MAR-2-05 CO:R:C:V 734213 RSD
Mr. Bill Yates
General Manager
Interactive Information Systems
52 Marway Circle
Rochester, N.Y. 14624
RE: Country of origin marking requirements for an imported
computer monitor made into a touchscreen monitor; substantial
transformation, computer devices, electronics, circuits; 19 CFR
134.35
Dear Mr. Yates:
This is in response to your letter dated June 10, 1991,
requesting a ruling on the country of origin marking requirements
for an imported computer monitor which your company will convert
into a touchscreen monitor for a blood analyzer. We have
received your supplemental submission dated August 26, 1991,
further explaining the product and the operations involved in
converting the monitor.
FACTS:
Inter-ad Inc., makes a device called a touchscreen monitor.
The touchscreen monitor allows the user to input information
directly into a computer by touching the monitor's screen. It
is sold exclusively to one company who uses it as the standard
interface device for a piece of medical equipment, a blood
analyzer, which they manufacture and sell worldwide.
The touchscreen monitor basically consists of two major
parts (1) a touchscreen made in the U.S. by Elographics costing
about $400 and (2) a monitor made in Korea by Samsung
Electronics, costing about $100. The product also contains other
minor parts and cables which are all made in the U.S. and cost a
total of approximately $150.
The first step in converting the imported computer monitor
into a touchscreen monitor is to test the monitor with a test
pattern from a test computer. The monitor is then disassembled
and the electronics are disconnected from the cathode ray tube
(CRT) by unplugging all six cables connecting the CRT to the
monitor circuit board. The video cable is also removed. The
light emitting diode (LED) is unplugged from the monitor circuit
board. The International Electrotechnical Commission (IEC) power
plug is then installed. The CRT is then carefully lifted out.
The bucket, swivel base, and front plastic bezel are
prepared for painting. These pieces are then sent to the paint
finisher. The transorb board is then installed. The touchscreen
is then placed on the monitor and tested by running a calibration
program made by Elographics. The touchscreen is then adhered to
the CRT by placing pressure sensitive double-sided foam tape
around the inside perimeter of the touchscreen to form a sealed
gasket. The touchscreen is aligned by using an assembly fixture.
The touchscreen is placed onto the face of the CRT and pressure
is applied around the perimeter of the touchscreen.
The monitor is then reassembled. First, the LED is
reinstalled to the front of the bezel with a small zinc screw.
The CRT is reattached to the bezel. The monitor circuit board is
then put back into place and loosely secured by using screws and
washers. The video cable is reattached. The (electrical
magnetic interference) EMI shield is then taped and installed.
The back bucket is replaced. The touchscreen cable is connected
to the black strain relief plate. The unit is then tested and
readied for shipment. The anti-swivel base is assembled. The
unit is packed and carton sealed.
When the unit is completed, it sells for between $1,000 and
$1,200 dollars. You indicate that after the processing is
completed, the monitor can no longer function in a regular
computer system without an adapter because of the installation of
the power plug and the cutting of the cables.
ISSUE:
Is the imported computer monitor substantially transformed
by the processing described above which converts it into a
touchscreen monitor?
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930, as amended (19
U.S.C. 1304), provides that unless excepted, every article of
foreign origin 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.
Congressional intent in enacting 19 U.S.C. 1304 was "that the
ultimate purchaser should be able to know by an inspection of the
marking on the imported goods the country of which the goods is
the product. The evident purpose is to mark the goods so that at
the time of purchase the ultimate purchaser may, by knowing where
the goods were produced, be able to buy or refuse to buy them, if
such marking should influence his will." United States v.
Friedlaender & Co. 27 C.C.P.A. 297 at 302; C.A.D. 104 (1940).
Part 134, Customs Regulations (19 CFR Part 134), implements
the country of origin marking requirements and the exceptions of
19 U.S.C. 1304. 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" within the meaning of the marking laws and
regulations. The case of U.S. v. Gibson-Thomsen Co., Inc., 27
C.C.P.A. 267 (C.A.D. 98) (1940), provides that an article used in
manufacture which results in an article having a name, character
or use differing from that of the constituent article will be
considered substantially transformed. (See 19 CFR 134.35).
In such circumstances, the imported article is excepted from
marking. The outermost containers of the imported articles shall
be marked.
In HQ 734097, November 25, 1991, Customs ruled that imported
terminal video shells (computer terminal housings that contain
video electronics, but no logic boards), were substantially
transformed in the U.S. when they were processed by the
installation of certain key components, such as terminal logic
boards, to make them into dumb terminals for certain computer
systems. We indicated that the addition of the logic boards
creates a new article. In this case, the imported monitors are
more complex than the shells, but still undergo a significant
amount of processing. The domestic processing results in an
article that has a different name, character, and use. The
article will be known not simply as a computer monitor but as a
touchscreen monitor. The touchscreen monitor's commercial
identity differs dramatically from that of the plain computer
monitor. Most significantly, the touchscreen monitor has a
different use. As imported, the monitor is merely capable of
displaying information. However, after the domestic processing,
the touchscreen monitor is more than a device which will display
information. It will serve as an interface device in which
information can directly be input for the blood analyzer unit.
We find that this touchscreen capability is not just a simple
enhancement of the monitor, but rather a significant change in
its very nature because it can be used for new applications that
it previously could not be used. For example, in this case, the
monitor can now function as part of the blood analyzer unit. In
addition, the processing involves the combining of the imported
monitor with important domestic parts such as the touchscreen
and the cables. Significantly, these domestic parts have a value
more than five times greater than the monitor. Moreover, we have
been advised by the Office of Scientific and Laboratory Services
and the National Import Specialist that the domestic processing
is complex requiring skill and expertise in changing the wiring
and the circuitry of the monitor.
Accordingly, we find that the imported computer monitors are
substantially transformed by the domestic processing done by
Inter-ad to convert them into touchscreen monitors. In
accordance with 19 CFR 134.35, Inter-ad is the ultimate
purchaser of the imported monitors.
HOLDING:
The imported computer monitors are substantially transformed
when they are processed by Inter-ad into touchscreen monitors
and in accordance with 19 CFR 134.35, Inter-ad, Inc. is the
ultimate purchaser of the imported monitors. The monitors are
excepted from individual marking provided the cartons in which
Inter-ad Inc. receives them are properly marked with the country
of origin and Customs officials at the port of entry are
satisfied that the monitors will be used by Inter-ad, Inc. only
in the manner set forth above.
Sincerely,
John Durant, Director
Commercial Rulings Division