N335711

N335711 October 31, 2023 OT:RR:NC:N4:463 CATEGORY: Country of Origin TARIFF: 9403.20.0050; 9903.88.03 Sydney H. Mintzer Mayer Brown LLP 1999 K Street, NW Washington, DC 20006 RE: The country of origin of two Sonos speaker floor stands Dear Mr. Mintzer: This ruling is being issued in reply to your letter dated October 3, 2023, on behalf of your client, Sonos, Inc, requesting a country-of-origin and Section 301 applicability ruling on two Sonos speaker floor stands, the Optimo1 Stand and the Optimo 2 Stand. In lieu of samples, illustrative literature, spreadsheets, and product descriptions were provided. FACTS The Optimo 1 and Optimo 2 are floor stands designed to hold Sonos speakers. The primary differences between the stands are (1) the method of the speaker’s attachment (platform v. stem), and (2) their heights. Both stands are comprised of three main parts: a base subassembly, a vertical post, and a top subassembly. The base subassembly consists of a plastic base bottom, a weight, and a steel top cover. The vertical post is an aluminum post with a plastic cap. On the Optimo 1, the top assembly is made up of a zinc alloy platform ring and a plastic bottom cover, and in the Optimo 2, the top assembly is an aluminum stem with mounting holes. OPTIMO 1 COMPONENTS AND THEIR MATERIALS Base Bottom (plastic) Base Weight (steel) Base Cover (steel) Post (aluminum) Post Cap (plastic) Platform Ring (zinc alloy) Platform Ring Bottom Cover (plastic) Washer (aluminum) Foot (silicone, primer) Miscellaneous Fasteners (various) OPTIMO 2 COMPONENTS AND THEIR MATERIALS Base Bottom (plastic) Base Weight (steel) Base Cover (steel) Post (aluminum) Post Cap (plastic) Stem (aluminum) Washer (aluminum) Landing Pad (silicone) Miscellaneous Fasteners (various) OPTIMO 1 MANUFACTURING SCENARIOS SCENARIO 1 The post is made in Malaysia and shipped to China. All other parts are made in China and all assembly and packaging operations occur in China. SCENARIO 2 The post, platform bottom and platform ring are made in Malaysia and shipped to China. All other parts are made in China and all assembly and packaging operations occur in China. SCENARIO 3A The post, platform bottom, platform ring and base cover are made in Malaysia and shipped to China. All other parts are made in China and all assembly and packaging operations occur in China. SCENARIO 3B The post, platform bottom, platform ring and base cover are made in Malaysia and shipped to China where the post and platform ring will undergo powder coating (minor processing). All other parts are made in China and all assembly and packaging operations occur in China. OPTIMO 2 MANUFACTURING SCENARIOS SCENARIO 1 The post is made in Malaysia and shipped to China. All other parts are made in China and all assembly and packaging operations occur in China. SCENARIO 2 The post and stem are made in Malaysia and shipped to China. All other parts are made in China and all assembly and packaging operations occur in China. SCENARIO 3A The post, stem and base cover are made in Malaysia and shipped to China. All other parts are made in China and all assembly and packaging operations occur in China. SCENARIO 3B The post, stem and base cover are made in Malaysia and shipped to China where the post and stem will undergo powder coating (minor processing). All other parts are made in China and all assembly and packaging operations occur in China. CLASSIFICATION Classification under the Harmonized Tariff Schedule of the United States (HTSUS) is made in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. If the goods cannot be classified solely based on GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order. In understanding the language of the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and coding System, which constitutes the official interpretation of the Harmonized System at the international level, may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading and are generally indicative of the proper interpretation of the HTSUS. The ENs to Chapter 94 of the HTSUS state, in relevant part, for the purposes of this Chapter, that the term “furniture” means: (A): Any “movable” articles (not included under other more specific headings of the Nomenclature), which have the essential characteristic that they are constructed for placing on the floor or ground, and which are used, mainly with a utilitarian purpose, to equip private dwellings, hotels, theatres, cinemas, offices…. The articles described above meet this definition of furniture. The applicable classification for the Optimo 1 Stand and the Optimo 2 Stand will be subheading 9403.20.0050, HTSUS, which provides for “Other furniture and parts thereof: Other metal furniture: Household: Other: Other.” The general rate of duty will be free. COUNTRY OF ORIGIN Section 134.1(b), Customs Regulations (19 CFR 134.1(b)) defines “country of origin” as the country of manufacture, production, or growth of any article of foreign origin entering the U.S. 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.” A substantial transformation occurs when articles lose their identity and become articles having a new name, character, or use. Generally, the U.S. Court of International Trade has determined whether a substantial transformation has occurred by asking whether the manufacturing or processing substantially transformed the foreign materials in question into an article having a name, character or use different from the name, character, or use of those materials before such processing. Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308, 1317 (C.I.T. 2016) (quoting Precision Specialty Metals, Inc. v. United States, 116 F. Supp. 2d 1350, 1364 (C.I.T. 2000)). The primary focus of the substantial transformation test is whether the work or material added to an article in another country changed the character or use of the article. See Energizer, 190 F. Supp. 3d at 1318. A party can show a change in the character of materials added during processing with evidence that the processing substantially altered the form of those materials. Id. at 1318. Under the CBP laws, if the article consists of materials produced, derived from, or processed in more than one country, it is considered a product of the country where it last underwent a “substantial transformation.” According to U.S. courts, a substantial transformation occurs when articles lose their identity as such and become new articles having a new “name, character or use.” In order to determine whether a substantial transformation has occurred, CBP considers the totality of the circumstances and makes such determinations on a case-by-case basis. CBP has stated that a new and different article of commerce is an article that has undergone a change in commercial designation or identity, fundamental character, or commercial use. A determinative issue is the extent of the operations performed and whether the materials lose their identity and become an integral part of the new article. The requester has provided three manufacturing scenarios for each Optimo stand with between one and four components made in Malaysia and the remaining components, final assembly and packaging performed in China. Additionally, the third manufacturing scenario includes a variation (3B) in which additional Chinese processing (powder coating) is performed on the Malaysian metal materials. Under scenario 1, the requester asserts that the height of the vertical posts is of such paramount importance to the function of the speaker stands that the

in any of the aforementioned four manufacturing scenarios (1, 2, 3A or 3B) and notes that the post is only one of three major assemblies that comprise the speaker stands, and that all three major components (base, post, and platform/stem) are all required parts of a speaker stand and that no one component is of significantly greater importance than any other.There is ample precedent in the Customs Ruling On-Line Search System (CROSS) that furniture components produced in one country lose their essential character when assembled with components of similar importance in another country, where they take on a new name, character and function.  (See HQRL H330862, HQRL H268491, and NYRL N334531.)  This is the case with the subject speaker stands, where the Malaysian components are assembled with Chinese components of similar importance, lose their name, character and function in China, and thus become components of a Chinese speaker stand.In support of this position, this office notes that both stands, under all four manufacturing scenarios, contain a majority of Chinese parts (from 6 to 9 out of approximately 10), undergo final assembly and packaging in China, and that none of the parts have the essential character of a speaker stand either individually or when grouped by country of origin.This office also notes that although the cost expended on manufacturing in one country vs. that expended in another is a crude measure with respect to origin, it nonetheless has some utility when considered as one of several factors.  For the Optimo 1 Stand, under the four manufacturing scenarios provided, the cost of the Malaysian materials and processing ranged from approximately 17% to 40% of the total processing cost, with the remaining cost (the majority) incurred in China.  For the Optimo 2 Stand, under the four manufacturing scenarios provided, the cost of the Malaysian materials and processing ranged from approximately 19% to 38% of the total processing cost, with the remaining