MAR-2OT:RR:NC:N2:209
Robert L. Grasing
Sandler, Travis & Rosenberg, P.A.
24 Smith St., Building 2, Suite 102
Pawling, NY 12564
RE: The country of origin and marking of coaxial cable assemblies from China
Dear Mr. Grasing:
This is in response to your letter dated March 13, 2019, requesting a country of origin determination for marking purposes and duty implications under the Section 301 remedy, and a marking exemption determination, on behalf of your client, FUJIFILM SonoSite, Inc.
This request concerns the country of origin of coaxial cable assemblies used in the manufacture of transducer units for ultrasound machines (Part #’s P14614-03 and P15469-02).
The first item concerned, Part # P14614-03, is a coaxial cable assembly that is imported into the United States to be further manufactured into an ultrasound transducer. This imported cable consists of numerous coaxial conductors within a single cable assembly. At the time of importation into the United States the cable is cut to length and fitted with printed circuit board connectors.
The second item concerned, Part # P15469-02, is a coaxial cable assembly that is imported into the United States to be further manufactured into an ultrasound transducer. This imported cable consists of numerous coaxial conductors within a single cable assembly. At the time of importation into the United States the cable is cut to length, fitted with printed circuit board connectors and a sensor element.
The cable assembly process is as follows:
Within Japan, each individual coaxial conductor is manufactured. The inner core, dielectric, outer conductor, and outer cover are assembled together to form a single coaxial conductor. Then several coaxial conductors are grouped together and incorporated into a cable assembly along with a braided EMI shield and an outer jacket. The cable assembly is then inspected and shipped to China for the final assembly process.
Within China, the cable assembly is cut to length. In some instances a sensor element is attached. The ends of the cable are exposed and soldered to a connector PCBA. A bushing is added and the labels are attached. The cable is then inspected, packaged and sent to the United States.
Within the United States, the cable assembly is manufactured into a finished transducer. A United States manufactured ultrasound array is soldered to one end of the imported cable assembly while a connector housing is assembled onto the opposite end. The cable is then electrically inspected. Next, an EMI shield is added and the transducer is programmed with United States origin programming. Finally, the array is encased within a housing and the transducer undergoes a variety of tests.
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 United States 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 United States 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 and the pertinent authorities, it is the opinion of this office that the Japanese origin coaxial cable assemblies, Part #’s P14614-03 and P15469-02, which are sent to China for the incorporation of connector PCBAs and sensor elements, prior to being shipped to the United States, do not undergo a substantial transformation within China. The assembly process does not result in a new and different article of commerce with a name, character, and use distinct from the article exported. Therefore, the coaxial cable assemblies, Part #’s P14614-03 and P15469-02, are considered products of Japan at the time of import into the United States for both country of origin marking and the applicability of the Section 301 duty implications.
Additionally, you inquire as to whether the imported coaxial cable assemblies, Part #’s P14614-03 and P15469-02, which will be further processed in the United States by a United States manufacturer are required to be individually marked with the country of origin at time of import.
Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.41(b), Customs Regulations (19 CFR 134.41(b)), mandates that the ultimate purchaser in the United States must be able to find the marking easily and read it without strain. Section 134.1(d) defines the ultimate purchaser as generally the last person in the United States who will receive the article in the form in which it was imported. 19 CFR 134.1(d)(1) states that if an imported article will be used in manufacture, the manufacturer may be the ultimate purchaser if he subjects the imported article to a process which results in a substantial transformation of the article. The case of United States v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940), provides that an article used in manufacture which results in an article having a name, character or use differing from that of the constituent article will be considered substantially transformed and that the manufacturer or processor will be considered the ultimate purchaser of the constituent materials. In such circumstances, the imported article is excepted from marking and only the outermost container is required to be marked. See 19 CFR 134.35.
In this case, the imported coaxial cable assemblies are substantially transformed as a result of the United States processing, and therefore the United States manufacturer is the ultimate purchaser of the imported coaxial cables and under 19 CFR 134.35 only the containers which reach the ultimate purchaser are required to be marked with the country of origin “Japan”.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 CFR Part 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 protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division