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NY I84981

September 10, 2002

MAR-2 RR:NC:MM:101 I84981


Mr. Michael E. Roll
KMZ Rosenman
525 West Monroe Street, Suite 1600
Chicago, Illinois 60661-3693


Dear Mr. Roll:

This is in response to your letter dated August 8, 2002 requesting a ruling on behalf of your client Morse Automotive Corporation on the country of origin marking requirements for imported automotive brake pads. Samples were submitted with your letter for review.

Specifically, you are requesting a country of origin ruling on two different types of automotive brake pads: an integral molded and a riveted brake pad. The integrally molded brake pad is identified as part number MKD 376. The riveted brake pad is identified as part number MKD 257.

In your narrative you state that the brake pads will be produced outside North America in Country A. Specifically, the brake pads will be manufactured in Country A using the following raw materials:

Mounting Plate: This material represents from 50 to 65% of the material costs of each brake pad and is a critical material in the manufacture of the brake pad. The mounting plate will originate in Country B (Country B will not be a NAFTA country).

Mounting Hardware: Mounting hardware consists of a wear plate and a piston clip. These items represent about 5% of the material costs of each brake pad. The piston clip is used to hold the mounting plate and brake pad in the brake caliper. The wear plate is attached to alert the vehicle owner when the brake pads become worn out and require change. Like the mounting plate, the mounting hardware will originate in Country B.

Friction Materials: These materials account for the remaining material costs and are: graphite, steel fibers, phenolic resin, kevlar, cashew dust, rubber crum, carbon, barytes, iron powder, wolastonite, and aluminum.

In Country A the following process will take place:

Addition of adhesive to mounting plate. The purpose of adding the adhesive is to facilitate the bonding of the friction material to the mounting plate.

Creation of the friction pad. The friction pad is created through the following steps:

Mix graphite, steel fibers, phenolic resin, etc. The purpose of mixing the friction pad raw materials together is to create a powder material of a particular consistency and formula. Form the mix into the basic shape of the friction material. In this step, the powder mixture created in the above step is passed through a machine that forms the powder into the shape of the finished pad. Cure the friction pad. After being formed into shape, the brake pad is “cured” by applying heat and pressure. In the case of the integrally molded brake pad, the preform pad is manually placed on top of the mounting plate prior to inserting the brake pad into tooling. The tooling is then placed into a machine that applies heat and pressure to solidify or “cure” the brake pad and bond the friction pad to the mounting plate. In the case of the riveted brake pad, the preform pad is inserted into the tool without the mounting plate (joining of the pad and the mounting plate occurs later in the production process via a riveting operation). Post cure. After the friction material has been cured (and bonded to the mounting plate, in the case of the integrally molded brake pad), the brake pad undergoes a second curing operation. This operation consists of placing the pad in an oven at approximately 380° F. for about 3 to 3½ hours. This operation is designed to further cure the friction material. Finishing. Next, the brake pads undergo grinding operations to ensure that the friction material is smooth. In addition, the friction material is chamfered (beveled). Painting. Finally, the pads are painted and “edge coated”. The painting is for aesthetic purposes. The edge coating identifies the manufacturer of the brake, the grade of friction material used and includes a date stamp to indicate when the brake pad was manufactured.

3. Attachment of mounting and other hardware: Finally, wear sensors and piston clips will be attached to the brake pads. The purpose of the wear sensors is to notify the vehicle operator that the friction material has been worn to the point that it needs to be replaced. The piston clips enable the brake pads to be attached to the brake caliper.

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 19 CFR 134.1(b) as "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; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin." For tariff purposes, the courts have held that a substantial transformation occurs if a new and different article emerges having a distinctive name, character or use. AnheuserBusch Brewing Association v. The United States, 207 U.S. 556 (1908) and Uniroyal Inc. v. United States, 542 F. Supp. 1026 (1982).

In this case, you state that you believe that the origin of the mounting plate (Country B) imparts the origin of the brake pad because the mounting plate is the most significant component used to make the brake pads and it accounts for the bulk of the material cost.

We disagree with your analysis. We believe that substantial transformation occurs in Country A where: Adhesive is applied to the mounting plate The friction pad is created (six manufacturing steps), and Attachment of mounting and other hardware.

After these processes are completed a finished brake pad emerges that is put up for retail sale to the consumer as a brake pad.

Therefore, the Country of Origin of the Integrally Molded Brake Pad – MKD 376, and the Riveted Brake Pad – MKD 257 will be Country A.

This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 CFR Part 177).

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 Robert DeSoucey at 646-733-3008.


Robert B. Swierupski

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