CLA-2-90:OT:RR:NC:N2:212
Joseph Spraragen
Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP
599 Lexington Avenue
New York, NY 07666
RE: The country of origin of TFT-LCD Modules
Dear Mr. Spraragen:
In your letter dated May 20, 2020, you requested a country of origin ruling on behalf of your client, Sharp Electronics Corporation.
There are three items at issue with this request, all described as TFT-LCD modules, that are identified by model numbers 4.2" LQ042T5DZ07, 8" LQ080Y5LX12, and 8" LQ080Y5DZ04. Each module is comprised identically of a TFT-LCD cell, Integrated Circuit (IC), Printed Circuit Board (PCB), flexible printed circuit connector, and a backlight. The only variation between the three subject modules is their size. You state that, after importation, each module will be assembled into various display units within automobiles.
In your request, you state that the manufacturing process begins in Japan where the TFT-LCD cell is created. In Japan, transistors are applied to a glass substrate that is then exposed to light and etched prior to filter layers being added. Liquid crystals are then dispensed onto the panel. This process creates a multi-cell panel.
This panel is then sent to China for final processing. This begins with the multi-cell panel being cut into individual cells of the desired size. The polarizer is then added, followed by the flexible printed circuit connector, control IC, and backlight unit to complete the finished module.
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 provided, it is our opinion that the TFT-LCD cell manufactured in Japan imparts the essence of the finished module. The complex manufacturing process that includes the addition of the transistors, 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 three TFT-LCD modules, model numbers 4.2" LQ042T5DZ07, 8" LQ080Y5LX12, and 8" LQ080Y5DZ04, is Japan.
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