October 1, 2023

Tullio Corradini

Trusted Legal Source

Customs ruling of the Week- Country of Origin of Battery Modules and Battery Packs and the Applicability of Certain Trade Remedies Under Section 301

Customs ruling of the Week- Country of Origin of Battery Modules and Battery Packs and the Applicability of Certain Trade Remedies Under Section 301

Most important Plan: Emotion optimistic about your region of origin perseverance? CBP’s selection on battery modules and packs confirms the great importance of knowledge the complexity of the sizeable transformation policies.

In a determination impacting the electric car, renewables, and other associated industries, U.S. Customs and Border Security (CBP) discusses the place of origin of battery modules and battery packs, as well as the applicability of selected trade therapies beneath Portion 301 to these types of items.  The goods CBP analyzes in ruling N329847 (Jan. 10, 2023) are lithium-ion battery modules and battery packs that are employed in numerous battery electric programs for electric vehicles.  Each battery module’s main elements include: lithium-ion battery cells, a prime and bottom housing, a mobile holder and existing collector, a module cold plate, and a battery administration board. The battery modules are produced into battery packs that contains various battery modules. Both equally the battery modules and battery packs are assembled in Canada by multi-move assembly processes that consist of: implementing adhesive, aligning, urgent, curing, plasma cleaning, laser ablation, wire bonding, material injection, bolting, and testing of inputs sourced from Canada, China, Germany, Indonesia, Japan, Singapore, South Korea, and the United States.  The lithium-ion battery cells are sourced from either China, Japan, or South Korea.

19 C.F.R. § 134.1(b) defines nation of origin as: “… the country of manufacture, output, or advancement of any posting of overseas origin entering the United States. More operate or materials additional to an short article in another country ought to influence a considerable transformation in purchase to render these kinds of other place the “country of origin” …” A considerable transformation happens when an article emerges from a production system with a name, character, and use that differs from the initial materials subjected to the processing.” See Countrywide Hand Tool Corp. v. United States, 16 C.I.T. 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993). CBP place of origin determinations on a case-by-case basis dependent on the totality of proof.

Making use of the sizeable transformation assessment to the battery modules and battery packs assembled in Canada, CBP focuses on the component giving the “essence” of the battery module and in which region that part undergoes a substantial transformation. In its ruling CBP establishes that the place of origin for the products is China, Japan, or South Korea, relying on the place the battery cells are made. CBP states that the assembly functions in Canada do not considerably completely transform the battery cells, which supply the essence of the battery module and subsequent battery pack, into an write-up with a new identify, character, or use, different from that possessed by the article prior to processing. 

CBP has formerly held that assembling battery cells into battery packs does not characterize significant transformation of the battery cells mainly because the fundamental character of the cells is not altered simply by being positioned jointly in plastic casing.  See HQ 563045 (Aug. 9, 2004) and HQ 734393 (Mar. 20, 1992). 

CBP’s ruling offers an case in point of why importers and makers require to be aware of the producing and assembly standards CBP considers “substantial” more than enough to constitute a significant transformation.