CLA-2 OT:RR:CTF:EMAIN H308751 NVF
TARIFF NO: 8479.70.99
David M. Murphy
Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP
599 Lexington Ave
Floor 36
New York, NY 10022-7648
RE: Tariff Classification and Country of Origin and Marking of Helix Guitar Processors
Dear Mr. Murphy:
This letter is in reply to your January 28, 2020 request submitted on behalf of Yamaha Guitar Group, Inc., for a binding ruling on the tariff classification and country of origin of certain models of Helix guitar processors. In arriving at our determination, we have considered the information submitted in your ruling request, information submitted in an amendment dated April 10, 2020 and in a supplement submitted June 30, 2020, additional information submitted via email, and the substance of the teleconference conducted with you on June 29, 2020.
FACTS:
There are three models of guitar processors at issue: the P21 Helix, P32 Helix, and the P33 HX Stomp. The P21 and P32 are both multi-effects processors for electric guitars, with the P32 having more effects and higher capacity than the P21. They both have a built-in foot pedal and 12 switches on the front, connect to a guitar and a playback system such as a speaker, and are used to alter the sound of the connected guitar. The P33 performs similar functions as the P21 and P32, but lacks the integrated foot pedal, has fewer switches, and can be connected to a personal computer to edit effects and models. Because the units are meant to be operated with one’s foot while playing a musical instrument, they are commonly referred to as pedalboards.
When in use, the pedalboards are connected to a guitar and a playback system. The switches and foot pedal (if present) are then programmed through the LCD interface or PC with various effects. Once the device is programmed, the user can change the effects while playing their instrument by using their foot to activate the switches and/or the foot pedal.
In your amended ruling request, you present two manufacturing scenarios. In Scenario 1, assembly is contemplated to occur in Malaysia or Vietnam using materials that are wholly manufactured in China. In Scenario 2, assembly is contemplated to occur in Malaysia or Vietnam with printed circuit board assemblies (“PCBAs”) that are manufactured in Malaysia and the remaining materials sourced from China.
In both scenarios, assembly of the P21 and P22 will occur in Malaysia. You state that the assembly of the P21 is a 17-step process which involves 247 total parts, including the integration of six separate PCBAs with various cables and wires. Assembly of the P32 is a 14-step process involving 210 parts, including five PCBAs. The assembly process involves preparing the enclosure for the PCBAs and subsequently installing the PCBAs within. After installation, the PCBAs are electrically connected to each other, the foot pedal is installed, and the enclosure is completed. Once assembly is complete, the units are tested for functionality.
In both scenarios, assembly of the P33 will occur in Vietnam. In your request, you state that assembly of the P33 is an 11-step process involving 59 parts, including four PCBAs. Assembly of the P33 is substantially similar to assembly of the P21 and P32.
Although the location of the PCBA manufacturing differs between the two scenarios, the manufacturing process remains identical. The PCBAs are manufactured using surface-mount technology (“SMT”) and involving integrated circuits sourced from the United States, Singapore, Taiwan, and Malaysia. The PCBAs are also programmed using programming from the United States.
The PCBAs each have a discrete function. For the P21: (1) one functions for the LCD display, (2) another functions for the foot pedal LCD, (3) another functions for controlling power supply, (4) another for the footswitch, (5) another controls the input and output functions of the rear of the device, and (6) one controls the microcontroller, a small computer on a single integrated circuit chip, and also contains the digital signal processor. For the P32 the PCBAs have virtually identical functions as the P21 except the P32, lacking a foot pedal LCD, does not have a PCBA to control a foot pedal LCD. For the P33, the PCBAs control (1) the footswitch, (2) input and output of the rear of the P33, (3) the microcontroller which contains the digital signal processor, and (4) user interface functions such as display and buttons.
In your request for a binding classification ruling, you assert that the guitar processors are classified under subheading 8543.70.9920 of the Harmonized Tariff Schedule of the United States Annotated (“HTSUSA”), which provides for “Electrical machines and apparatus, having individual functions, not specified or included elsewhere . . . : Other machines and apparatus: Other: Other: Other: Special effects pedals for use with musical instruments.” You do not provide any further discussion regarding classification.
In your request for a binding country of origin ruling, you first argue that the PCBAs are a product of the country they were manufactured in using SMT. You contend that the use of SMT operations “result in a new and different product” and substantially transforms the individual components into the PCBA. As justification for this position, you refer to Texas Instruments Inc. v. United States, 681 F.2d 778 (Fed. Cir. 1982), HQ 071827 (Sep. 25, 1984), HQ H287548 (Mar. 23, 2018) (Monochrome laser printer), NY N303008 (Mar. 8, 2019) (cellular telephones), and NY N310182 (Mar. 23, 2020) (rearview sensing camera module). Next, you, argue that the country of origin is where each pedalboard is assembled because the components and PCBAs undergo a “very substantial physical change” by way of “complex assembly operations.” As justification for this argument, you rely on HQ H303529 (June 6, 2019) (postage meter) and assert that where assembly is sufficiently extensive and complex, it substantially transforms components into a different product. You also argue that in NY N305375 (Aug. 9, 2019) (midi controllers), the assembly and interaction of multiple PCBAs is not as complex as occurs in the assembly of the subject pedalboards.
ISSUES:
Whether the guitar processors are classified under subheading 8543.70.9920, HTSUSA, as special effects pedals for use with musical instruments and what the country of origin is for the guitar processors for country of origin marking purposes.
LAW AND ANALYSIS:
Classification
Classification of goods under the HTSUS is governed by the General Rules of Interpretation (GRI). 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. In the event that the goods cannot be classified solely on the basis of 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.
We have previously classified other guitar pedalboards and sound processors under heading 8543, HTSUS. NY R02388 (Sep. 1, 2005) (special effects pedals/processors); NY G89155 (May 10, 2001) (Yamaha Stomp pre-amplifier). The applicable subheading for the guitar processors is 8543.70.9920, HTSUSA, which provides for: Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof: Other machines and apparatus: Other: Other: Other: Special effects pedals for use with musical instruments.
Country of Origin
Section 304 of the Tariff Act of 1930, as amended, provides that, unless excepted, every article of foreign origin imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit, in such a manner as to indicate to the ultimate purchaser in the United States the English name of the country of origin of the article. 19 U.S.C. § 1304.
The country of origin marking requirements are set forth in Part 134, Customs Regulations, (19 C.F.R. §134). 19 C.F.R. § 134.1(b) defines “country of origin” 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 the marking laws and regulations.
The test for determining whether a substantial transformation has occurred is whether an article emerges from a process with a new name, character or use, different from that possessed by the article prior to processing. See Texas Instruments, 681 F.2d 778; Belcrest Linens v. United States, 741 F.2d 1368, 1372 (Fed. Cir. 1984). This determination is based on the totality of the evidence and courts agree that each case must be decided on its facts. National Hand Tool Corp. v. United States, 16 C.I.T. 308, 311 (1992). In determining whether a substantial transformation has occurred, courts consider the extent of the operations performed and whether the parts lose their identity and become an integral part of the new article. Belcrest Linens, 573 F. Supp. at 1371. If the manufacturing or combining process is a minor one that leaves the identity of the imported article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 542 F. Supp. 1026 (CIT 1982).
In cases where the manufacturing process consists of assembly, courts consider the nature of the assembly along with the name, character, or use test in determining whether substantial transformation has occurred. Ran-Paige, 35 Fed. Cl. at 121; Belcrest Linens, 741 F.2d at 1371; Uniroyal, 542 F. Supp. at 1031. Even when assembly operations require some skill and dexterity, courts do not find that substantial transformation has occurred if the names of each article and the form and character of each component remains unchanged, and the use of the articles was predetermined at the time of importation. National Hand Tool, 16 C.I.T. at 310-313. Courts have not imposed a bright line rule on the number of components required or the amount of time required for assembly before an assembly process is considered substantial transformation. Energizer Battery Inc. v. United States, 190 F.Supp.3d 1308, 1321 (CIT 2016).
We have previously ruled that the manufacture of PCBAs via SMT operations generally results in a substantially transformed product. See HQ H287548 (Monochrome laser printer), NY N303008 (cellular telephones), and NY N310182 (rearview sensing camera module). In this case, you assert, and we agree, that the PCBAs are a product of the country in which they were manufactured. The PCBAs used in the subject pedalboards are manufactured using SMT to attach integrated circuits to a circuit board. The circuit boards are then programmed with U.S. programming that is specific to the article’s end use. This process occurs in China under Scenario 1, and in Malaysia under Scenario. Once the assembly and programming are complete, a new article, the PCBA, emerges. The end use of each PCBA is determined from this point forward and it cannot be used to perform a different function. For example, a PCBA that is programmed to run an LCD display cannot be substituted for a PCBA that is programmed to control a foot pedal. PCBAs that are manufactured in China are a product of China and PCBAs that are manufactured in Malaysia are a product of Malaysia.
Therefore, the sole issue is whether assembly of the subject pedalboards constitutes a substantial transformation and renders the finished item a product of the country in which it was assembled. Although you argue that assembly of the pedalboards is a complex process and emphasize the number of components that are included in each pedal, we are not convinced that the assembly processes used for the subject pedalboards are overly complex, regardless of the number of components involved. The assembly process consists of steps described as “electrically connecting the various PCBAs to one another using various cables and wires” or “installation of various PCBAs into the unit chassis with appropriate fasteners.” Regardless of how many times these processes occur during assembly or with varying components, the essence of the assembly activity remains the same, that of merely wiring together different parts. Detailed information contained in the confidential exhibits supports our finding that assembly of the subject pedalboards is not sufficiently complex to effect a substantial transformation.
While there may be some skill required in wiring the PCBAs into the pedalboards and some added functionality after assembly, we find there is insufficient change in the name, character, or use of the subassemblies to effect a substantial transformation when the pedalboards are fully assembled. For example, the pedals and individual push buttons retain their name, character, and use after assembly. Similarly, the LCD display, if present, retains its name, character, and use. Although the PCBAs cannot perform their functions until they are wired together and provided with electricity, the wiring and connection processes do not change the name, character, or use of the PCBAs. They are, and remain after assembly, devices that are programmed to perform a specific function within the pedalboard. Furthermore, the finished PCBAs are imported into Malaysia or Vietnam with a predetermined end-use and this end-use does not change after assembly. Accordingly, we find that the assembly process contemplated to occur in Malaysia and Vietnam will not subsume the individual subassemblies and components into a new and different product with a new name, character, and use.
You argue that in HQ H303529, we found the assembly of an incomplete postage meter sufficiently complex to effect a substantial transformation. However, this is an inaccurate restatement of our decision. In HQ H303529, we specifically found that “the true question here is whether the print axis is substantially transformed when it is assembled with the other components, i.e. whether it undergoes a change in name, character, and use.” Our decision in HQ H303529 did not turn on the complexity of the assembly process, nor did it involve a machine that is similar to the subject pedalboards. Therefore, your reliance on HQ H303529 is misplaced. We find, instead, that this case is very similar to NY N305375, concerning a midi controller that creates and processes electronic music. In NY N305375, we found that assembly operations which consisted of attaching, fastening, calibration, and packaging were not complex and the joining of the subassemblies didnot produce a physical change to the PCBAs. The assembly process in NY N305375 and the subassemblies are strikingly similar to the assembly process and subassemblies involved here. Accordingly, we find the totality of the facts of this case more similar to NY N305375 than HQ H303529.
We are of the opinion that the PCBAs impart the essential character of the finished pedalboards because they contain the sound processors which manipulate incoming sound. This is in keeping with prior rulings in which we have determined that a PCBA functions as the “brain” of a finished article. HQ H302801 (Oct. 3, 2019) (Fitbit), HQ H306809 (Jan. 23, 2020) (ozone generation unit), HQ H301910 (Aug. 5, 2019) (mailing machine engines), NY N303008 (Mar. 8, 2019) (cellular telephones), and, NY N305375 (midi controllers). Therefore, under Scenario 1, the country of origin for the pedalboards is China and under Scenario 2, the country of origin for the pedalboards is Malaysia.
HOLDING:
By operation of GRIs 1 and 6, the guitar processors are classified in subheading 8543.70.9920, HTSUSA, which provides for: Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof: Other machines and apparatus: Other: Other: Other: Special effects pedals for use with musical instruments. The column one rate of duty is free.
Duty rates are provided for your convenience and subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov/tata/hts/.
The country of origin of the pedalboards under Scenario 1 is China and under Scenario 2 is Malaysia.
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a Customs Service field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.”
A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Gregory Connor, Chief
Electronics, Machinery, Automotive,
and International Nomenclature Branch