements provided for in GN 11(b)(iii) and GN 11(o). The applicable rule of origin for merchandise under subheading 9401.99 HTSUS, is in GN 11(o), HTSUS, which provides, in relevant part: Chapter 94 …2. A change to subheading 9401.90 from any other heading. As an initial matter, the following “Compiler’s Note” is identified in part on page 2 of the General Notes (GN) of the HTSUS (2023) (Rev. 10): “COMPILER’S note: Multiple sets of changes to the Harmonized System have caused heading and subheading numbers and product coverage in some rules of origin for free trade agreements to be inconsistent with those in current tariff schedule chapters. Negotiations are required to enable agreement partners to update each text, plus domestic actions to implement agreed changes. As a result, the rules of origin provisions for certain United States free trade agreements have NOT been updated since major changes to the HTS were proclaimed. Where not updated for HS changes, be aware that the rule you try to apply may contain HTS numbers as in effect in 2002, 2007 or 2012. You can find U.S. proclamations updating rules in the Federal Register (see annexes for operative language). Changes in rules of origin reflecting HS 2022 modifications are generally not yet negotiated and proclaimed for FTAs.” Based on the documentation submitted, a tariff shift occurs with 14 of the discrete foreign origin Chinese material components; they are classified in a subheading other than 9401.99, HTS, at the time of importation into Mexico. A tariff shift does not occur with 4 of the discrete foreign origin Chinese material components; they are classified in subheading 9401.99, HTS, at the time of importation into Mexico. Therefore the requisite tariff shift rule under GN 11(o), Rule 2 to Chapter 94, HTSUS, is not met. In view of these facts, the subject merchandise described above does not qualify for USMCA preferential tariff treatment. Country of Origin Marking: The marking statute, Secti

is applicable when determining the country of origin for purposes of applying Section 301 trade remedies.  (See HQ H301494 (Oct. 29, 2019); HQ H301619 (Nov. 6, 2018); and Belcrest Linens v. Unites States, 741 F.2d 1368, 1370-71 (Fed. Cir. 1984).  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 United States v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (1940)).  This determination is based on the totality of the evidence.  (See National Hand Tool Corp. v. United States 16 Ct. Int’l Trade 308, 312 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993).  In the instant case, the foreign Chinese components lose their identity in Mexico and undergo a substantial transformation, thereby, taking on a new name, character, and identity.  The joining, pressing, assembly, attaching, greasing, loading, laser welding, re-striking, insertion and placement, alignment, and positioning of individual components into more substantial subcomponents that are then integrated into a larger more complex subassembly that is distinguishable from the individual components sourced from China.  After final assembly manufacturing operations, the complete seat track assembly is then laser-marked with a part number.  The seat track assembly is manufactured to an extent that none of the individual components alone can perform (1) the “speed controlled horizontal movement of an automotive seat through the conversion of motor rotation to the track system” or (2) the “longitudinal strength through the joinder of the car body to the seat to ensure passenger safety” functionality.  Only through the integration of the material components into a more substantial subassembly is the functional end product created.  In view of these facts, the Track3000 assembly is not subject to the additional duties under Section 301 of the Trade Act of 1974