CLA-2-85:OT:RR:NC:N2:220
Dora Chiang
XAC Automation Corp.
4F., No. 30 Industry E. Road IX
Science-Based Industrial Park
Hsin-Chu 300
Taiwan
RE: The country of origin of printed circuit board assemblies (PCBA) from Taiwan
Dear Ms. Chiang:
In your letter dated November 1, 2018 you requested a country of origin ruling determination.
The merchandise under consideration is a printed circuit board assembly (PCBA) identified as the iX-JADE, which is described as the main processor board for a secure payment terminal. The payment terminal, which is not subject to this request, is designed for harsh outdoor environments and features a 7” display, a touch screen user interface, and secure keypad. The iX-Jade, which you have requested our office to determine the correct country of origin, is the PCBA that performs the data processing and user interface control for the payment terminal.
You state in your request that the iX-JADE is manufactured in Taiwan from a bare printed circuit board and 180 components of various origins which are soldered onto the board. Once the boards are produced, they are programmed and tested prior to packing for export. All of the manufacturing, programming, and testing is performed in Taiwan.
With regard to the appropriate country of origin of the iX-JADE, 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 in pertinent part 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;
As stated in HQ 735009 dated July 30, 1993, “The country of origin is the country where the article last underwent a “substantial transformation”, that is, processing which results in a change in the article's name, character, or use”. Customs and Border Protection (CBP) maintains, based on United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 (C.A.D. 98) (1940), that “A substantial transformation occurs when an article emerges from a manufacturing process with a name, character, and use that differs from the original material subjected to the processing.”
Further, in Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308 (2016), the Court of International Trade (“CIT”) interpreted the meaning of “substantial transformation” as used in the Trade Agreements Act of 1979 (“TAA”) for purposes of government procurement. In Energizer the court reviewed the “name, character and use” test in determining whether a substantial transformation had occurred in determining the origin of a flashlight, and reviewed various court decisions involving substantial transformation determinations. The court noted, citing Uniroyal, Inc. v. United States, 3 C.I.T. 220, 226, 542 F. Supp. 1026, 1031, aff’d, 702 F.2d 1022 (Fed. Cir. 1983), that when “the post-importation processing consists of assembly, courts have been reluctant to find a change in character, particularly when the imported articles do not undergo a physical change.” Energizer at 1318. In addition, the court noted that “when the end-use was pre-determined at the time of importation, courts have generally not found a change in use.” Energizer at 1319, citing as an example, National Hand Tool Corp. v. United States, 16 C.I.T. 308, 310, aff’d 989 F.2d 1201 (Fed. Cir. 1993). Furthermore, courts have considered the nature of the assembly, i.e., whether it is a simple assembly or more complex, such that individual parts lose their separate identities and become integral parts of a new article.
In determining the origin of the iX-JADE, we would note that the manufacturing process involves the placement and soldering of numerous individual components, integrated circuits, etc. onto a bare printed circuit board. It is the view of this office that the manufacturing processes performed in Taiwan constitutes substantial transformation of the original articles into a new or different article of commerce. In the opinion of our office, the country of origin of the iX-JADE is Taiwan.
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 Karl Moosbrugger at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division