MAR-2-85:OT:RR:NC:N2:209
H. Michael Leightman
Ernst & Young LLP
1401 McKinney Street
Houston, TX 77010
RE: The country of origin and marking of a remote radio head unit
Dear Mr. Leightman:
In your letter dated April 27, 2021, you requested a country of origin ruling on behalf of your client, Microelectronics Technology Inc.
The item concerned is a remote radio head (RRH) unit identified as the Diamond Head Triple Remote Radio Head. This device is a tower-top transceiver unit for a wireless telecommunication station which interacts with a baseband processing unit on the ground to provide 5th generation (5G) network services.
The RRH unit is primarily composed of two main components identified as Power Amplifier Module (PAM) and Radio Linearization Board (RLB). The device resembles the shape of a piece of carry-on luggage and is designed to be mounted to the top of a pole.
The key components of the RRH unit that enable it to function properly as a transceiver for communications are the primary printed cirbuit board assemblies (PCBAs) and their embedded integrated circuits (ICs). The RRH unit consist of two RLB PCBAs and four PAM PCBAs. These six primary PCBAs provide the essential character and core functionalities to the completed RRH unit.
Under the proposed scenario, all six PCBAs will be manufactured in Taiwan with imported or locally procured components. Then the PCBAs are shipped to China for incorporation with other structural and supporting components to complete the finished RRH unit before shipping to the U.S.
The manufacturing process that takes place within Taiwan is as follows:
The PCBAs for both the PAM and RLB are manufactured with various electrical components such as integrated circuits soldered/attached/mounted to the printed circuit boards using Surface Mount Technology (SMT) or Pin through Hold (PTH) processes. The resulting commodities are the PCBAs which form the dominant component of both the PAM and RLB modules. Once finished, software is downloaded to each PCBA and various testing is performed to ensure the modules are properly functioning.
The manufacturing process that takes place within China is as follows:
Interface Board (IF Board) which serves as a connector between RLBs will be manufactured in China before the final assembly. This secondary or auxiliary IF Board functions as an extension cord to connect the RLB PCBAs to the power source and it does not contribute to the essential functionalities of the RRH unit.
Finally, the Taiwanese origin RLB PCBAs and the PAM PCBAs are manually installed with various connectors and screws, with other pre-determined components such as Duplexer, IF Board and Power Supply Module to complete the RRH unit. The completed product is prepared for shipment to the U.S. after undergoing function testing and packaging.
A complete detailed manufacturing process explanation has been submitted.
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”.
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, it is the opinion of this office that the PCBAs for both the PAM and RLB modules manufactured in Taiwan are the dominant components of this device. They do not undergo a substantial transformation as a result of the processing that takes place in China. The PCBAs have a predetermined end use when exported from Taiwan and they retain that identity after the processing that takes place within China. Therefore, since a substantial transformation does not occur as a result of the Chinese processing, the country of origin of the finished Diamond Head Triple Remote Radio Head will be Taiwan for origin and marking purposes at time of importation into the United States.
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 Steven Pollichino at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division