CLA-2-90:OT:RR:NC:N1:105
Alena A. Eckhardt Nakachi Eckhardt & Jacobson, P.C. 50 California Street, Suite 1500 San Francisco, CA 94111
RE: The tariff classification and country of origin of the Halsa Baby All-In-One Wellness System
Dear Ms. Eckhardt:
In your letter dated February 6, 2024, on behalf of your client, Halsa Baby, Inc., you requested a tariff classification and country of origin ruling. A sample and descriptive literature was provided for our review.
The item under consideration is described as the Halsa Baby All-In-One Wellness System, which is an advance baby monitoring system consisting of a base station hub, ankle sensor, power supply, instructions, and three sizes of ankle bands. The base station hub transmits voice (two-way communication via microphone/speakers and the App) and data, monitors the nursery environment through temperature and humidity tracking, and features a customizable nightlight, lullabies, and white noise generator. The ankle sensor, which is attached to one of the soft fabric ankle bands (three different sizes), gathers the infant’s vital signs (heart rate, oxygen saturation, and skin temperature), movement (via the accelerometer) and activity data. The data is transmitted wirelessly via Bluetooth to the Halsa Baby Hub, which in turn transfers the data to an app on a smart device. The base station hub, ankle sensor, bands, instructions, and power supply are all packaged together in a retail box for shipment to the United States.
You have proposed classification within heading 8517, Harmonized Tariff Schedule of the United States (HTSUS). Heading 8517, HTSUS, provides in relevant part for: “…other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network)…”. Classification under heading 8517, HTSUS, is precluded because the items concerned are used primarily to execute a measurement/sensing function. Devices of heading 8517, HTSUS, consist of the transmitters, receivers or transceiver units that are used to send and receive data. Wireless sensors and/or measurement devices provide a function that falls outside of heading 8517, HTSUS. The transmission/reception function is a secondary or support function to that of the measurement/sensing function. Additionally, Section XVI Note 1(m) excludes articles of chapter 90. The function of measuring/sensing a user’s health/activity level is beyond the scope of heading 8517, HTSUS.
Accordingly, the applicable subheading for the Halsa Baby All-In-One Wellness System will be 9031.80.8085, HTSUS, which provides for “Measuring or checking instruments, appliances and machines, not specified or included elsewhere in this chapter; profile projectors; parts and accessories thereof: Other instruments, appliances and machines: Other: Other.” The general rate of duty will be free.
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 at https://hts.usitc.gov/current.
Regarding the country of origin of the Halsa Baby All-In-One Wellness System, the operational instructions are engineered and designed in Sri Lanka along with the design of the product, including printed circuit board (PCB) hardware, software (server and back-end), and the mobile application. The complete manufacturing of the PCBs and Printed Circuit Board Assemblies (PCBAs) are also performed in Sri Lanka.
In Sri Lanka, the PCBAs are manufactured using different automated technologies – standard surface mount technology (SMT), through hole mounting technology (THT), reflow and hand soldering – in which all the electrical components (resistors, capacitors, ICs, connectors, and wire harnesses) are mounted and soldered to respective PCBs to form the PCBAs. Five of the PCBAs are dedicated for use in the Halsa Baby Hub and the other for use in the Halsa Baby Smart Sensor. After the PCBAs are created, the wire harness connections are completed making the PCBA unit an interconnectable component. The cable preparation for wire harnessing, followed by cable cutting, crimping and connector attachment, are all executed in Sri Lanka. The Sri Lankan developed firmware, which is the functional programming, is flashed into the relevant PCBAs so that they become functional units. After the firmware flashing, the manufacturer in Sri Lanka tests PCBA functionalities and performs quality assurance and quality control. Finally, the mobile app, server back-end, and web front-end are developed and programmed in Sri Lanka. The Sri Lankan components account for roughly 68% of the overall cost of the finished system and over 60% of the manufacturing time.
Following the above steps, the functional Sri Lankan PCBAs are shipped to China for manufacture of the final components, enclosure assembly, and packaging. The plastic enclosure parts, branded cardboard packaging, power cable, and fabric bands are all manufactured in China. The Chinese components account for roughly 20% of the overall cost of the system and less than 40% of the manufacturing time. The next step in China includes the PCBA installation into the enclosures with connecting of the cables. This is followed by the addition of the Taiwanese processor to the hub. A visual inspection is performed to ensure the proper configuration and enclosure sealing is correct. This is followed by final simple assembly that includes gluing and affixing screws. The final step in China involves placing the assembled smart sensor, hub, power adapter, power cable, and ankle bands into the retail cardboard box, attaching labels, and securing for shipment. 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 “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 test for determining whether a substantial transformation will occur is whether an article emerges from a process with a new name, character, or use, different from that possessed by the article prior to processing. See Texas Instruments Inc. v. United States, 69 C.C.P.A. 151 (1982). This determination is based on the totality of the evidence. See National Hand Tool Corp. v. United States, 16 C.I.T. 308 (1992), aff'd, 989 F.2d 1201 (Fed. Cir. 1993). In regard to the country of origin of the Halsa Baby All-In-One Wellness System, it is our opinion that the assembly process performed in China is not considered complex and does not constitute a substantial transformation. The PBCAs are fully functional when they are imported to China for final enclosure assembly and packaging. The firmware is product specific and the PBCAs cannot be used for any other purpose than with the hub and smart sensor. Therefore, to determine the country of origin of the Halsa Baby All-In-One Wellness System, we rely on the origin of the PCBAs, which are the essential components of the Halsa Baby All-In-One Wellness System. It is the PCBAs that are performing the measuring and transmission functions and they do not change function when installed into the plastic housing. Accordingly, the country of origin of the Halsa Baby All-In-One Wellness System for marking purposes will be Sri Lanka, which is where the functional PCBAs are manufactured.
The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in Title 19, Code of Federal Regulations (CFR), Section 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, whether directly, by reference, or by implication, is accurate and complete in every material respect. In the event that the facts are modified in any way, or if the goods do not conform to these facts at time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and submit a request for a new ruling in accordance with 19 CFR 177.2. Additionally, we note that the material facts described in the foregoing ruling may be subject to periodic verification by CBP.
This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection 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, please contact National Import Specialist Jason Christie at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division