MAR-2-85:OT:RR:NC:N2:209
Sydney Mintzer
Mayer Brown LLP
1999 K Street, NW
Washington, DC 20006
RE: The country of origin and marking of audio adapters/dongles
Dear Mr. Mintzer:
In your letter dated August 16, 2022, you requested a country of origin and marking ruling on behalf of your client, Sonos, Inc.
The items concerned are referred to as the Sonos Line-in Adapter, SD-01 and the Sonos Combo Adapter, SD-02.
The Sonos Combo Dongle incorporates an RJ 45 Ethernet connector and a 3.5mm audio input connector on one end, and a USB Type-C connector on the other. It allows compatible Sonos smart speakers to be connected to an audio source, and an Ethernet source, at the same time.
The Sonos Line-In Dongle incorporates a 3.5mm audio input connector on one end and a USB Type-C connector on the other. It is designed to take the analog signal from the 3.5mm audio connector, convert it into a USB compliant digital signal and transmit it to the USB Type-C connector.
Both products are significantly different from traditional USB cables and dongles. Traditional USB cables/dongles have a single standard USB connector on each end of the product. As such, when a traditional USB cable/dongle is in use, the input source provides USB-compliant digital signals that can simply be transmitted to and processed at the other end of the cable/dongle without much data processing and manipulation. By contrast, the Sonos Combo Dongle needs to take non-USB compliant signals (including analog signals), convert them into
USB-compliant digital signals, and manage the distinct inputs from two different, and potentially competing, data sources for smooth and orderly transmission to the other end. Similarly, the Sonos Line-in Dongle also needs sophisticated data processing and manipulation to achieve the product’s intended purpose. It is well-known that USB standards are communication protocols based on the concept of digital signal transmission. However, the 3.5mm audio input connector only sends analog audio signals via the conductors to the Type-C end, which must be converted into USB-compliant digital signals before they may be passed onto the Sonos smart speaker via the Type-C connector.
All of the above-mentioned data conversion and management functions are provided by the printed circuit board assemblies (“PCBA”) in these products. The Sonos Combo Dongle has a PCBA on each end of the product, while the Sonos Line-In Dongle has a critical PCBA on the Type-C end of the product.
These PCBAs perform critical and complex data functions for the end product. As such, they would be considered the dominate component of each adapter/dongle.
Front-End Production Processes within Vietnam:
The PCBAs in the Sonos Combo Dongle and Sonos Line-In Dongle are manufactured in Vietnam from a bare printed circuit board (“PCB”) using the surface mount technology (“SMT”). Through this process, dozens of electronic components will be surface-mounted to the PCB. Specifically, in Vietnam, the bare board will be inspected first and then electronic components, such as inductors, resistors, capacitors, crystal, and MOSFETs, will be surface-mounted to the board; after this step, the board assembly will go through “reflow”; and finally firmware will be uploaded to the PCBA and the finished PCBA will be tested, packaged and shipped from Vietnam.
Back-End Production process within Vietnam or China:
After the PCBAs are produced in Vietnam, they will be assembled with other components into a finished Sonos Combo Dongle or Sonos Line-In Dongle either in Vietnam or China. The process of assembling a Sonos Combo Dongle or Sonos Line-In Dongle involves simple operations that consist of cutting the cable into the appropriate length, exposing the conductor wires in the cable, arranging the wires in the right order, soldering them onto the PCBAs (or the connector pad); and forming different types of covers for protective and aesthetic reasons. Various product tests and inspection will also be performed before the finished Sonos Combo Dongle or Sonos Line-In Dongle is packaged for shipment.
A complete manufacturing process description and explanation has been provided.
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 form the dominant component of each adapter/dongle. The front-end manufacturing process of creating the PCBAs takes place within Vietnam. The PCBAs (which contain the processing, converting, transmission/reception, etc.) do not undergo a substantial transformation as a result of the back-end manufacturing process that takes place in Vietnam or China. They retain their identity and predetermined end use. Therefore, since a substantial transformation does not occur as a result of the back-end manufacturing processes, the country of origin for marking purposes would be Vietnam at the time of importation into the United States. The Sonos Line-in Adapter, SD-01 and the Sonos Combo Adapter, SD-02 should be legibly, conspicuously, and permanently marked in accordance with the requirements of 19 U.S.C. 1304 to indicate that its country of origin is Vietnam.
Additionally, as the country of origin has been determined to be Vietnam, the Sonos Line-in Adapter, SD-01 and the Sonos Combo Adapter, SD-02 would not be subject to the Section 301 trade remedies.
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