OT:RR:NC:N:2:212
Kathrin Jankowski
Ableton AG
Schoenhauser Allee 6-7
Berlin 10119
Germany
RE: The country of origin of an electric music controller.
Dear Ms. Jankowski:
In your letter dated July 19, 2019, you requested a country of origin ruling determination on electric music controllers.
The merchandise under consideration is identified as the Ableton Push 2 (Push 2) and is described as a midi-controller used in the creation and processing of electronic music. You state that Push 2 midi-controller acts as a user interface when connected to a personal computer. When used in conjunction with the Ableton Live software, the device is used to electronically create new music as well as to process and sample existing music files.
The Push 2 is comprised of a flashed and programmed main printed circuit board assembly (PCBA), fader board, LCD display, and various interface buttons and electronics housed within an aluminum and plastic case. The main PCBA is described as the core of the finished good and provides the device with its primary functionality while the fader board enables the device to enhance and change the pitch of the music.
In your request, you describe the manufacturing process as follows:
In Vietnam, the main PCBA and fader board are produced by populating bare PCBs via surface-mount technology (SMT) with all necessary electronics, including a processor, flash memory, LEDs, and various other electronic components. The two boards are then visually inspected, flashed and programmed with firmware, tested, and assembled together. The completed boards are then shipped to China. In China, the PCBAs are assembled into the Push 2 by mounting the boards into the casing along with the buttons and LCD display. The final device is then tested, calibrated, inspected, and packaged for retail sale.
In your request, you suggest that main PCBA and fader board impart the essential character of the finished product and, thus, the country of origin of the finished controller is Vietnam. 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.
The courts have held that a substantial transformation occurs when an article emerges from a process with a new name, character or use different from that possessed by the article prior to processing. United States v. Gibson-Thomsen Co., Inc., 27 CCPA 267, C.A.D. 98 (1940); National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff’d, 989 F. 2d 1201 (Fed. Cir. 1993); Anheuser Busch Brewing Association v. The United States, 207 U.S. 556 (1908) and Uniroyal Inc. v. United States, 542 F. Supp. 1026 (1982). However, if the manufacturing or combining process is merely a minor one that leaves the identity of the article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983). Substantial transformation determinations are based on the totality of the evidence. See Headquarters Ruling (HQ) W968434, date January 17, 2007, citing Ferrostaal Metals Corp. v. United States, 11 CIT 470, 478, 664 F. Supp. 535, 541 (1987).
Further, in Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308 (2016), the Court of International Trade (“CIT”) interpreted the meaning of “substantial transformation” as used in the Trade Agreements Act of 1979 (“TAA”) for purposes of government procurement. In Energizer, the court reviewed the “name, character and use” test in determining whether a substantial transformation had occurred in determining the origin of a flashlight, and reviewed various court decisions involving substantial transformation determinations. The court noted, citing Uniroyal, Inc. v. United States, 3 C.I.T. 220, 226, 542 F. Supp. 1026, 1031, aff’d, 702 F.2d 1022 (Fed. Cir. 1983), that when “the post-importation processing consists of assembly, courts have been reluctant to find a change in character, particularly when the imported articles do not undergo a physical change.” Energizer at 1318. In addition, the court noted that “when the end-use was pre-determined at the time of importation, courts have generally not found a change in use.” Energizer at 1319, citing as an example, National Hand Tool Corp. v. United States, 16 C.I.T. 308, 310, aff’d 989 F.2d 1201 (Fed. Cir. 1993). Furthermore, courts have considered the nature of the assembly, i.e., whether it is a simple assembly or more complex, such that individual parts lose their separate identities and become integral parts of a new article.
Regarding the country of origin of the Push 2, we would note that the main PCBA and fader board that are manufactured in Vietnam impart the essence of a finished midi-controller. In our view, the assembly operations performed in China, which consists of attaching, fastening, calibration, and packaging are not complex and the joining of the subassemblies into an enclosure does not produce a physical change to the two PCBAs.
Therefore, based on the information presented, it is the opinion of this office that the assembly process performed in China does not result in a substantial transformation of the Vietnamese goods. The components are not transformed in China into a new and different article of commerce with a name, character, and use distinct from the articles exported from Vietnam. The Push 2 in considered a product of Vietnam for origin and marking purposes at the time of importation into the United States.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 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 Luke LePage at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division