MAR-2-0-5 CO:R:C:V 734021 RSD

Richard H. Abbey, Esq.
Mudge, Rose, Guthrie, Alexander & Ferdon
2121 K Street, N.W.
Washington, D.C. 20037

RE: Country of origin marking of components used to make a printed circuit board, substantial transformation, electronic components, 19 CFR 134.35

Dear Mr. Abbey:

This is in response to your request for a ruling on the country of origin marking requirements for components used in making a printed circuit board. You have also requested that we rule that the printed circuit board may be marked "Made in the U.S.A." In addition, you have asked that certain information contained in the ruling request be given confidential treatment. This information is in brackets and will not be included in the copies of the ruling made available to the public. A video tape demonstrating the processes involved in producing the printed circuit boards was submitted.


Toshiba America Information Systems, Inc. (Toshiba) is planning to manufacture printed circuit boards in the U.S. The printed circuit boards will be assembled from imported components, some of which are imported by Toshiba and some of which are imported and processed by other importers and sold to Toshiba. The printed circuit boards are commercially known as the T1200XE, and will be made from 210 components consisting primarily of integrated circuits, transistors, diodes, resistors, capacitors, connectors, transformers, and boards. Approximately 92% of the components (by value) are completely foreign made. The balance of the components are foreign made, but are processed in the U.S.

The manufacture of the printed circuit boards is a multi- step process. The first step is that a solder powder and flux in a paste are squeegeed over a four layer glass epoxy board, and through a metal mask in a process similar to silk screening. The printed pattern consists of over 1800 deposits of very critical shapes located to an accuracy of plus or minus of { } of an inch. Next, the large components, such as quad flat packs and small outline packages, are mounted. These components are selected, positioned, and mounted in a solder paste pattern by a computer-controlled mounter. These components are then soldered into the printed circuit board in an oven which uses heated air to reflow the solder paste at a stabilized temperature of { } degrees Fahrenheit. After the large components are soldered, the printed circuit boards are turned over for the mounting of the small chip components. A small dot of adhesive is applied at the locations where each chip component will be mounted. After the adhesive has been applied, the small chip components are mounted by a machine, which is preprogrammed to mount the correct components to within plus or minus { } of an inch, using a computer controlled vision system. This is followed by quality control, consisting of a visual check of the component alignment, in which any misaligned chips are skillfully adjusted. When the operator is satisfied with the alignment of the chip components, the printed circuit boards are started through the adhesive curing oven. Both ultraviolet and infrared light sources are used to cure the adhesive. The curing process is to ensure that the heavier components soldered to the other side of the board do not move or fall off.

All of the line processes and automatic equipment used in the assembly line are monitored and controlled by a foreman from a computer terminal. The terminal is linked to a central host computer which has stored programming information for each printed circuit board type to be assembled. This information is used to control the part sequencing and mounting programs of the various machines. After this step, a small number of leaded components are inserted manually. The next process is called wave soldering. In this process, the partially completed printed circuit board is placed on a conveyor and carried over a flux and then across two waves of molten solder. The chip components which are secured by the adhesive to the bottom of the board are submerged in the wave. Related components which are manually inserted in the top side are also soldered. Pre-heating is performed on the board as it moves toward the solder waves. There are two waves to ensure good solderability. The first wave is turbulent to provide complete coverage. The final wave is smooth to provide a consistent solder deposit.

After soldering, the leads of the manually inserted components are trimmed. Highly skilled operators inspect and touch up the soldering of the chip components on the bottom side of the printed circuit board. Once all soldering has been visually inspected and touched up, the printed circuit board is thoroughly cleaned to remove all traces of the soldering flux. The printed circuit boards are then put through a quality control check. The final components that are not compatible with the cleaning process are installed. Finally, the printed circuit boards are tested on a functional tester. This test takes approximately { } minutes.

The cost to Toshiba of a finished printed circuit board is , consisting of in material costs and in labor and overhead costs. The cost of assembly amounts to of the total cost of the printed circuit board.


Are the components of the printed circuit boards substantially transformed when they are assembled into completed printed circuit boards?

Can the completed printed circuit boards be marked "Made In the U.S.A.?"


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 and that the manufacturer or processor will be considered the ultimate purchaser of the constituent materials. In such circumstances, the imported article is excepted from marking and only the outermost container is required to be marked (see section 134.35, Customs Regulations).

In C.S.D. 85-25, September 24, 1984, Customs held that for purposes of the Generalized System of Preferences, the assembly of a large number of fabricated components onto a printed circuit board in a process involving considerable amount of time and skill results in a substantial transformation. In HQ 733159, July 23, 1990, a marking case, Customs held that the assembly of a large number of components, including a transformer, on a printed circuit board and incorporating the board into a telephone system resulted in a substantial transformation. Recently, we ruled in HQ 733690, February 22, 1991, that blank boards were substantially transformed by assembling various electronic components onto the blank boards and placing the completed circuit boards into larger systems such as computer power units. We noted that the blank circuit boards have no function except to serve as a part for a completed circuit board with various electronic components mounted onto it, which in turn will go into a larger system. Insertion of the electronic components onto the blank board, plus the assembly of the populated boards into a larger unit changes the nature of the board and caused it to lose its separate identity.

We note that the assembly process in this case is quite complex and involves a considerable amount of skill and time. The assembly also involves a large number of different components and a significant number of distinct skilled operations. We also note that there is an extensive increase in value when the printed circuit boards are completed. Through the assembly processes, the separate components of the printed circuit boards acquire new attributes. The completed printed circuit boards have a name, character, and use differing from that of the individual components. Consequently, a new article of commerce is created. Therefore, we conclude that of the assembly of the components into the completed printed circuit boards constitutes a substantial transformation and that pursuant to 19 CFR 134.35, Toshiba is the ultimate purchaser of the components used to make the boards. Accordingly, so long as the components are imported in a container which is properly marked to indicate the country of origin and Customs officials at the port of entry are satisfied that these containers will reach the ultimate purchaser unopened, the individual components do not have to be marked with their country of origin.

You also inquire as to whether the boards can be marked "Made in the U.S.A." Approval of markings of "Made in the U.S.A." is within the jurisdiction of the Federal Trade Commission and not the Customs Service. In order to get approval for marking the boards "Made in the U.S.A.," you should contact the Federal Trade Commission, Division of Enforcement, 6th & Pennsylvania Avenue, N.W., Washington D.C. 20508.


For purposes of 19 U.S.C. 1304, assembling the electronic components into a completed printed circuit board is a substantial transformation. Pursuant to 19 CFR 134.35, the individual components do not have to be individually marked with the country of origin, as long as they are imported in containers that are properly marked with the country origin and Customs officials at the port of entry are satisfied that these containers will reach the ultimate purchasers unopened. However, Customs cannot authorize that the completed boards may be marked "Made in the U.S.A." Approval of the marking "Made in the U.S.A.," after the printed circuit boards are assembled, is within the jurisdiction of the Federal Trade Commission.


John Durant, Director
Commercial Rulings Division