6300 Legacy Drive
Plano, TX 75024
RE: The classification and country of origin of a radio main unit from Mexico.
Dear Ms. Hoffman:
In your letter dated January 4, 2019, you requested a classification and country of origin determination ruling.
The item under consideration is referred to as a Main Unit, part number 20/BFL901009/760. This Main Unit is a support unit which contains one or two basebands. It supports and facilitates the scalability of a modular radio base station (RBS) which may consist of one or many indoor units and several radios, remote radio units or an antenna integrated radio (AIR).
The Main Unit assembly, part number 20/BFL901009/760 has the following functions:
Downlink baseband processing
Uplink baseband processing
IP traffic management
Controlling the power and the climate of the RBS
The Main Unit assembly, part number 20/BFL901009/760 consists of the following components:
Part SXA 1342193/2 – a dummy unit used to fill the cabinet since it has height to host two baseband units and only one is installed. It also secures the correct flow of air to properly cool the units in operation. The country of origin is Mexico.
Part RPM777291/02000- a grounding cable is used to connect the baseband to the earth of the control unit (power). The country of origin is Estonia.
Part RPM777193/00200 - a DC power cable used to power the baseband. It drives the DC power signal from the power source to the baseband. The country of origin is Estonia.
Part KDU137925/31 - a baseband 5216 unit provides switching, traffic management, timing, baseband processing, and radio interfacing. The country of origin is China.
Part SVB154600/35 – a label that identifies the unit. The country of origin is Mexico.
Part RPM77701/00300 – a signal cable for data signals as well as control signals. The country of origin is China.
Part 1/BFL901009/4 – Equipment housing/magazine provided with a DC power unit (1 -48V, 2 - 48V, 2 +24V) and prepared to host one or two baseband units. The country of origin is Thailand.
The manufacturing process that takes place in Mexico is as follows:
The production supervisor receives a manufacturing order from Ericsson, so the exact amount of material is requested for the number of units requested to be built. Based on the production order, the material is requested to be sent to the warehouse.
The material is supplied by the warehouse and the production people must verify the quantity and correctness of the part numbers received. There is a hand-shake with the warehouse people once the verification is complete and no irregularities are found.
Insert Baseband & Dummy units into the cabinet.
Using part number RPM777193/00200, wire the PWR signal from the control unit to the baseband.
Using part number RPM77701/00300, connect Signals EC X from the control unit to EC in the baseband.
The Main Unit is tested. During the test process there is a software upload and verification of functionality (fans and communication interfaces). There is also a short simulation of the real function in the field. The software is downloaded for testing purposes only. The software is loaded to make the unit functional, and the proper configuration is loaded. After this, the actual testing is performed. After testing, all software is removed again. The only remaining software is low level, "boot software", which is needed for the software download upon delivery to the customer's site.
Create structure in Track and Trace (TnT) - TnT is the system used for tracking all built part numbers and the serialized items inside of them. Structure is created in TnT and the built unit is packed.
The applicable subheading for the Main Unit, part number 20/BFL901009/760 will be 8517.62.0020, Harmonized Tariff Schedule of the United States (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…: Machines for the reception, conversion, and transmission or regeneration of voice, images or other data, including switching and routing apparatus: Switching and routing apparatus.” 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 on the World Wide Web at https://hts.usitc.gov/current.
Regarding your country of origin determination request, Section 304 of the 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 container) will permit in such a manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article. The regulations implementing the requirements and exception to 19 U.S.C. § 1304 are set forth in Part 134, Customs and Border Protection Regulations (19 C.F.R. Part 134).
19 C.F.R. § 134.1(b) provides as follows:
Country of origin means 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; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin.
Since Mexico is a NAFTA country, the NAFTA Marking Rules must be applied in this case for purposes of determining the country of origin for purposes of marking.
Part 102, Customs and Border Protection Regulations (19 C.F.R. Part 102), sets forth the NAFTA Marking Rules. Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes. See 19 C.F.R. § 102.11. Applied in sequential order, the required hierarchy establishes that the country of origin of a good is the country in which:
(a)(1) The good is wholly obtained or produced;
(a)(2) The good is produced exclusively from domestic materials; or
(a)(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in Section 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because the imported modems are neither wholly obtained nor produced exclusively from “domestic” (Mexican, in this case) materials. Because the analysis of sections 102.11(a) (1) and 102.11(a) (2) does not yield a country of origin determination, we look to section 102.11(a) (3). “Foreign material” is defined in 19 C.F.R. § 102.1(e) as “a material whose country of origin as determined under these rules is not the same country as the country in which the good is produced.”
The applicable rule for subheading 8517.62.0020, HTSUS, in section 102.20 requires:
“A change to other transmission apparatus for radiotelephony or radiotelegraphy or to other transmission apparatus incorporating reception apparatus for radiotelephony or radiotelegraphy of subheading 8517.61 through 8517.69 from any other good of subheading 8517.61 through 8517.69 or from any other subheading, except from subheading 8517.12, other transmission apparatus for radiotelephony or radiotelegraphy or from other transmission apparatus incorporating reception apparatus for radiotelephony or radiotelegraphy of subheading 8517.61 through 8517.69, or 8525.50 through 8525.60.”
The Chinese Baseband 5216 unit, part KDU137925/31 is classified under subheading 8517.62.0020, at time of import into Mexico. The manufacturing process that takes place in Mexico does not result in a new product that satisfies the tariff shift requirement. The country of origin for purposes of marking, would be imparted by Baseband 5216 unit, part KDU137925/31. As such, the country of origin for marking purposes will be China.
Effective July 6, 2018, the Office of the United States Trade Representative (USTR) imposed an additional tariff on certain products of China classified in the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(b), HTSUS. The USTR imposed additional tariffs, effective August 23, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(d), HTSUS. Subsequently, the USTR imposed further tariffs, effective September 24, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(f) and U.S. Note 20(g), HTSUS. For additional information, please see the relevant Federal Register notices dated June 20, 2018 (83 F.R. 28710), August 16, 2018 (83 F.R. 40823), and September 21, 2018 (83 F.R. 47974). Products of China that are provided for in subheading 9903.88.01, 9903.88.02, 9903.88.03, or 9903.88.04 and classified in one of the subheadings enumerated in U.S. Note 20(b), U.S. Note 20(d), U.S. Note 20(f) or U.S. Note 20(g) to subchapter III shall continue to be subject to antidumping, countervailing, or other duties, fees and charges that apply to such products, as well as to those imposed by the aforementioned Chapter 99 subheadings.
Products of China classified under subheading 8517.62.00, HTSUS, unless specifically excluded, are subject to the additional 10 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.04, in addition to subheading 8517.62.0020, HTSUS, listed above.
The tariff is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Notice cited above and the applicable Chapter 99 subheading.
This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 C.F.R. 181).
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 Steven Pollichino at email@example.com.
Steven A. Mack
National Commodity Specialist Division