MAR-2-05 CO:R:C:V 733690 RSD
Mr. Stephen M. Stoeser
David K. Lindemuth Co., Inc.
P.O. Box 68552
Seattle, Washington 98168
RE: The country of origin of printed circuit boards; 19 CFR
134.35; substantial transformation
Dear Mr. Stoeser:
This is in response to your letter of July 23, 1990,
requesting a country of origin ruling on behalf of your client,
Trans Pacific Sales Corporation, for imported printed circuit
boards.
FACTS:
Trans Pacific Sales Corporation (Trans Pacific) imports
blank printed circuit boards from various manufacturers in Korea.
Trans Pacific sells these printed circuit boards to its customers
in the U.S., who populate the boards with various electronic
components, and make them into motherboards and modems. Trans
Pacific's customers also install the motherboards and modems into
their product lines. The boards are manufactured to the
specifications of Trans Pacific's customers, who provide specific
art work to the Korean manufacturer which is screened into the
blank board during manufacturing. The art work includes a
corporate name, an Underwriters Laboratory listing number, a FCC
identifier number, and the words "Made in the USA." The
populated boards are not sold individually but as part of a
finished electronic component such as a "computer power unit."
It takes about one hour to assemble the electronic
components onto the blank board. The work is done by a skilled
electronic assembler, who clips in and solders the electronic
components onto the board. You point out that the value of the
blank boards is about $3.00, while the value of the finished
board can be $800 or more. You also indicate that it costs $O.57
per square inch to install the populated board into the finished
unit. We also assume that boards are populated with many
different components made in several different countries, but no
specific information on this has been presented. In addition,
you indicate that Trans Pacific's customers are aware that the
blank boards are made in Korea because they provide the art work
to the manufacturers in Korea. These customers would like to
have the boards marked "Made in the USA," prior to importation.
ISSUES:
Is placing the electronic components onto a blank printed
circuit board and installing the populated boards into a larger
system such as a computer power unit a substantial
transformation?
Can the statement "Made In the USA" appear on the blank
boards at the time of importation?
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C.
1304), provides that unless excepted, every article of foreign
origin 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. Congressional intent in
enacting 19 U.S.C. 1304 was "that the ultimate purchaser should
be able to know by an inspection of the marking on the imported
goods the country of which the goods is the product. The evident
purpose is to mark the goods so that at the time of purchase the
ultimate purchaser may, by knowing where the goods were produced,
be able to buy or refuse to buy them, if such marking should
influence his will." United States v. Friedlaender & Co. 27
C.C.P.A. 297 at 302; C.A.D. 104 (1940).
Part 134, Customs Regulations (19 CFR Part 134), implements
the country of origin marking requirements and the exceptions of
19 U.S.C. 1304. Section 134.1(b), Customs Regulations (19 CFR
134.1(b)), defines "country of origin" as the country of
manufacture, production or growth of any article of foreign
origin entering the U.S. 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 the marking laws and
regulations. The case of U.S. v. Gibson-Thomsen Co., Inc., 27
C.C.P.A. 267 (C.A.D. 98) (1940), provides that an article used in
manufacture which results in an article having a name, character
or use differing from that of the constituent article will be
considered substantially transformed and that the manufacturer
or processor will be considered the ultimate purchaser of the
constituent materials. In such circumstances, the imported
article is excepted from marking and only the outermost container
is required to be marked (see section 134.35, Customs
Regulations).
In C.S.D. 85-25, September 24, 1984, Customs held that for
purposes of the Generalized System of Preferences, the assembly
of a large number of fabricated components onto a printed circuit
board in a process involving considerable amount of time and
skill results in a substantial transformation. In HQ 733159,
July 23, 1990, a marking case, Customs held that the assembly of
a large number of components, including a transformer, on a
printed circuit board and incorporating the board into a
telephone system resulted in a substantial transformation.
Similarly in this case, Trans Pacific's customers are assembling
various electronic components onto the blank boards. The
completed circuit boards are then placed into larger systems such
as computer power units. We find that the combination of
populating the boards with various electronic components and then
placing the populated boards into larger systems, such as
computer power units, changes the name, character and use of the
boards. The blank circuit boards have no function except to
serve as a part for a completed circuit board with various
electronic components mounted onto it, which in turn will go into
a larger system. Insertion of the electronic components onto the
blank board plus the assembly of the populated boards into a
larger unit, changes the nature of the board and causes it to
lose its separate identity. It is not until the assembly
process, consisting of mounting a large number of electrical
components on the board, that the board can be used as part of a
larger system such as a computer power unit.
The assembly process also involves a considerable amount of
skill and time. It takes about an hour of time to do the
assembly and the work is done by a skilled electronic assembler.
We also note that there is an extensive increase in value in the
boards when they are completed. Therefore, we conclude that
assembling the components onto the blank printed board and
putting the populated boards into the larger systems such as
computer power units constitute a substantial transformation and
that pursuant to 19 CFR 134.35, Trans Pacific's customers who do
the assembly process are the ultimate purchasers of the blank
boards. Accordingly, so long as the blank boards are imported in
a container which is properly marked to indicate the country of
origin and Customs officials at the port of entry are satisfied
that these containers will reach the ultimate purchasers
unopened the individual blank boards do not have to be marked
with the country of origin.
Although it is claimed the boards should be excepted from
country of origin marking because the ultimate purchasers know
the country of origin of the blank boards, not enough information
has been presented to determine if the boards should be excepted
from marking on this basis. For example, the ruling request is
not clear on whether the ultimate purchasers furnish the art work
for the boards directly to the Korean manufacturers or through
Trans Pacific. Accordingly, the shipping cartons containing the
blank boards reaching the ultimate purchasers must be marked with
the country of origin of the blank boards.
You also inquire as to whether the boards can be marked
"Made in the USA" at time of entry. A "Made in the USA" marking
would be misleading. The blank boards are not made in the USA,
and therefore, it is not acceptable to mark the boards at time of
importation as if they were made in the U.S. Moreover, approval
of markings of "Made in the USA" is in the jurisdiction of the
Federal Trade Commission and not the Customs Service. In order
to get approval for marking the boards "Made in the USA,"
after they enter the U.S. and are fully assembled, you should
contact the Federal Trade Commission.
HOLDING:
For purposes of 19 U.S.C. 1304,assembling the electronic
components on a blank printed circuit board and placing the
boards into a finished electronic component such as a computer
power unit is a substantial transformation. Pursuant to 19 CFR
134.35, the blank boards do not have to be individually marked
with the country of origin, as long as the boards are imported in
containers that are properly marked with the country origin and
Customs officials at the port of entry are satisfied that these
containers will reach the ultimate purchasers unopened. However,
the blank boards cannot be marked "Made in the USA" at time of
importation. Approval of the marking "Made in the USA" after the
boards are imported and assembled is within the jurisdiction of
the Federal Trade Commission.
Sincerely,
John Durant, Director
Commercial Rulings Division