OT:RR:CTF:VS H311447 CMR
Jacobs Global Trade & Compliance LLC
4134 N. River Street
McLean, VA 22101
RE: Origin of a “smart oven”
Dear Ms. Jacobs:
This is in response to your request for a ruling, dated January 31, 2020, submitted on behalf of the Hong Kong Productivity Council (HKPC) and collaborating companies which manufacture products for export to and sale in the United States, as to the country of origin of a product referred to as a “smart oven.” You note that the HKPC is an organization created by statute to support small and medium sized enterprises in Hong Kong, including export-oriented manufacturers. As such, you state that HKPC is an entity with a direct and demonstrable interest in the question presented in your request letter. We regret the delay in responding to your request.
FACTS:
The product at issue is a stainless steel toaster countertop convection oven, or “smart oven.” The functions available on the oven are: broil, bake, roast, reheat, warm, slow cook, toast, bagel, pizza and cookies. As you state, “[t]he functions are provided by technology that adjusts the power of the heating elements.” You further describe the function of the oven as follows:
The effectiveness of the function is also determined by the shelf on which the food is placed (bottom, middle or top). Each of the oven’s functions is preset with recommended settings, but a user also may customize the settings, and that customization will remain in the memory of the oven until changed or the oven is unplugged from the power outlet.
The oven includes a broil rack, a baking pan, a pizza tray and a crumb tray.
You describe the production process of the oven as involving hundreds of components consisting of more than 100 different types of materials and inputs. You indicate that the software and most of the raw materials for the production of the oven are sourced from China. Other components are sourced from various countries. You describe the components as generic or subject to further processing to produce final components, subassemblies and final assemblies. You provide as examples aluminum sheets and PBT TRIBIT (an advanced polymer) which are sourced from Korea; while ceramic blocks, various wires, various steels, rivets, screws and a power printed circuit board are sourced from China; Taiwan is the source of some steel; and Thailand is the origin of a thermofuse and Zener diodes. The production plan involves all materials and inputs being shipped to a factory in Vietnam to be manufactured into finished parts, subassemblies and finally assembled together to create the toaster oven.
In Vietnam, the printed circuit board assembly (PCBA) is assembled using surface-mount technology and the software to operate the toaster oven is installed. In addition, plastic injection molding is used to create several of the toaster oven parts, such as, brackets, tray handles and wire racks, as well as spacers in Vietnam. These are all of the plastic parts of the oven. Furthermore, stamping the metal components to create the hardware, such as the door front, control panel, crumb tray, door lock and a motor plate occur in Vietnam. Various parts will be cured, sand-blasted, cleaned, polished, and spray-painted in Vietnam. The main motor, along with the heater, is assembled in Vietnam. The various components, plastic and metal, are assembled in Vietnam to form the completed oven.
ISSUE:
What is the country of origin of the smart oven?
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 United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit in such a manner as to indicate to an ultimate purchaser in the United States 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 markings on the imported goods the country of which the good is the product. "The evident purpose is to mark the goods so 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 (1940).
Part 134, Customs and Border Protection (CBP) Regulations (19 C.F.R. 134), implements the country of origin marking requirements and exceptions of 19 U.S.C.
§ 1304. Section 134.1(b), CBP Regulations (19 C.F.R. 134.1(b)), defines "country of origin" 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 [the marking regulations]. . . .” A substantial transformation is said to have occurred when an article emerges from a manufacturing process with a name, character, or use which differs from the original material subjected to the process. United States v. Gibson Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940); Texas Instruments v. United States, 681 F.2d 778, 782 (1982).
In order to determine whether a substantial transformation occurs when components of various origins are assembled into completed products, CBP considers the totality of the circumstances and makes such determinations on a case-by-case basis. The country of origin of the item’s components, extent of the processing that occurs within a country, and whether such processing renders a product with a new name, character, and use are primary considerations in such cases. Additionally, factors such as the resources expended on product design and development, the extent and nature of post-assembly inspection and testing procedures, and worker skill required during the actual manufacturing process will be considered when determining whether a substantial transformation has occurred. No one factor is determinative.
In this case, all of the plastic parts of the oven are formed in Vietnam by plastic injection molding. In Headquarters Ruling Letter (HQ) 5577331, dated September 9, 1993, we noted that “we have consistently held that products created by a thermal
injection molding process have undergone a substantial transformation.” Earlier rulings supporting this determination, and cited in HQ 557731, are HQ 071518, dated November 8, 1984; HQ 071534, dated July 19, 1984; and HQ 555659, dated December 3, 1990 (molded plastic parts, such as handles, folding hinges, and folding clips are different articles from the plastic resins from which they are made.). Thus, the plastic parts of the oven which are formed by plastic injection molding in Vietnam are substantially transformed there and considered to be of Vietnamese origin.
In addition, the printed circuit board assembly occurs in Vietnam using surface-mount technology. CBP has consistently held that the assembly of components onto a printed circuit board is a substantial transformation. See HQ 735306, dated December 21, 1993, wherein CBP stated:
With respect to printed circuit boards, Customs has ruled that the complete assembly of all the components onto a printed circuit board was a substantial transformation of the printed circuit board because the assembly process was complex and involved a considerable amount of skill and time.
See also, HQ H302801, dated October 3, 2019, wherein CBP stated:
The SMT [surface-mount technology] operations result in a new and different product with an overall use and function different than any one function of the individual components. Each individual component serves a particular purpose or function once incorporated into the PCBA. Prior to the SMT operations, these components are stand-alone, general use items.
Furthermore, shaped metal components, such as the door front, control panel, crumb tray, door lock and a motor plate are stamped out of aluminum sheeting in Vietnam.
Based upon the extent of the assembly process in Vietnam, including the creation of various components of the oven, we agree with you that the country of origin of the oven is Vietnam. The origin of the software which is downloaded onto the oven in Vietnam does not affect the origin of the oven. See HQ H306349, dated November 26, 2019, (“. . . CBP has consistently held that the downloading of software or firmware is not a substantial transformation.”).
HOLDING:
The country of origin of the “smart” oven at issue is Vietnam.
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a CBP field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.”
A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction
Sincerely,
Monika R. Brenner, Chief
Valuation & Special Classification Branch