MAR-2-05 CO:R:C:V 735097 RSD
Michael P. Maxwell, Esq.
10100 Santa Monica Boulevard
Suite 300
Los Angeles, California 90067
RE: Country of origin marking requirements for cordless
telephones; electronics; printed circuit boards; assembly;
substantial transformation; HQ 557208
Dear Mr. Maxwell:
This is in response to your letter dated April 7, 1993, on
behalf of Kyushu Matsushita Electric Corporation of America
regarding the marking requirements for cordless telephones
imported from Mexico. These telephones were the subject of a
ruling request submitted on March 24, 1993, concerning their GSP
eligibility. In response to this request, the Special
Classification Branch issued HQ 557208 on July 24, 1993.
FACTS:
Kyushu Matsushita Electric Corporation of America (AKME)
produces cordless telephones (Model 3920) in Mexico from three
printed circuit board ("PCB") subassemblies (a base unit circuit
board, a base unit control board, and a handset main board), and
various other components. In June, 1993, AKME started producing
these three "stuffed" PCB subassemblies in Mexico by
incorporating various components (diodes, resistors, etc.) onto
bare printed circuit boards, all of which may be imported into
Mexico from the U.S., Japan and other countries.
The base unit control board acts as a switching device and
secondary circuit. It transmits the keypad functions which are
essential to telephone operations such as dialing phone numbers;
it also transmits commands such as "Mute", "Hold", etc. which are
controlled from the base unit. The control board is produced in
a 7 step process involving the incorporation of 74 parts.
The handset main board transmits and receives data between
itself and the main board base unit, and it also transmits voice
signals. The handset unit is dependent on battery power for its
operation. It also contains a liquid crystal display (LCD),
which indicates the number dialed from the keypad on the handset
unit. The handset board is produced in a 12-step process
involving the incorporation of 247 parts. The processes involved
in making the PCB assemblies include one or more of the following
operations: the insertion of jumper wires, axial parts, and
radial parts into the boards, bond surface mounting (i.e. bonding
chip capacitors, chip resistors, etc. into the boards); the
insertion of various components into the boards by hand; flux and
soldering operations, testing and adjustment operations, and the
separation of the board into the proper dimensions.
These three "stuffed" PCB subassemblies are then used to
produce cordless telephones in a separate 58-step process
involving the incorporation of 95 parts. This process involves
the preparation of the significant operation units of the base
unit of the telephone (such as the speakers and microphones which
are necessary to convert the voice transmission into electronic
signals, and the antenna which transmits and receives the
signal), and the hand set unit of the telephone. The speakers,
microphones, and antenna are attached to the telephone housing by
soldering, mechanical fasteners, or by other means. Various
other parts are incorporated into the base unit including the
main unit board; the control board, battery charging circuits,
and other functional parts. The keypad is incorporated into the
telephone housing. Lastly, the base unit is tested and
inspected. Similarly, the hand set unit contains various
components such as speakers soldered into the housing, and the
buzzer.
ISSUE:
Should the imported cordless telephones be marked as
products of Mexico?
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.
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 HQ 557208 (July 24, 1993), involving whether these same
cordless telephones would be eligible for duty-free treatment
under the GSP, Customs found that the insertion, bond surface
mounting, flux and soldering, and testing and adjustment
operations, substantially transformed the components imported
into Mexico into PCB subassemblies. Customs also ruled that the
assembly of the PCB subassemblies to create the finished cordless
telephone resulted in a second transformation of the components.
Therefore, the ruling concluded that the cordless telephones were
products of Mexico. The facts of HQ 557208 are identical to this
case. Accordingly, under 19 CFR 134.1(b), for the reasons
articulated in HQ 557208, the country of origin of the cordless
telephones for marking purposes is also Mexico. The cordless
telephones must therefore be legibly, conspicuously, and
permanently marked at the time of importation to indicate to
their ultimate purchaser that their country of origin is Mexico.
HOLDING:
In accordance with the determination of HQ 557208, the
country of origin of cordless telephone model 3920 is Mexico, and
therefore it must be marked as a product of Mexico.
Sincerely,
John Durant, Director