Mr. H. Michael Leightman
Ernst & Young LLP
1401 McKinney Street
Houston, Texas 77010
RE: The country of origin of a Satellite TV Receiver and an Entertainment System
Dear Mr. Leightman:
In your letter dated December 19, 2019, on behalf of Shanghai DD&TT Electronic Enterprise Company Limited (DD&TT), you requested a country of origin ruling determination.
The merchandise under consideration is satellite television receivers referred to as the Hopper 3 (“Hopper”) and Joey 3 (“Joey”). The Hopper is a satellite receiver and DVR tuner that can connect to Joeys, which are smaller receivers that can connect to multiple televisions within a single home. The Joey receivers synchronize with the Hopper and permit the consumer to use all the Hopper’s features on displays connected to Joey receivers. The Hopper connects to Joey receivers through Multimedia over Coax Alliance (MoCA). The Hopper host can then share any content with a Joey receiver, which is saved on the Hopper system.
In the proposed scenarios, DD&TT is performing the following manufacturing in Taiwan:
The Surface Mount Technology (“SMT”) operations of the motherboard for Joey, and
The SMT and Through Hole Technology (“THT”) operations of both the motherboard and Wi-Fi Board for Hopper
The proposed manufacturing steps for Joey are as follows:
The main manufacturing operations will be conducted in Taiwan. The SMT process of the motherboard (primary board), which involves many steps will result in electronic components permanently mounted onto a raw printed circuit board (“PCB”) via various soldering techniques. Once the PCBA is manufactured in Taiwan, the functional motherboard is capable of receiving and processing satellite signals and is shipped to China for further assembly. The final assembly process that occurs in China is the assembly of the structural component parts onto the device to complete the Joey for shipping to the United States.
The proposed manufacturing steps for the Hopper are as follows:
The manufacturing process for Hopper is essentially identical to the descriptions above for Joey. However, the Hopper is comprised of two primary PCBAs (the motherboard and a Wi-Fi Board), two auxiliary PCBAs, along with other component parts. The motherboard controls all the critical operations and serves as the “brain” of the device. The Wi-Fi Board enables Hopper to access the Internet to view Netflix and other streaming services, as well as to connect to smart home devices. The manufacturing operations of the motherboard and the Wi-Fi Board will take place in Taiwan. They include the SMT and THT processes that create the motherboard and the Wi-Fi Board, which comprises many steps that results in numerous electronic components permanently mounted onto raw printed circuit boards via various soldering techniques.
In addition, two auxiliary PCBAs, the Power Board, and the Button Board are also incorporated into the Hopper. These two auxiliary boards provide supporting functions to the two primary PCBAs. They are connected to the Hopper by a cable within the device. The manufacturing of the Power Board and the Button Board is performed in China. Also performed in China is the box build assembly process, i.e. the final product’s frame and exterior casing, which involves the assembly of the primary and auxiliary boards along with component parts to complete the Hopper device for shipping to the US.
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.
When considering a product that may be subject to antidumping, countervailing, or other safeguard measures, the substantial transformation analysis is applied to determine the country of origin. See 19 C.F.R. § 102.0; HQ 563205, dated June 28, 2006; see also Belcrest Linens v. United States, 741 F.2d 1368, 1370-71 (Fed. Cir. 1984) (finding that “the term ‘product of’ at the least includes manufactured articles of such country or area” and that substantial transformation “is essentially the test used…in determining whether an article is a manufacturer of a given country”).
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).
Based on the facts presented in the proposed scenarios, it is our opinion that the motherboards (primary PCBAs) that are manufactured in Taiwan impart the essence of these finished products. The complex SMT manufacturing production of the motherboard PCBA in both scenarios as the placement and soldering of numerous individual components onto a bare PCB, thereby creating a functional motherboard PCBA results in a substantial transformation of the components to produce motherboards of Taiwanese origin. Further, the assembly process performed in China, would not substantially transform the motherboards into a new and different article of commerce with a name, character, and use distinct from that of the exported good. Therefore, based upon the fact presented with these proposed scenarios, it is the opinion of this office that the country of origin of the satellite television receivers “Hopper” and “Joey” would be Taiwan.
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 Lisa Cariello at [email protected].
Steven A. Mack
National Commodity Specialist Division