CLA-2-90:OT:RR:NC:N2:212
Rachel Lee
FNS Customs Brokers, Inc.
1545 Francisco Street
Torrance, CA 90501
RE: The country of origin of TFT LCD Module
Dear Ms. Lee:
In your letter dated December 17, 2019, you requested a country of origin ruling on behalf of your client, LG Display America, Inc.
The merchandise at issue, identified by model number LB170E01-SL01-5W1, is described as a thin film transistor liquid crystal display (TFT LCD) module. You state that, after importation into the United States, the modules will be incorporated into multiple end products, specifically medical devices and casino gaming machines. Once installed, they will act as the display for the finished products. The module is comprised of a TFT-LCD cell, driver Integrated Circuit (IC), control Printed Circuit Board (PCB), and a backlight.
You state that the manufacturing process begins in Korea with the creation of the TFT-LCD cell. This process starts with the manufacture of the TFT by depositing transistors onto a glass substrate that is then cleaned and a photoresistive coating is added. The substrate is then etched, stripped, and patterned with insulators and electrodes. The color filter is then manufactured in Korea by depositing a black matrix on a glass substrate followed by the addition of a photoresistive coating. The color filter is then exposed to light, developed, etched, and stripped. The TFT and color filter are joined and liquid crystals are applied to make the completed cell.
The TFT-LCD cell is then shipped to China where it is cleaned and a polarizer is added. This is followed by the addition of the driver IC, control PCB, and backlight. The completed module is then inspected and packaged for distribution to the customer.
The “country of origin” is defined in 19 CFR 134.1(b), in pertinent part, 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.”
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).
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, “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.
Regarding the country of origin of the subject TFT LCD module, based on the information presented, it is our opinion that the TFT-LCD cell manufactured in Korea imparts the essence of the finished module. The complex manufacturing process that includes the addition of the transistors, color filter, and liquid crystals would render the end-use of the cell predetermined, as it could not be used for any other purpose than that of a display. Further, the assembly process performed in China, would not substantially transform the cell into a new and different article of commerce with a name, character, and use distinct from that of the exported good. Therefore, based on the facts presented, it is the opinion of this office that the country of origin of the TFT LCD module, model number LB170E01-SL01-5W1, is Korea.
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 Luke LePage at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division