MAR-05 RR:CR:SM 562402 NL
David E. Cohen, Esq.
Sandler, Travis & Rosenberg, P.A.
1300 Pennsylvania Avenue, NW
Washington, DC 20004-3002
RE : NAFTA Marking for Patient Monitoring Systems; 19 CFR Part 102; 9818.19, HTSUS; Printed Circuit Boards
Dear Mr. Cohen:
This is in reply to your letters of January 24, 2002 and March 21, 2002 on behalf of General Electric Medical Systems – Information Technologies (GEMS-IT). The letters seek a binding ruling concerning the country of origin marking of certain patient monitoring systems to be imported by GEMS-IT. Your letters were forwarded to this office by the National Commodity Specialist Division under cover of a memorandum dated April 19, 2002.
FACTS:
The product in question is the GEMS-IT DASH 2000 patient monitoring system (PMS). The National Commodity Specialist Division has confirmed your position that the DASH 2000 is classified in subheading 9018.19.5500, HTSUS. The machine is to be assembled in Mexico using approximately 125 components. You identify key components with Hungary, Japan and the United States as countries of origin. Of particular relevance are two printed circuit board (PCB) assemblies produced in Hungary: the DAS II PCB, which accounts for 15% of the total import value of the PMS; and the Main PCB, which accounts for 13% of the total import value. The National Commodity Specialist Division is of the view that these are classified as parts of the PMS in subheading 9018.19.95. The National Commodity Specialist Division is also of the view that the metal rear housing, produced in the U.S., is classified as a part of the PMS in subheading 9018.19.95, HTSUS.
A ruling is requested that the country of origin of the DASH 2000 is Mexico for the purposes of NAFTA country of origin marking under 19 CFR Part 102.
It is further requested that in the event that Customs determines that the country of origin of the DASH 2000 is Hungary, approval is sought for either of two country of origin markings:
“Country of Origin for NAFTA market (U.S., Canada and Mexico): Made in Hungary /Country of Origin for non-NAFTA markets: Assembled in Mexico;” or
“Circuit Boards Made in Hungary, Final Assembly in Mexico.”
ISSUES:
What country of origin is to be marked on the DASH 2000 Patient Monitoring System when it is imported into the U.S. from Mexico?
Are the suggested country of origin markings acceptable?
LAW & ANALYSIS:
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. Part 134, Customs Regulations (19 CFR Part 134) implements the country of origin marking requirements of section 304 of the Tariff Act of 1930, as amended.
1. Origin Determination for NAFTA Marking
The country of origin marking requirements for a "good of a NAFTA country" are also determined in accordance with Annex 311 of the North American Free Trade Agreement. The rules used for determining the country of origin of a good imported from a NAFTA country are set forth in 19 CFR Part 102. Section 102.11 sets forth the required hierarchy for determining country of origin for marking purposes. Section 102.11(a) provides that "[t]he country of origin of a good is the country in which: (1) The good is wholly obtained or produced; (2) The good is produced exclusively from domestic materials; or (3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20 and satisfies any other applicable requirements of that section, and all other requirements of these rules are satisfied.
Neither section 102.11(a)(1) or (2) are applicable to the facts at issue in this case. Pursuant to section 102.11(a)(3), the country of origin of a good is the country in which each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20. Section 102.20 sets forth the specific tariff classification changes, and/or other operations, that are specifically required in order for country of origin to be determined on the basis of operations performed on the foreign materials contained in a good.
In the instant case, the National Commodity Specialist Division has properly indicated that the DASH 2000 Patient Monitoring System is classified in subheading 9018.19.5500, HTSUS, which provides for “electro-diagnostic apparatus…other”. The applicable rule under Part 102.20 requires that foreign materials undergo “a change to subheading 9018.19 from any other subheading, except to patient monitoring systems from printed circuit assemblies when resulting from a simple assembly.”
Therefore, for the Mexican assembly to confer origin upon the DASH 2000, each foreign material incorporated into the apparatus during its assembly in Mexico must come from a subheading other than 9018.19, HTSUS. However, the production of patient monitoring systems from foreign printed circuit assemblies classified outside of subheading 9018.19 must result from more than a simple assembly.
This office has reviewed the opinions of the National Commodity Specialist Division concerning the tariff classification of certain of the foreign materials. That office found that these materials were classified in subheading 9018.19.95, HTSUS, which includes parts and accessories of electro-diagnostic apparatus. This office is in agreement that the DAS II PCB (15% of the total import value of the PMS) and the Main PCB (13% of the total import value), both products of Hungary, are classified in subheading 9018.19.95. We also agree that the metal rear housing produced in the U.S. is classified in the same provision.
In the instant case, classification of the PCBs and metal rear housing back, in subheading 9018.19, the same subheading as the finished DASH 2000, means that the required changes in tariff classification do not occur. Because these foreign materials do not undergo the required change in tariff classification, it is unnecessary to consider the second part of the rule for subheading 9018.19, i.e., whether there are changes to patient monitoring systems from printed circuit assemblies classified outside subheading 9018.19 by other than simple assembly.
Since the country of origin is not determined by section 102.11(a) (incorporating section 102.20) of the interim regulations, the next step in the country of origin NAFTA Part 102 regulations hierarchy is section 102.11(b). Section 102.11(b) provides, in relevant part, that the country of origin of a good whose origin cannot be determined under Section 102.11(a) is the country or countries of origin of the single material that imparts the essential character to the good. Part 102’s Rules of Interpretation, at section 102.18(b)(1) provide that for the purpose of determining the material that imparts the essential character to the good under section 102.11, the only materials to be taken into account are the domestic or foreign materials that are classified in a tariff provision from which a change in tariff classification is not allowed under the rule for the good specified in Section 102.20. Thus, the regulation directs in this case that the Hungarian origin PCBs and the U.S. origin metal back housing, being the domestic or foreign materials that did not meet the prescribed change in tariff classification, should be considered with regard to whether they impart the essential character to the DASH 2000 patient monitoring system.
This office finds that the PCB Main Board, produced in Hungary, is the single material that imparts the essential character to the DASH 2000 Patient Monitoring System. The Main Board controls and integrates the essential functions of the PMS, and is a major cost item. The DAS II PCB also merited consideration as imparting the essential character to the PMS, but appears to function principally to convert analog to digital signals. Unlike the PCB Main Board, it does not control the PMS apparatus. The U.S. origin metal back housing does not equally merit consideration.
In light of these considerations the country of origin of the PMS, which undergoes final assembly in Mexico, is Hungary for the purpose of NAFTA marking under Part 102, Customs Regulations.
Phrasing of the Marking Indication
You have requested approval of either of the two following formulations for the indication of the DASH 2000 country of origin.
One indication proposed is:
“Circuit Boards Made in Hungary, Final Assembly in Mexico.”
This indication is not acceptable. The term “assembled” is authorized, pursuant to 19 CFR §134.43(e), as an indication of an article’s country of origin. Accordingly, use of that term in reference to Mexico, which is not the country of origin for the purposes of importation into the U.S., together with another phrase stating that the product is “made in” another country is confusing and contradictory. No single indication of origin is clearly given.
The other indication proposed is:
“Country of Origin for NAFTA market (U.S., Canada and Mexico): Made in Hungary /Country of Origin for non-NAFTA markets: Assembled in Mexico.”
This indication distinguishes sufficiently between the indication of country of origin for NAFTA (including U.S.) purposes, and the indication of origin for non-NAFTA purposes. Notwithstanding the use of the phrases “assembled in” in the latter and “Made in “ in the former, this office considers that the difference is made sufficiently clear to the ultimate purchaser in the U.S. as to satisfy the marking requirements for goods imported into the U.S. The above marking is approved for the DASH 2000. This approval is limited to the goods and circumstances set forth in the instant determination.
HOLDING:
For the purpose of marking the DASH 2000 pursuant to Part 102, Customs Regulations, the apparatus is determined to be a product of Hungary.
The marking “Country of Origin for NAFTA market (U.S., Canada and Mexico): Made in Hungary /Country of Origin for non-NAFTA markets: Assembled in Mexico” is acceptable. Such approval is limited to the goods and circumstances discussed in this ruling.
A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.
Sincerely,
Myles B. Harmon
Acting Director
Commercial Rulings Division