George R. Tuttle, III
Tuttle Law Offices
3950 Civic Center Drive
San Rafael, CA 94901
RE: The country of origin of Scale Master Models
Dear Mr. Tuttle:
In your letter dated December 14, 2022, on behalf of your client, Calculated Industries, you requested a country of origin ruling. Descriptive literature was provided for our review.
The merchandise under consideration is described as Scale Master Models 6020 (Scale Master Classic), 6025/6028 (Scale Master Pro), and 6135/6138 (Scale Master Pro XE). The Scale Master Models are hand-held devices designed for building, engineering, and construction professionals to obtain linear area and volume take-offs from blueprints, drawings, and maps. There are seventy-two built-in scales (39 U.S. and 33 metric) including decimal inches, feet-inches, yards, miles, nautical miles and millimeters. The Scale Masters incorporate built-in counters, which allow the user to manually count other items such as studs, piers, outlets, etc. There are 6 custom scales, 3 each for U.S. and metric units, which let you "roll" or define any scale, even from plans that have been reduced, enlarged or are out-of-scale. The devices run off batteries and are 6.7 inches x 1.6 inches x 0.6 inches. Each model operates very similarly and is constructed in the same process listed below.
The proposed assembly process of the Scale Master Models in the Philippines utilizes five fabrication procedures including: 1) Surface Mount Technology 2) Chip-on-Board Integration 3) Scale Master component assembly 4) Testing and 5) Packing.
The main printed circuit board assembly (PCBA) will be assembled in the Philippines using predominately Chinese individual components. The printed circuit board (PCB) mechanically supports and electrically connects the electronic/electrical components using conductive tracks, pads, and other features etched from one or more sheets of copper laminated onto and/or between sheets of a non-conductive substrate. Components for the PCBA are sourced from various suppliers in China and other countries. The components that make up the PCBA include (but are not limited to) the printed circuit board (a resin matrix reinforced with glass fibers) and 26+ components, including design-specified capacitors, resistors, an integrated circuit, and an oscillator. Components are soldered onto the PCB to both electrically connect and mechanically fasten them to it. The PCB is also printed with conductive carbon-filled inks to provide contact pads and conductors for the rubbery keypad sheet used for the user interface.
The initial step is to program the machine which will place components onto the PCB using surface mount technology (SMT). Before entering the surface-mount device (SMD), solder paste is applied to the panel with a solder paste printer. A template assures that the application of the paste is limited to the points on the panel where the SMD components are to be placed. The panel enters the SMD where all small electronic components, stored on rotating reels, are placed onto the panel. Capacitors, resistors, an integrated circuit, and an oscillator are rapidly placed onto the panel to the exact location programmed into the surface-mount equipment (SME). Once populated, the panel passes through an oven causing the soldering paste to liquify, bonding the components firmly to the board and establishing electrical connectivity of all components of the PCBA. The panel is then cooled, solidifying the solder, and fixing the electronic components in position.
The next step is the Chip-on-Board (COB) mounting in the Philippines. The "brains" of the Scale Master Models 6020, 6025, 6028, 6135, and 6138 are provided by a Taiwanese "Integrated Circuit" ("IC"), a microprocessor that is attached to the PCB. In a controlled environment, each utilized pad of the device is welded to the PCB. A device called a "Wire Bonder" is positioned with microscopic precision on each conduction pad used, and then bonds the die to the PCB via ultrasonic vibrations. It will then move to the mating conduction pad on the PCB and weld that wire to the conduction pad used on the printed circuit board. A human operator oversees the operation of the wire bonder to reposition it if needed. The last part of the process involves adding a thermal epoxy compound over the die, bonding wires, and connection pads for environmental and mechanical protection of the IC. Calculated Industries' units mostly use custom-designed IC's that are proprietary to the Company. They are pre-programmed (in the IC fabrication process), so no programming step is required.
The third step is the Scale Master assembly. In the Philippines, a Chinese origin Liquid Crystal Display (LCD) will be assembled to one end of a flexible multi-conductor electrical cable using a heat press process. Then the other end of the flexible cable will be heat pressed to the PCB. A protective sheet is added to the back of the LCD to protect it during battery changes. Small pieces of elastomer are added to assist in shock absorption, and foam glue pads are added to fasten the LCD to the housing.
In the Philippines, the battery holder subassembly will be completed using two plastic parts that are heat-sealed together using an ultrasonic bonding machine. Battery clips will then be pressed into specifically designed recessed plastic housing. Two wires will then be routed through guides and soldered to the PCB to complete the connection.
In the Philippines, a Chinese rubber keypad membrane is combined with the Scale Master PCB assembly. As mentioned above, the front side of the PCB is selectively printed with conductive carbon patterns. When a key is pressed on the Scale Master keypad, the conductive pad on the backside of each key selectively presses on a pair of conductive pads on the PCB, completing an electrical circuit that allows the Microprocessor on the PCB to determine which key is being pressed. After testing, the top of the housing is placed over the rubber pad and LCD and fastened with screws. Once completed, the Scale Master is laser engraved for lot tracking.
Finally, in the Philippines, testing algorithms are performed. Testing each circuit on the board ensures that all electrical connections are of proper electrical function and quality. Function and parametric tests are performed. A Final Sampling Quality Control is done on select completed Scale Masters. At this stage the Scale Masters are ready for packaging and shipping to the United States.
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."
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).
Regarding the country of origin of the Scale Master Models, in our view and based on the facts presented, the assembly operations conducted in the Philippines are considered complex. As described above, a complex surface mount device adds the individual components to the board using surface mount technology. Additionally, specialized machines attach the microprocessor as well as solder various components onto the PCBA which produces a physical change.
It is the opinion of this office that the assembly and manufacturing operations conducted in the Philippines results in a substantial transformation that transforms the non-originating components and parts into functional Scale Master Models. It creates a new and different article of commerce with a distinct character and use that is not inherent in the components imported into the Philippines. Therefore, they are considered products of the Philippines for origin and marking purposes at the time of importation into the United States. Accordingly, the Section 301 measures will not apply.
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 Jason Christie at [email protected]
Steven A. Mack
National Commodity Specialist Division