CLA-2-90:OT:RR:NC:N3:135
Mr. David Stepp
Crowell & Moring LLP
515 South Flower Street, 40th Fl.
Los Angeles, CA 90071
RE: The country of origin and marking of certain blood pressure monitors
Dear Mr. Stepp:
In your letter dated June 10, 2021, you requested a country of origin and marking ruling on behalf of Health & Life Co., Ltd. A bill of materials, exploded view diagram, and manufacturing process flow chart accompanied your inquiry. A marked sample was not submitted with your request.
The products under consideration are Model # WGNBPA240 (HL858CJ) blood pressure monitors (“the BP Monitors”). They are comprised of numerous components, which are sourced from China, Taiwan, and Vietnam. All components are shipped to Vietnam for assembly, function processing, and packaging. The BP Monitors contain a printed circuit board assembly (“PCBA”) produced by surface mount technology (“SMT”) in Vietnam by mounting Taiwanese and Chinese electrical components onto a Chinese-origin printed circuit board.
The finished BP Monitors have several functions including: (a) detecting blood pressure; (b) measuring blood pressure; (c) processing and converting measured blood pressures into readily readable and quantifiable data measurements; and (d) displaying data measurements on the product’s screen for the user. To function as intended, each BP Monitor must undergo the following five (5) processing steps in Vietnam:
(1) Firmware code burning - The firmware code is a binary code that contains the algorithms responsible for processing blood pressure detected and measured by the Taiwanese microcontroller unit (“MCU”) of the BP Monitors into readily readable and quantifiable data measurements. The firmware code is developed in Taiwan, with copies of the code distributed and kept at Health & Life’s manufacturing site in Vietnam. During the process of firmware code burning, the program code is transferred to the MCU’s memory using a burner hardware and dedicated software. The MCU is located in the assembled BP Monitor’s PCBA.
(2) Heat-sealing - Heat-sealing is the process of connecting and bonding the printed circuit board (“PCB”) to the light crystal display (“LCD”) of the BP Monitor using a heat-sealing connector. During this process, specialized technicians align thermoplastic materials with the PCB and LCD and apply heat and pressure to seal the PCB and LCD together.
(3) Pressure calibration - Pressure calibration involves calibrating the Taiwanese pressure sensors of the BP Monitors, so that they can accurately measure the blood pressure detected. During the process, specialized technicians calibrate and continuously monitor and fine-tune the pressure sensors to measure blood pressures between the range of 0 mm Hg to 300 mm Hg.
(4) Pressure accuracy checkup - The pressure accuracy checkup involves a final testing and calibration checkup to ensure that measurements made by the pressure sensor and the BP Monitor itself meet industry standards.
(5) Testing. At the end of testing, specialized technicians are required to analyze the testing results to ensure that these results meet industry standards and are optimal for the functioning of the BP Monitor. If the results do not meet industry standards and/or are not optimal, then the goods will undergo previous function processing, calibration and fine-tuning again.
You state these function processing steps are all completed in Vietnam by specialized technicians who have obtained the necessary technical and engineering education and qualifications to conduct such work. Once completed, the finished BP Monitors are packaged in Vietnam for shipping and importation into the United States.
COUNTRY OF ORIGIN
"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.”
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). 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). The issue of whether a substantial transformation occurs is determined on a case by case basis. See HQ 561353, dated September 19, 2002.
In this case, the printed circuit board assembly occurs in Vietnam using surface-mount technology. The blank MCUs are programmed in Vietnam using Taiwanese-origin firmware. The final assembly in Vietnam completes the BP monitors. You state the PCBA is critical to the function of the BP Monitors and imparts the essence of the finished articles. The firmware code enables the articles to read and quantify blood pressure data measurements as intended.
HQ ruling H241177, dated December 3, 2013, states “the programming of a device that defines its use generally constitutes substantial transformation.” Customs and Border Protection (“CBP”) has consistently held that the assembly of components onto a printed circuit board is a substantial transformation. See HQ ruling 735306, dated December 21, 1993, wherein CBP stated:
With respect to printed circuit boards, Customs has ruled that the complete assembly of all the components onto a printed circuit board was a substantial transformation of the printed circuit board because the assembly process was complex and involved a considerable amount of skill and time.
See also, HQ ruling H302801, dated October 3, 2019, wherein CBP stated:
The SMT [surface-mount technology] operations result in a new and different product with an overall use and function different than any one function of the individual components. Each individual component serves a particular purpose or function once incorporated into the PCBA. Prior to the SMT operations, these components are stand-alone, general use items.
Based on the totality of the circumstances, we find that the SMT and programming operations performed in Vietnam substantially transform the PCBAs into products of Vietnam and the PCBAs convey the essential character of the BP Monitors. Consequently, we agree with you that the country of origin for the subject BP Monitors will be Vietnam.
MARKING
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.
The “ultimate purchaser” is defined in section 134.1(d), Customs and Border Protection (CBP) Regulations (19 CFR 134.1(d)), as the “last person in the U.S. to receive the article in the form in which it was imported.” If an imported article is to be sold at retail in its imported form, the purchaser at retail is the ultimate purchaser.
As provided in section 134.41(b), Customs Regulations (19 CFR 134.41(b)), the country of origin marking is considered conspicuous if the ultimate purchaser in the U.S. is able to find the marking easily and read it without strain.
With regard to the permanency of a marking, section 134.41(a), Customs Regulations (19 CFR 134.41(a)), provides that as a general rule marking requirements are best met by marking worked into the article at the time of manufacture. For example, it is suggested that the country of origin on metal articles be die sunk, molded in, or etched. However, section 134.44, Customs Regulations (19 CFR 134.44), generally provides that any marking that is sufficiently permanent so that it will remain on the article until it reaches the ultimate purchaser unless deliberately removed is acceptable.
Section 134.22, CBP regulations (19 CFR 134.22), provides general rules for marking of containers or holders. Section 134.22(a), CBP regulations (19 CFR 134.22(a)), states:
[w]hen an article is excepted from the marking requirements by subpart D of this part, the outermost container or holder in which the article ordinarily reaches the ultimate purchaser shall be marked to indicate the country of origin of the article whether or not the article is marked to indicate its country of origin.
Pursuant to 19 U.S.C. 1304(a)(3)(D) and section 134.32(d), CBP Regulations (19 CFR 134.32(d)), articles for which the marking of the containers will reasonably indicate the country of origin of the articles are excepted from individual marking. This exception would apply, for example, in cases where the articles are imported in a properly marked container and CBP officials at the port of entry are satisfied that the ultimate purchaser will receive it in its original unopened marked container.
Section 134.46, CBP Regulations (19 CFR 134.46), requires that in any case in which the words “United States,” or “American,” the letters “U.S.A.,” any variation of such words or letters, or the name of any city or locality in the United States, or the name of any foreign country or locality other than the country or in which the article was manufactured or produced, appears on an imported article or its container, there shall appear, legibly and permanently, in close proximity to such words, letters, or name, and in at least a comparable size, the name of the country of origin preceded by “Made in,” Product of,” or other words of similar meaning. In order to satisfy the close proximity requirement, the country of origin marking must generally appear on the same side(s) or surface(s) in which the name or locality or other than the actual country of origin appears.
You propose that the imported BP Monitors will be marked with the following language: “Designed in Taiwan and Assembled/Manufactured in Vietnam.” CBP has previously allowed the phrase "designed in" to be used in conjunction with country of origin information. See HQ ruling 559886, dated August 16, 1996. HQ ruling H237742, dated August 26, 2015, states:
As a result of 19 C.F.R 134.43(e), the terms "Made in," "Product of," and "Assembled in" are words of similar meaning. Accordingly, it is no longer acceptable to use "Made in," "Product of, " or words of similar meaning, along with the words "Assembled in" in a single country of origin marking statement on articles of foreign origin imported into the U.S.
Also, the term “Manufactured in” constitutes "other words of similar meaning" as "made in" or "product of." See HQ ruling 563301, dated August 26, 2005. Accordingly, we suggest using the following phrases for marking in a conspicuous place as legibly, indelibly, and permanently as the nature of the articles (or their containers) will permit, such as “Assembled in Vietnam, designed in Taiwan”, “Manufactured in Vietnam, designed in Taiwan” or words of similar meaning assuming the close proximity and comparable size of 19 CFR 134.46 is met.
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 Fei Chen at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division