CLA-2-90:OT:RR:NC:N2:212
Richard Suh
Toshiba Logistics America, Inc.
501 Burning Tree Road
Fullerton, CA 92833
RE: The country of origin of TFT-LCD modules
Dear Mr. Suh:
In your letter dated July 16, 2021, you requested a country of origin ruling on behalf of your client, JDI Display America, Inc.
There are five items at issue with this request that are all described as Thin Film Transistor (TFT) – Liquid Crystal Display (LCD) modules and are separately identified by part numbers LPM124G358A, LAM042G404A, LAM070G405A, LPM123G406A, and LT042CA64000. You state that the subject modules are virtually identical in composition as they are comprised of a TFT-LCD cell, polarizers, backlight, driver and control printed circuit board (PCB), and flexible PCB for connection. The finished modules will be incorporated into a wide variety of consumer display applications.
In your request, you state that the manufacturing process for all subject modules is identical. This process begins in Japan with the manufacture of the TFT-LCD cell. The TFT is first created by transistors being deposited onto a substrate through chemical vapor deposition. The color filter is then manufactured by building a color matrix on a glass substrate. A layer of liquid crystals is then deposited between the color filter and TFT as the two pieces are bonded together. This process creates a sheet of TFT-LCD cells that will later be cut into individual cells.
The sheet of cells is then sent to China where it is cut into individual cells. These cells are then bonded to the PCBA, which contains the driver and control circuitry, before the polarizers, backlight, and flexible connection PCBA is attached. The finished modules are then packaged for shipment to the U.S.
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 modules, it is our opinion that the completed TFT-LCD cell, regardless of when it is cut to size, imparts the essential functional component of the finished device. The complex manufacturing process performed in Japan renders the end-use of the cell predetermined, as it could not be used for any other purpose than a display. Further, the assembly processes 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 upon the facts presented, the country of origin of the TFT-LCD modules, part numbers LPM124G358A, LAM042G404A, LAM070G405A, LPM123G406A, and LT042CA64000, 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