CLA-2-85:OT:RR:NC:N2:109

Mr. Craig A. Lewis
Hogan Lovells US LLP
Columbia Square
555 Thirteenth Street, NW
Washington, DC 20004

RE: The tariff classification of a wearable sensor patch, a smart charger base and a power adapter from China

Dear Mr. Lewis:

In your letter dated August 30, 2017, you requested a tariff classification ruling on behalf of your client MC10, Inc.

There are three items concerned, a “Wearable Sensor Patch”, a “Smart Charger” base unit and a power supply.

Each of the three items concerned work within the BioStamp nPoint™ system. The BioStamp nPoint™ system is stated to be a wireless remote monitoring system intended for use by researchers and healthcare professionals for continuous collection of physiological data in home and healthcare settings. The collected data is intended to be used by researchers and healthcare professionals for research applications or as an aid to diagnosis and treatment. You indicate that the system offers a wide variety of applications for physicians and researchers, from allowing them to monitor a patient’s vital signs after hospital discharge to providing data on a patient’s ability to follow through with assigned physical therapy exercises. The primary market for the system will be facilities like hospitals and clinics.

The entire system includes “Sensor Patches”, a digital tablet (the Samsung Galax Tab A), a smartphone (the Samsung Galaxy J3), a charging cradle (the “Smart Charger”), a generic power supply (“Power Supply”) for supplying power to the “Smart Charger”, adhesives for the “Sensor Patches”, and special software. However, you only requested a classification ruling for the “Sensor Patch”, the “Smart Charger”, and the power supply, in their individual capacities because the items will be imported separately and later assembled into kits in the United States.

The BioStamp nPoint™ “Wearable Sensor Patch” is the essential component of the system, said to be a body-worn wearable and reusable sensor patch and to collect physiological data like heart rate, heart rate variability, respiration rate, activity (including step count and activity classification), and posture (body position relative to gravity). You further state the system is also intended for measurement of surface electromyography and to monitor limb or body movements during daily living and sleep. Physicians and researchers can place the sensor patches on various positions on a patient’s body depending on what they intend to measure. The patches adhere directly to the skin, capturing accelerometer, gyroscope, and surface bio-potential signals. Data is transmitted wirelessly from the “Sensor Patch” to the “Smart Charger” for storage. The “Smart Charger” transfers data to a smartphone, which transmits data through WiFi or a cellular network. Practitioners then use the tablet and software to monitor and analyze data from the network. The applicable subheading for the “Wearable Sensor Patch” will be 9018.19.5500, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Instruments and appliances used in medical, surgical, dental or veterinary sciences, including scintigraphic apparatus, other electro-medical apparatus and sight-testing instruments...:Electro-diagnostic apparatus (including apparatus for functional exploratory examination or for checking physiological parameters); parts and accessories thereof: Other: Other: Patient monitoring systems.” The rate of duty will be free.

The “Smart Charger” is a base unit that is used to charge the “Sensor Patches” and a smartphone as well as facilitate the transfer of data from the patches to the smartphone. The “Sensor Patches” can only transfer their collected data to the “Smart Charger”, which temporarily stores the data and then transmits it to a smartphone when it is placed in the base. Both the “Sensor Patches” and the “Smart Charger” have Bluetooth transceivers. The “Sensor Patches” are not capable of transferring their data directly to a smartphone or tablet, they need the “Smart Charger” base unit to accomplish the data transfer. The “Smart Charger” transfers data to the smartphone, which then transfers the data to the Cloud. The “Smart Charger” transfers data to the smartphone via a USB connection when the smartphone is plugged into the “Smart Charger” base and the smartphone is connected to WiFi or a cellular network. The “Sensor Patches” transmit data to the “Smart Charger” base rather than directly to the smartphone because the Bluetooth hardware and software implementations in most phones are too slow for large data transfer and can sometimes be unreliable.

You have proposed classification of the “Smart Charger” within subheading 8504.40.8500, HTSUS, which provides for power supply for telecommunication apparatus. Based on the information supplied the “Smart Charger” would be considered a composite machine as is provided for in Section XVI Note 3. Both the charging functionality, which is provided for in heading 8504 and the data transfer functionality, which is provided for in heading 8517 are equally important to the overall performance of this specific unit. It is CBP’s position that no single principal function can be determined. Based on General Note VI of Section XVI when a principal function cannot be determined it becomes necessary to apply GRI 3 (C) and classify based on the tariff number that appears last within the tariff.

The applicable subheading for the “Smart Charger” will be 8517.62.0050, HTSUS, which provides for “Telephone sets…; other apparatus for the transmission or reception of voice, images or other data…: Other apparatus for transmission or reception of voice, images or other data…: Machines for the reception, conversion and transmission or regeneration of voice, images or other data…: Other.” The rate of duty will be Free.

The power supply is a basic AC to DC static converter with a length of insulted wire that is terminated with a standard barrel connector. It’s a 20W high performance AC to DC external power supply designed for medical applications due to its higher level of operational safety standards. This static converter plugs into a standard outlet and converts the AC current to DC current which is then fed to the “Smart Charger” base unit.

You have proposed classification of the power supply under subheading 8504.40.8500, HTSUS, which provides for power supplies for telecommunication apparatus. This power supply is not limited or in any way designed to be used solely or principally with telecommunications apparatus. It’s a general use type of power supply. If there are any unique attributes to this device they are incorporated mainly for the safe use of this item with medical equipment not telecommunication apparatus. As such subheading 8504.40.8500 would not be applicable.

The applicable subheading for the power supply will be 8504.40.9510, HTSUS, which provides for “Electric transformers, static converters …: Other: Rectifiers and rectifying apparatus: Power supplies: With a power output not exceeding 50 W.” The rate of duty will be 0.7%

Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at https://hts.usitc.gov/current.

In addition to a classification determination you have also requested a country of origin determination.

The “Sensor Patch” will be manufactured in China and imported into the United States. The “Sensor Patch” consists of approximately 50 components coming from various manufacturers in different parts of the world. These components include sensors, various capacitors, diodes, integrated circuits, a battery, an electrode, and others.

The “Smart Charger” will be manufactured in China and imported into the United States. The outer assembly of the “Smart Charger” consists of approximately 15 components that include docking units and a USB cable. The “Smart Charger's” circuit board consists of approximately 60 components that come from companies based in Japan, Germany, South Korea, Taiwan, and the United States among other countries.

The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. § 1304), provides that, unless excepted, every article of foreign origin (or its container) 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. Part 134, CBP Regulations (19 C.F.R. Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. § 1304.

Section 134.1(b) of the regulations, 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 this Part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin.

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). 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).

In this instance, the imported “Sensor Patch” and “Smart Charger,” which are assembled in China from foreign parts, is substantially transformed as a result of the foreign processing into its finished form. The country of origin of the imported “Sensor Patch” and “Smart Charger” is China.

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 classification within heading 9018, HTSUS, please contact National Import Specialist Fei Chen at [email protected]. For all other issues please contact National Import Specialist Steven Pollichino at [email protected].

Sincerely,

Steven A. Mack
Director
National Commodity Specialist Division