Importer Tells CIT Its DC Motors Made in Vietnam, Not China
Importer Southern Motion told the Court of International Trade that its electric DC motors were made in Vietnam and thus should have received a country of origin determination of Vietnam and not China. Filing a complaint at the trade court on March 31, Southern Motion said its products were improperly assessed Section 301 duties as a result of the COO decision (Southern Motion v. United States, CIT # 25-00033).
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The importer claimed its goods were made by the Vietnamese branch of manufacturer Kaidi Electrical Co. -- a company that also has a branch in China. The motors at issue were purportedly shipped from Vietnam and entered into a U.S. foreign-trade zone in Mississippi in April to August 2021.
Southern Motion said the "incorrect manufacturer identifier was inadvertently used" in its QAD software, mistakenly identifying Kaidi China as the manufacturer instead of Kaidi Vietnam. While the importer historically entered the goods from China, the importer switched to using the Vietnamese manufacturer, leading to the mistake, the complaint said.
CBP denied a protest from Southern Motion that claimed that the true COO was Vietnam.
In its complaint, the importer said the proper COO was Vietnam. The Vietnamese manufacturer sources rotors, stators and motor wires from Vietnam, though it gets tube assemblies, plastic caps, end covers, iron cores, insulation plates and worm gear from China.
In China, four manufacturing processes occur, including slicing, injection molding and die stamping. From there, the goods go to Vietnam and "undergo significant processing and become a completed DC motor," the complaint said. The importer identified 11 manufacturing steps that occur in Vietnam, including the preparation and production of the rotors. Southern Motion argued that a "substantial transformation occurs in Vietnam," imbuing them with a COO of Vietnam.
The importer noted a 2021 CBP ruling in which the agency determined that a DC motor's COO was Mexico, since it was assembled in Mexico "from components sourced from primarily Mexico and China and one component sourced from Serbia." In CBP's substantial transformation analysis, the agency said the manufacturing and assembly operations substantially transformed the individual components into a new article of commerce with a "changed name, character, and use." The importer drew similarities between that case and the present issue with its motors.