Etherwan Systems, Inc.
33F, No. 93, Sec. 1, Xintai 5th Rd., Xizhi Dist.,
New Taipei City, 221
RE: The country of origin and marking of an Ethernet extender
Dear Ms. Wu:
In your letter dated August 27, 2020, you requested a country of origin ruling.
The item concerned is referred to as an Ethernet extender (model # ED3575-622). It is a hardened managed Ethernet switch and extender combo. This device is equipped with Ethernet, SFP, copper extender ports, and it is used to bridge the gap between modern and legacy infrastructure networks.
The Ethernet extender is designed and assembled in Taiwan. It consists of a Main printed circuit board assembly (PCBA), a CPU PCBA, a Relay/Power PCBA and various housing/mounting/electrical components. A bill of materials listing all sub-assemblies and components with their countries of origin has been submitted.
The manufacturing process that takes place within Taiwan involves the manufacturing of the printed circuit board assemblies (PCBA) using surface mount technology (SMT) and dual in-line processing (DIP). During this process electrical elements (i.e. diodes, transistors, capacitors, etc.) are placed on a printed circuit board and soldered into the circuitry. When complete each PCBA is tested. A manufacturing narrative and various flow charts depicting the manufacturing process have been submitted.
Next, the competed PCBAs and other housing/support/electrical components from various countries of origin, are assembled into the finished device.
Finally, firmware is installed into the device, and the finished products are inspected.
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; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin."
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).
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).
Based upon the facts presented, it is the opinion of this office that the manufacturing and assembly processes that take place in Taiwan is substantial and complex. The PCBAs are the dominant components for these devices. Each PCBA is manufactured within Taiwan and additionally the final assembly processes (housing/brackets/etc.) also takes place within Taiwan. As a result, the country of origin of the finished Ethernet extender (model # ED3575-622) will be Taiwan for origin and marking purposes at time of importation into the United States.
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 Steven Pollichino at firstname.lastname@example.org.
Steven A. Mack
National Commodity Specialist Division