Alpha Networks Inc.
No. 8 Li-shing 7th Rd, Science-based Industrial Park
RE: The country of origin and marking of a gateway device
Dear Ama Hsu:
In your letter dated March 11, 2021, you requested a country of origin ruling.
The item concerned is referred to as the 802.11 ax VDSL gateway. This device is a high performance 2x2 Wi-Fi 6 router (802.11ax) with a VDSL2 integrated access device (IAD) and a four-port built-in Giga Ethernet switch. The 802.11 ax VDSL gateway enables wired and wireless connectivity/access to the Internet. This device undergoes manufacturing processes in two different countries, China, and Taiwan.
The 802.11 ax VDSL gateway contains one main printed circuit board assembly, which is produced in China from electrical elements/components made in both China and Taiwan. In China, the printed circuit board assembly is manufactured using surface mount technology (SMT) and pick and place machines. During this process electrical elements (i.e. diodes, transistors, capacitors, etc.) are placed on a printed circuit board and soldered into the circuitry. Next, the PCBAs are tested, packaged, and shipped to Taiwan for the final assembly process.
In Taiwan, the PCBAs are assembled within a housing and connected to antennas, brackets, etc. This process involves simple hand assembly. Finally, the finished item is tested.
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 process that takes place in China is substantial and complex. The various electrical components/elements from China and Taiwan are transformed in China into a different article with a new name, character, and use. The assembly process that takes place in Taiwan, does not result in a substantial transformation of the PCBA, which is the dominat component of this device. The assembly process does not result in a new and different article of commerce with a name, character, and use. Therefore, the 802.11 ax VDSL gateway is considered a product of the China 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 email@example.com.
Steven A. Mack
National Commodity Specialist Division