OT:RR:CTF:EMAIN H328731 PF/AMW
Ruta Riley
Lyft, Inc.
441 9th Ave., 2nd Floor
New York, NY 10023
RE: Tariff classification and Country of Origin of Monolith Station
Dear Ms. Riley:
This is in reply to your request for a prospective ruling on the tariff classification and country of origin, under the Harmonized Tariff Schedule of the United States (HTSUS), of a Monolith Station. Your request was forwarded by the National Commodity Specialist Division to this office for a response. Our decision follows.
FACTS:
The subject merchandise, entitled the Monolith Docking station (the Monolith) is a street mounted locking platform for the securing and dispensing of E-bikes or E-scooters. This rack system is used mainly for the locking/securing, docking and rental of compatible vehicles (bikes and scooters). The docking station functions as a type of vending machine in that it allows riders to rent shared bikes and scooters. It has the ability to electronically transmit operational information such as bike availability information at a particular station to remote cloud-based servers running service operator programs.
This docking/vending machine uses an internal cellular transceiver to connect to Lyft’s server back-end, which in turn communicates with the end-user’s mobile application to enable use of the shared service. The cloud-based server provides a user with access information and allows a user to verify payment and billing information prior to dispensing the E-bike to a potential user. A rider is charged for the ride when they return the vehicle into any compatible docking station. Lyft app users are required to connect a credit card to their Lyft account for payment.
Each Monolith docking station is composed of a fixed number of bollards capable of docking/undocking compatible vehicles which are attached to a baseplate assembly. The station may also include optional modules such as an advertisement panel (optional modules will be imported separately into the U.S. and attached to Monolith in the local market). When the user pushes the vehicles into the bollard it activates the lock. The bollard checks bike/scooter ID and relays docking information to Lyft back-end users. The user receives updates in the Lyft mobile app and their account is charged for the ride. Payment is processed by charging the rider’s credit card connected to the Lyft’s app or as part of an annual subscription fee.
The Monolith will consist of approximately seven main subassemblies: the bollard metal structure; cassette module; receiver subassembly; lock module; electronic components and printed circuit board assemblies (“PCBAs”); solar components (in the solar SKU only); and street infrastructure (e.g., base plates, optional ad panels).
The bollard is constructed of steel, and serves as the main structural component of the docking station, onto which all other modules (subassemblies) and parts are attached to create the final product.
The cassette module consists of a housing that contains all of the core electronic components, namely: the LTE antenna, Main PCBA, battery, speaker, and triangle PCBA. The main PCBA is said to communicate with the other active modules (e.g., User Interface (“UI”) near-field communication (“NFC”) module, UI flipdot module) and provides a connection to Lyft back-end services via its LTE antenna. The triangle PCBA incorporates an NFC antenna to identify vehicles during docking and relays this information to the main PCBA.
The receiver subassembly “accepts” or receives and releases the vehicles from Monolith during docking and undocking. The receiver subassembly consists of the receiver, the NFC module, the UI module, and detents. The receiver is a metal part that interacts with bicycles and scooters while docking and is the structure to which the NFC module and UI module are attached.
The NFC module houses the NFC PCBA with integrated NFC antenna. The NFC PCBA relays collected NFC information to the main PCBA, which can include commands sent from operators/technicians in addition to rider-provided information such as transit card ID. The NFC module also provides an indicator LED as a visual indicator for riders and service technicians. The bollard provides visual feedback to users via a UI module enabled by a UI PCB and flip dot display. The UI module receives input from the main PCBA to determine the status of visual, physical indicators (flipdots) to communicate bollard status to users and operators. A flip dot display consists of painted discs that can be rotated electronically to display information.
Lyft has not yet selected a final assembly process or location for the Monolith. Instead, Lyft proposes four sourcing and production scenarios, which are outlined in the following table:
MONOLITH MODULE
Sourcing Scenario One
Sourcing Scenario Two
Sourcing Scenario Three
Sourcing Scenario Four
Bollard metal structure (material source & Mfg. location)
China
China
Mexico
China
Cassette Module assembly site
China
China
Mexico
Vietnam
Cassette- Main PCBA
PCB: China
PCB population (“pop.”): China
Electronics: China/Asia
PCB: China
PCB pop.: Vietnam
Electronics: China/Asia
PCB: China
PCB pop.: Mexico
Electronics: China/Asia
PCB: China
PCB pop.: Vietnam
Electronics: China/Asia
Cassette- NFC Triangle PCBA
PCB: China
PCB population: China
Electronics: China/Asia
PCB: China
PCB pop.: Vietnam;
Electronics: China/Asia
PCB: China
PCB pop.: Mexico;
Electronics: China/Asia
PCB: China
PCB pop.: Vietnam;
Electronics: Asia
Battery
China
China
China
China
Receiver assembly site
China
China
Mexico
Vietnam
User interface
NFC module assembly site
China
China
Mexico
Vietnam
User Interface –
NFC PCBA
PCB: China
PCB pop.: China;
Electronics: China/Asia
PCB: China
PCB pop.: Vietnam;
Electronics: China/Asia
PCB: China
PCB pop: Mexico;
Electronics: China/Asia
PCB: China
PCB pop.: Vietnam;
Electronics: China/Asia
Flipdot display module assembly
China
China
Mexico
Vietnam
Flipdot PCBA
PCB: China
PCB pop.: China
Electronics: China/Asia
PCB: China
PCB pop.: Vietnam;
Electronics: China/Asia
PCB: China
PCB pop.: Mexico;
Electronics: China/Asia
PCB: China
PCB pop.: Vietnam;
Electronics: China/Asia
Lock Module
Metal: China
PCB: China
PCB pop.: China
Metal: China
PCB: China
PCB pop.: China
Metal: China
PCB: China
PCB pop.: China
Metal: China
PCB: China
PCB pop.: China
Solar Assembly site (only Solar SKU)
China
China
Mexico
Vietnam
Solar cell origin
Thailand
Thailand
Thailand
Thailand
Cell incorporated into panel
India
India
India
India
[DC-DC charger (only Static SKU)]
Thailand
Thailand
Thailand
Thailand
Final Monolith Assembly Site
China
China
Mexico
Vietnam
ISSUES:
Whether the Monolith is classified in heading 8476, HTSUS as an automatic goods-vending machine, heading 8479, HTSUS, as a machine having an individual function not specified or included elsewhere, or in heading 8517, HTSUS, as other apparatus for the transmission or reception of data?
What is the country of origin for the Monolith?
LAW AND ANALYSIS:
Merchandise Classification
Merchandise imported into the United States is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (“GRIs”) and, in the absence of special language or context which requires otherwise, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law for all purposes.
GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the heading and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order.
The HTSUS provisions under consideration are as follows:
8476 Automatic goods-vending machines (for example, postage stamp, cigarette, food
or beverage machines), including money-changing machines; parts thereof:
8479 Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof:
8517 Telephone sets, including smartphones and other telephones for cellular networks or for
other wireless networks; other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network), other than transmission or reception apparatus of heading 8443, 8525, 8527 or 8528; parts thereof:
In understanding the language of the HTSUS, the Explanatory Notes (“Ens”) of the Harmonized Commodity Description and Coding System, which constitute the official interpretation of the HTSUS at the international level, may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUS. See T.D. 89-80, 54 Fed. Reg. 35127 (August 23, 1989).
EN 84.76 provides, in part, as follows with respect to the scope of heading 8476, HTSUS:
This heading covers the various kinds of machines which supply some kind of merchandise when one or more coins, tokens or a magnetic card are put in a slot (other than those machines covered more specifically by other headings of the Nomenclature or excluded from the Chapter by a Chapter or Section Note). The term “vending” in the context of this heading refers to a “monetary” exchange between the purchaser and the machine in order to acquire a product. This heading does not cover machines which dispense a product but do not have a device to accept payment.
* * *
The heading covers not only machines in which the distribution is automatic, but also those consisting of a number of compartments from which the merchandise can be withdrawn after the coin has been inserted, the machine incorporating a device for releasing the lock of the appropriate compartment (e.g., by pressing on a corresponding button).
* * *
You maintain that the Monolith is classified in heading 8517, HTSUS, as other apparatus for the transmission of data. You rely on New York Ruling (“NY”) N256564, dated September 9, 2014, in support of classification in heading 8517, HTSUS. NY N256564, addressed the classification of a docking station for medical tools, such as pulse oximeters. These docking stations allowed for the transfer of data from the portable medical monitoring systems to computers and other devices. They also enabled data sharing with multi-dimensional patient monitors and provided a nurse call functionality. In addition to the data transfer function, the docking stations also provided power to the oximeters to charge their internal batteries. The merchandise in NY N256564 is different from the Monolith because the Monolith is not of a telecommunication device. While the Monolith enables the reception and transmission of some data through a cellular transceiver, such functionality is merely in support of the product’s principal function, which is to facilitate the user in obtaining a bicycle to rent. As such, the subject Monolith is not covered by the scope of heading 8517, HTSUS, on the basis of GRI 1.
In the alternative, you contend that the Monolith is classified in heading 8476, HTSUS, as an “automatic goods-vending machine.” In support of your contention, you rely on Headquarters Ruling (“HQ”) H269223, dated June 8, 2017. In HQ H269223, the subject merchandise was described as dispensers of personal protective equipment (“PPE”) and maintenance, repair, and operations (“MRO”) equipment. Dispensation of the PPE or MRO equipment was regulated by an external control device, which included a touchscreen-operated automatic data processor and radiofrequency or magnetic card reader. The majority of the dispensers were sold to industrial suppliers, which installed the dispensers in their customer’s facilities – generally industrial worksites - and continually stocked the dispensers’ internal compartments. Employees at the worksites could access the dispenser’s contents by swiping or scanning an employer-issued, dispenser-calibrated card and navigated a series of prompts displayed on the touchscreen to select specific equipment. Selection of the equipment initiated a turn of an internal drum and a corresponding door that allowed a user to retrieve the equipment. Upon removal of the equipment, a notification indicating the removal was electronically transmitted to the supplier (or in some cases to the dispenser’s manufacturer for batching and transmission to the supplier). The supplier billed the customer for any items removed at regular intervals. In HQ H269223, CBP held that an apparatus incorporating a payment mechanism qualified as a vending machine within the meaning of heading 8476, HTSUS, even if the temporal nexus between delivery and payment was not necessarily direct.
The term “vending machine” is not defined in the HTSUS. In the absence of a statutory definition, a tariff term is construed according to its common and commercial meaning, which are presumably identical. Tyco Fire Products v. United States, 841 F.3d 1353, 1357 (Fed. Cir. 2016). Dictionaries and other lexicographic authorities may be utilized to determine a term's common meaning. See Mast Indus., Inc. v. United States, 9 C.I.T. 549 (1985), aff’d, 786 F.2d 1144 (Fed. Cir. 1986). Among the sources that are regularly consulted pursuant to this maxim is industry literature, which may inform a term’s commercial meaning. See Rocknell Fastener, Inc. v. United States, 267 F.3d 1354, 1361 (Fed. Cir. 2001) (citing ANSI specifications as industry standards indicative of commercial designation); see also Well Luck Co., Inc. v. United States, 208 F. Supp. 3d 1364 (Ct. Int'l Trade 2017); and Specialty Commodities, Inc. v. United States, 190 F. Supp. 3d 1277, 1285-1286 (Ct. Int'l Trade 2016) (both citing industry references in defining tariff terms at issue).
“Vending machine” is consistently defined in dictionaries as an apparatus that dispenses merchandise in exchange for coins or another form of payment. See, e.g., Oxford English Dictionary (2023), available at http://www.oed.com/view/Entry/222068 (defining vending machine as a “slot machine from which comestibles or other small goods may be obtained”); Merriam-Webster.com, definition of VENDING MACHINE, https://www.merriam-webster.com/dictionary/?vending%?20machine (defining term as “a coin-operated machine for selling merchandise”); Collins English Dictionary, vending machine, https://www.collinsdictionary.com/?us/?dictionary/?english/vending-machine (defining term as “a machine that automatically dispenses consumer goods such as cigarettes, food, or petrol, when money is inserted.”) (last visited June 5, 2023). This definition of vending machine is consistent with characterizations of such in industry literature and EN 84.76. See National Automatic Merchandising Association, Vending 101 (stating that vending involves provision of service at an “unattended point of sale” through the use of monetarily-driven equipment); and EN 84.76 (“’Vending’ in the context of this heading refers to a ‘monetary’ exchange between the purchaser and the machine in order to acquire a product.”); see also HQ 962415, dated February 22, 2000 (determining that medication dispenser did not qualify as a vending machine because dispensation did not involve a monetary transaction).
Industry literature and EN 84.76 both further indicate that vending machines may incorporate a broad range of payment mechanisms, including, among other things, card readers and devices designed to process other forms of “cashless” payment. See, e.g., National Automatic Merchandising Association, Vending 101; Chris Mumford, The Components Of Credit Card Vending, Automatic Vending Merchandiser, July 22, 2014, http://www.vendingmarketwatch.com/home/article/?10256874/?the-components-of-credit-card-vending; and Tim Sanford, AVA Study Shows UK’s Vending Industry and Cashless Payments on Upswing, Vending Times, May 17, 2017, https://www.vendingtimes.com/news/ava-study-shows-uks-vending-industry-and-cashless-payments-on-upswing/ (last visited June 5, 2023) (all discussing the prevalence of non-cash payment mechanisms in vending machines). These mechanisms may not effectuate direct and immediate payment but instead trigger a process by which payment is eventually delivered, via third party institutions, from the purchaser’s account to that of the vendor. See Chris Mumford, The Components Of Credit Card Vending, Automatic Vending Merchandiser, July 22, 2014, http://www.vendingmarketwatch.com/home/?article?/10256874/the-components-of-credit-card-vending (last visited December 15, 2022); see also Credit Cards.com, How does a credit card transaction work, http://?www.creditcards.com/?credit-card-news/how-a-credit-card-is-processed-1275.php (last visited June 5, 2023).
Moreover, the types of goods that are sold through vending machines are varied. The following article notes examples of the types of goods that can be sold through automatic merchandising: Snacks, beverages, tobacco products, boxes of detergent, fabric softener sheets, as well as rental DVDs. See https://www.wise-geek.com/what-is-automatic-merchandising.htm (last visited June 5, 2023). In NY K82080, dated January 22, 2004, CBP classified a machine used to sell and rent DVDs in heading 8476, as a vending machine. The machine in NY K82080 was described as having three components: a store, a console, and a graphics package for use with the console. The store contained a rack type storage compartment for storing and dispending videos and DVDs. The console had a touch screen and was similar in operation to a bank ATM machine and had a magnetic “swipe card” interface, it allowed a user to select a video or DVD, and once the video or DVD was dispensed from the machine the appropriate fee was immediately deducted for the video or at the time of return for the rented videos. The machine accepted cash or credit cards to re-load the magnetic card. The machine also allowed software to be configured to rent videos and DVDs without the “swipe card” using only a credit card.
Here, the Monolith is a machine where rental E-bikes and E-scooters can be obtained in exchange for cashless payment. The Monolith is used to securely hold/lock E-bikes and E-scooters until a valid payment or user code has been transmitted to the docking station. The device, which connects to a cloud-based server communicates directly with a user’s cell phone and Lyft app to provide the required access to the rack. Lyft app users are required to connect a credit card to their Lyft account for payment. After verifying a user’s payment and billing information, the Monolith will dispense an E-bike or E-scooter for rental. A rider is charged for the ride when they return the vehicle into any compatible docking station. As we determined in HQ H269223, dated June 8, 2017, an apparatus that incorporates a payment mechanism qualifies as a vending machine within the meaning of heading 8476, HTSUS, even if the temporal nexus between delivery and payment is not necessarily direct. See also NY N131698, dated December 7, 2010 (indicating that hotel minibar which transmits consumption data to hotel system for subsequent billing is classified in heading 8476, HTSUS). Here, the Monolith allows for the rental of an E-bike or E-scooter, incorporates a payment mechanism, and charges a user after returning the E-bike or E-scooter. We find that the Monolith is described by the terms of heading 8476, HTSUS, as a vending machine. As a result, the Monolith is not classifiable in heading 8479, HTSUS.
Country of Origin
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 the ultimate purchaser in the United States the English name of the country of origin of the article. By enacting 19 U.S.C. § 1304, Congress intended to ensure “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, 302 (1940).
The country of origin marking requirements and the exceptions of 19 U.S.C. § 1304 are set forth in Part 134, Customs Regulations (19 C.F.R. Part 134). Section 134.1(b), Customs 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 laws and 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., 27 C.C.P.A. 267 (C.A.D. 98) (1940); Texas Instruments, Inc. v. United States, 681 F.2d 778, 782 (1982).
In determining whether the combining of parts or materials constitutes a substantial transformation, the determinative issue is the extent of the operations performed and whether the parts lose their identity and become an integral part of the new article. Belcrest Linens v. United States, 6 C.I.T. 204, 573 F. Supp. 1149 (1983), aff’d, 741 F.2d 1368 (Fed. Cir. 1984). If the manufacturing or combining process is a minor one that leaves the identity of the imported article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 C.I.T. 220, 542 F. Supp. 1026 (1982).
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, or use are primary considerations in such cases. See e.g., HQ H311606, dated June 16, 2021 and HQ H302801, dated Oct. 3, 2019. 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 may be considered when determining whether a substantial transformation has occurred. No one factor is determinative.
Substantial transformation, including the “name, character and use” test, was also at issue in National Hand Tool Corp. v. United States, 16 C.I.T. 308, aff’d, 989 F.2d 1201 (Fed. Cir. 1993). Therein, the Court of International Trade determined that certain mechanics’ tools did not undergo substantial transformation in the United States, and therefore, were not exempt from the marking requirements set forth in 19 U.S.C. § 1304. The court found that there was no change in name because each article as imported had the same name in the completed tool. The court also found that there was no change in character because the articles, which were either hot-forged or cold-formed into its final shape in Taiwan, remained the same after heat treatment, electroplating, and assembly in the United States. The court further determined that the use of the imported articles was predetermined at the time of entry – noting that each component was intended to be incorporated in a particular finished mechanics’ hand tool, except for one exhibit. Lastly, the court rejected the Plaintiff’s claim that the value added in the United States was relatively significant to the operation in Taiwan so that that substantial transformation should be found, noting that such a finding could lead to inconsistent marking requirements for importers who perform exactly the same processes on imported merchandise, but sell at different prices. Id.
In Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308 (2016), the Court of International Trade interpreted the meaning of “substantial transformation.” Energizer involved the determination of the country of origin of a flashlight, referred to as the Generation II flashlight. All of the components of the flashlight were of Chinese origin, except for a white LED and a hydrogen getter. The components were imported into the United States and assembled into the finished Generation II flashlight. The Energizer court reviewed the “name, character and use” test utilized in determining whether a substantial transformation had occurred and noted, citing Uniroyal, Inc., 3 C.I.T. at 226, that when “the post-importation processing consists of assembly, courts have been reluctant to find a change in character, particularly when the imported articles do not undergo a physical change.” Energizer at 1318. In addition, the court noted that “when the end-use was pre-determined at the time of importation, courts have generally not found a change in use.” Energizer at 1319, citing as an example, National Hand Tool Corp. v. United States, 16 C.I.T. at 311-312. Furthermore, courts have considered the nature of the assembly, i.e., whether it is a simple assembly or more complex, such that individual parts lose their separate identities and become integral parts of a new article.
The Court of International Trade has also looked at the essential character of an article to determine whether its identity has been substantially transformed through assembly or processing. For example, in Uniroyal, Inc. v. United States, 3 C.I.T. at 225, the court held that imported shoe uppers added to an outer sole in the United States were the “very essence of the finished shoe” and thus the character of the product remained unchanged and did not undergo substantial transformation in the United States. Similarly, in National Juice Products Association v. United States, 10 C.I.T. 48, 61, 628 F. Supp. 978, 991 (1986), the court held that imported orange juice concentrate “imparts the essential character” to the completed orange juice and thus was not substantially transformed into a product of the United States.
In C.S.D. 85-25, 19 Cust. Bull. 844 (1985), CBP 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 a considerable amount of time and skill resulted in a substantial transformation. In that case, in excess of 50 discrete fabricated components (such as resistors, capacitors, diodes, integrated circuits, sockets, and connectors) were assembled onto a PCB. CBP determined that the assembly of the PCBA involved a very large number of components and a significant number of different operations, required a relatively significant period of time as well as skill, attention to detail, and quality control, and resulted in significant economic benefit to the beneficiary developing country from the standpoint of both value added to the PCBA and the overall employment generated thereby.
In HQ H302801, dated October 3, 2019, CBP considered the country of origin of two models of Fitbit-brand smart watch/fitness trackers. The devices consisted of components sourced from Taiwan, China, and the Philippines. In its analysis, CBP stated that “[t]he unique and full functionality of Fitbit’s devices is only accessed once the components and subassemblies are integrated and populated into the PCBA,” which is accomplished by using the SMT process in Taiwan or in another country such as Malaysia or Indonesia. The individual components, such as the Bluetooth transceivers, once incorporated into the PCBA through the SMT process, lose their identity because they cannot “individually carry out the functions of … a smart watch or … track[] the user’s fitness and activity,” and become “an integral part of the new article.” CBP further stated that the final assembly process in China, which involves “[a]ttaching the PCBAs into the housing with the vibration motor, battery, display, and wristband does not alter their functional or physical attributes,” does not render the PCBAs into a product with a new name, character, or use. Moreover, CBP determined that the final assembly process requires less training for the workers than the SMT process and is not time intensive. Accordingly, CBP concluded that the final assembly process in China does not substantially transform the PCBAs. CBP concluded that the SMT operations in Taiwan or in another country, such as Malaysia or Indonesia, “results in a substantial transformation of the electronic components from Taiwan and the Philippines into a new and different article of commerce with a new name, character, and use distinct from the components.” Accordingly, CBP determined that the country of origin for the Fitbit device is where the SMT operations occur.
In instances in which component production or assembly occurs in multiple countries and no single country’s operations dominate the manufacturing operations, CBP has looked to the location at which final assembly occurs. In HQ H170315, dated July 28, 2011, CBP was asked to determine the country of origin for an imported satellite telephone that contained Malaysian-origin circuit boards and U.K.-origin software and that underwent final assembly and programming in Singapore. In that matter, CBP noted, there existed “three countries under consideration where programming and/or assembly operations take place, the last of which is Singapore.” Although the Malaysian-origin boards and U.K.-origin software were important to the function of the device, CBP determined Singapore to be the proper country of origin because it had been the site of the last substantial transformation. Similarly, in HQ H203555, dated April 23, 2012, CBP considered the country of origin of oscilloscopes containing Malaysian-origin circuit boards assembled in Singapore and programmed with U.S.-origin software. Once again, CBP observed that no one country’s operations dominated the manufacturing process, but that the final assembly in Singapore completed the oscilloscopes and, therefore, the last substantial transformation occurred in that country. See also, HQ H327997, dated April 10, 2023 (relating to the U.S. assembly of a video management and surveillance system).
In the present request, Lyft outlines four scenarios for the manufacture and assembly of the Monolith. Lyft argues that, under each scenario, the country of origin would be the location in which the main PCBA is populated (i.e., surface mount or similar technology is used to attach various components to the bare circuit board). In support of this claim, Lyft cites HQ H302801, analogizing the Monolith to the Fitbit devices subject to that ruling.
The scenarios presented by Lyft involve varying degrees of manufacturing activity in multiple countries. Lyft estimates that the Monolith assembly process will require 68.25 minutes and approximately 40 workstations to complete. Regarding the final assembly operations site, the subassemblies will be assembled into the bollard which houses all subassemblies. During final assembly, bollard doors (aluminum) are attached to the inside of the bollard. As noted in Lyft’s request, “[w]ith the exception of PCB population (which may be done by the same vendor doing final Monolith assembly), the final Monolith production site will not manufacture any components and will only be used for assembly of the complete station. The assembly will involve operations such as fastening, heat staking, ultrasonic welding (a standard assembly process for plastic housings), and testing.”
According to Lyft, “the most complex step of all Monolith is the PCB population with electronic components (via SMT or another process) to make PCBAs.”
We examine each scenario below.
Scenario One
In Scenario One, all major components are sourced in China and virtually all assembly operations occur in China as well, including the population of the PCBAs, and the final assembly of the Monolith unit. As such, it is clear that the individual components, many of which also originate in China, are combined into a new article, the Monolith, with a name, character, and use different from the original material. As a result, the country of origin under Scenario One will be China.
Scenario Two
Scenario Two is like Scenario One except that, in this scenario, the Chinese-origin PCBs (with the exception of the lock module PCB) will be populated in Vietnam instead of China.
In this scenario, Lyft asserts that the PCBA population in Vietnam constitutes substantial transformation, thus making Vietnam the country of origin. In support, Lyft cites HQ H302801, which relates to the manufacture of Fitbit watches and trackers. We note, however, that the population of the PCBs for the Fitbit devices at issue in HQ H302801 accounted for all or virtually all the functionality of the tracker. Unlike the Fitbit, the Monolith incorporates significant mechanical, electrical, and structural features that are important to making the Monolith what it is – a structural docking station that locks and unlocks bicycles and scooters for paid use after the user provides credentials. Additionally, the SMT process in HQ H311606, dated June 16, 2021, related to the manufacture of an electronic “drawing tablet,” involved “more components and subassemblies in manufacturing the PCBAs than the final assembly in China.” That does not appear to be the case for the Monolith in Scenario Two, where the PCBA population is automated, and the non-PCBA assembly steps and components are quite numerous. See Exhibit 8 (Monolith Assembly instructions).
In consideration of the many important China-sourced components and assembly operations undertaken in China to produce the Monolith in Scenario Two (including all other electronic components, the bollard itself, lock module (with PCBA population), solar assembly, and all final assembly operations), we determine that the Vietnam PCBA population alone does not dictate the country of origin of the complete Monolith. Importantly, other China-origin subassemblies provide the structural base of the docking station (the bollard), a sophisticated mechanism for locking (or latching) and unlocking the bike (i.e., the lock module), the receiver subassembly which incorporates mechanical features and uses an interface and display to engage the user, and the battery. The lock module production alone involves 12 steps. See Exhibit 5 at 21. In total, the cost and complexity of the production of the non-PCB subassemblies is significant. See Exhibits 5 and 8. All these items are sourced from and/or assembled in China. The solar cells are also assembled in China in Scenario Two. Finally, the material cost of the bollard, cassette subassembly, battery, receiver, lock module, both collectively and individually, far exceed the cost of the PCBAs. See Exhibit 3 (BOM).
As such, we determine, even assuming that the population of the PCBAs in Vietnam can be characterized as “complex assembly,” and accepting that the PCBAs provide important functionality to the Monolith, important functionality is also provided by other subassemblies produced and assembled in China (e.g., the bollard and lock module). Because no single country dominates the manufacturing operations, and because the final assembly in China largely completes the Monolith, the country of origin in this scenario will be where the last substantial transformation occurs, which is China. See, e.g., HQ H327997, dated April 10, 2023; HQ H198875, dated June 5, 2012; NY N321682, dated Oct. 18, 2021. Accordingly, the country of origin of the Monolith in Scenario Two is China.
Scenario Three
In Scenario Three, the PCBAs are all populated in Mexico, except for the lock module PCBA. In addition, the bollard is sourced in Mexico, and the cassette assembly occurs in Mexico. Additionally, the receiver subassembly, user interface, solar assembly, flipdot display module, and all final assembly operations occur in Mexico. While the source of the lock module and its country of assembly remain China in this Scenario (including populating the PCBA in the lock module), the bulk of the assembly, including main PCBA population and final assembly, occur in Mexico. As with Scenario One, it is clear that the individual components are therefore combined in Mexico into a new article, the Monolith, with a name, character, and use different from the original material. As such, the country of origin under Scenario Three will be Mexico.
Scenario Four
Scenario Four is similar to Scenario Three in that the population of the PCBs (except for the lock module PCB) occurs in one country, in this case Vietnam. The receiver subassembly, user interface, solar assembly, Flipdot display module, and all final assembly operations also occur in Vietnam. As a result, the country of origin under Scenario Four will be Vietnam.
HOLDING:
By application of GRIs 1 and 6, the subject Monolith is classified in heading 8476, specifically subheading 8476.89.00, HTSUS, which provides for: “Automatic goods-vending machines (for example, postage stamp, cigarette, food or beverage machines), including money-changing machines; parts thereof: Other machines: Other.” The general column one, rate of duty is Free.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading, 8476.89.00, HTSUS, unless specifically excluded, are subject to an additional 7.5 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.15, in addition to subheading 8476.89.00, listed above.
The tariff is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Notice cited above and the applicable Chapter 99 subheading. For background information regarding the trade remedy initiated pursuant to Section 301 of the Trade Act of 1974, including information on exclusions and their effective dates, you may refer to the relevant parts of the USTR and CBP websites, which are available at https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions and https://www.cbp.gov/trade/remedies/301-certain-products-china, respectively.
Duty rates are subject to change. The text of the most recent HTSUS and the accompany duty rates are provided at www.usitc.gov.
In addition, the country of origin for the Monolith will vary based on the scenarios provided. For scenarios one and two, the country of origin will be China. For scenario three, the country of origin will be Mexico. For scenario four, the country of origin will be 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 the goods are 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,
Gregory Connor, Chief
Electronics, Machinery, Automotive, and International Nomenclature Branch