CLA-2-90:OT:RR:NC:N2:212
Lisa Murrin
Expeditors Tradewin
795 Jubilee Drive
Peabody, MA 01960
RE: The tariff classification and country of origin of fiber optic cassettes
Dear Ms. Murrin:
In your letter dated January 27, 2021, you requested a tariff classification ruling on behalf of your client, R&M USA, Inc.
The merchandise under consideration is described as a fiber optic cassette for use in fiber optic telecommunications networks. You state in your request that the subject items are imported in three different scenarios, representing a progression of complexity and finished states. In scenario one, six pairs of twelve total cassettes are imported together. Each cassette consists of two fiber optic bundled cables, which are constructed of twelve glass optical fibers, bundled together within a tube of netting. At one end of the cables is a splice tray while the other ends in the cassette, which separates each individual fiber into a single connection point. The requestor states that the optical fibers are not individually sheathed and the cables contain no strength members.
In scenario two, twelve cassettes are manufactured as described above. These twelve cassettes are then mounted within a specially designed metal block, known as a bulkhead, which can then be sent to the end user to incorporate within their existing fiber optic network.
In the third scenario, the optical cassettes are installed within the bulkhead as previously described. Three completed bulkheads are then loaded within a specially designed metal cabinet that is ready-made to be installed into the customer’s fiber optic network.
The cassettes, in all forms described above, are used within a customer’s fiber optic telecommunications network as a patch panel, effectively adding additional connections and capability to the system. The cables and incorporated connection points are passive elements in that they only allow for the transmission of data via optical signals travelling on the fiber. The cassettes contain no electrical or electronic components and the signal is not altered in any way in transmission.
In your request, you suggest that the correct classification for the subject cassettes is 8517.70.0000, Harmonized Tariff Schedule of the United States (HTSUS). We disagree.
The proposed classification covers those items considered parts of telecommunications apparatus. When considering classification of a particular product in a “parts” provision of the HTSUS, we must apply Additional US Rule of Interpretation (AUSRI) 1(c), which states as follows:
In the absence of special language or context which otherwise requires—
(c) a provision for parts of an article covers products solely or principally used as a part of such articles but a provision for “parts” or “parts and accessories” shall not prevail over a specific provision for such part or accessory
Pursuant to AUSRI 1(c), the optical components at issue can only be classifiable as a part if it cannot be established that it is prima facie classifiable in a heading that specifically provides for it. Additionally, Section XVI Note 1(m), HTSUS provides that section XVI does not cover articles of chapter 90. Heading 8517, HTSUS, is included in section XVI, HTSUS.
Based upon the past precedence set by HQ 967549 and ADC Telecommunications, INC. v. United States, Court No. 13-00400, it is the opinion of this office that the optical components at issue are classifiable within their own specific heading. Further, in the ADC case, the court found that optical elements with no electronic or electrical components are accurately classified under heading 9013, HTSUS. As such, classification as a part within heading 8517, HTSUS would be inapplicable.
The applicable subheading for the fiber optic cassette, in all three scenarios, will be 9013.80.9000, HTSUS, which provides for “Liquid crystal devices not constituting articles provided for more specifically in other headings; lasers, other than laser diodes; other optical appliances and instruments, not specified or included elsewhere in this chapter; parts and accessories thereof: Other devices, appliances and instruments: Other.” The general rate of duty will be 4.5% ad valorem.
You further request a country of origin ruling for the subject cassettes and describe the manufacturing process as follows. In scenario one, optical fibers of U.S. origin are shipped to China where they are cut to length, inserted into the netting, and fanned out. These fiber bundles are then routed through the splice tray before the ends are broken out and assembled onto the connector modules. The cassettes are then inspected and tested for form and function.
For scenario two, multiple cassettes are simply mounted within a metal block to create a bulkhead consisting of more connection points. Similarly, in scenario three, multiple bulkheads are mounted within a metal cabinet.
The “country of origin” is defined in 19 CFR 134.1(b), in pertinent part, 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.”
For tariff purposes, 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).
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, “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 origin of the subject fiber optic modules, it is the opinion of this office that the U.S. origin optical fibers impart the essential functional component of the finished goods. While the addition of the connection components and assembly into cabinets in China adds to the form and function of the finished device, we find that this process does not substantially transform the fibers into a new and different article of commerce with a name, character, and use distinct from the exported article. Therefore, the country of origin of the fiber optic modules, in all three scenarios, is the United States.
Whether an article may be marked with the phrase "Made in the USA" or similar words denoting U.S. origin, is an issue under the authority of the Federal Trade Commission (FTC). We suggest that you contact the FTC Division of Enforcement, 6th and Pennsylvania Avenue, N.W., Washington, D.C. 20508 on the propriety of proposed markings indicating that an article is made in the USA.
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 the World Wide Web at https://hts.usitc.gov/current.
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