OT:RR:CTF:VS H337124 RRB
Steven B. Zisser, Esq.
Zisser Customs Law Group
9355 Airway Rd.
San Diego, CA 92154
RE: Country of Origin of an Arc-Fault Circuit Interrupter (AFCI)/Ground-Fault Circuit Interrupter (GFCI) Circuit Breaker
Dear Mr. Zisser:
This is in response to your letter, dated December 21, 2023, requesting a prospective ruling on behalf of Hongfa America, Inc. ("Hongfa"), regarding the country of origin of a dual function Arc-Fault Circuit Interrupter (AFCI)/Ground-Fault Circuit Interrupter (GFCI) Circuit Breaker ("AFCI/GFCI Circuit Breaker") produced under two different production scenarios. Your request, originally submitted as an electronic ruling request to the National Commodity Specialist Division, was forwarded to this office for review.
FACTS:
The subject merchandise is a dual function AFCI/GFCI Circuit Breaker that protects an electrical circuit against overcurrent, arc, and ground fault conditions by tripping or interrupting the flow of current. You state that this type of circuit breaker is specially designed to protect electrical currents by detecting and tripping the flow of current whenever there is an imbalance of electrical current or an abnormal arcing condition.
The AFCI/GFCI Breaker consists of six main elements:
1) The plastic molded housing from China protects the circuit breaker's internal parts from outside materials.
2) The operating mechanism from China provides a means of opening and closing the circuit breaker with a switch.
3) The contacts from China allow the current to flow through the circuit breaker when closed. The contacts also provide the line side connection of the circuit breaker. This element includes terminals that provide electrical connection to the circuit breaker and a wire harness that provides power to the board.
4) The arc extinguisher, which consists of arc chute components from Malaysia, protects and safely extinguishes an arc when the circuit breaker interrupts a fault, and minimizes damage to the contacts.
5) The trip unit opens the operating mechanism in the event of a prolonged overload or short circuit. It consists of three subcomponents-the thermal bimetal strip, the magnetic current coil and the adjusting screw. The bimetal strip provides the circuit breaker's tripping mechanism and protects the circuit from excess current. When heated, the bimetal strip interrupts the circuit and is reset once cooled down. The magnetic current coil is used when large current associated with short circuits are present. The large current will induce a magnetic field in the current coil, driving a plunger forward and tripping the breaker. The adjusting screw allows for adjusting the trip current of the device. All of the trip unit components are from Malaysia.
6) The AFCI/GFCI component processes multiple signals to decide on an arc/ground fault. It consists of three subcomponents-the AFCI/GFCI printed circuit board assembly ("PCBA"), transformer pack, and metal oxide varistor. The PCBA subcomponent processes multiple signals to decide on an arc/ground fault. Under Scenario One, all three subcomponents-the PCBA, the transformer pack and the metal oxide varistor-are from China. Under Scenario Two, the PCBA is from Malaysia while the transformer pack and metal varistor are from China.
In your submission, you explain that while all of the components work in sync with one another, it is the trip unit, consisting of the thermal bimetal strip and magnetic current coil, that provides the main functionality of the AFCI/GFCI Circuit Breaker because it protects the circuit by tripping or interrupting the flow of current and is responsible for opening the contacts in the event of a fault condition such as an overcurrent or short circuit.
You provide two scenarios for producing the dual function AFCI/GFCI Circuit Breaker. In Scenario One, you state that the trip unit-namely, the bimetal strip, the current coil, the adjusting screws-and the arc chute components are each manufactured in Malaysia and then shipped to China for final assembly of the AFCI/GFCI Circuit Breaker with the other components. You also state that the PCBA, which consists of numerous electrical components soldered onto a bare printed circuit board, along with the various contacts, terminals, plastic housing, and operating mechanism, are manufactured in China. The AFCI/GFCI Circuit Breaker is then assembled in China by inserting the Malaysian origin trip unit, Malaysian origin arc chute, Chinese origin electrical contacts and Chinese origin operating mechanism into the Chinese origin plastic housing unit.
As with Scenario One, you state that under Scenario Two, the trip unit-namely, the bimetal strip, the current coil, the adjusting screws-and the arc chute components are each manufactured in Malaysia and then shipped to China for final assembly of the AFCI/GFCI Circuit Breaker with the other components. Unlike in Scenario One, however, the PCBA in Scenario Two is manufactured in Malaysia, and is shipped to China where final assembly takes place. You also state that the various contacts, terminals, plastic housing, and operating mechanism are manufactured in China. The AFCI/GFCI Circuit Breaker is then assembled in China by inserting the Malaysian origin trip unit, Malaysian origin arc chutes, Chinese origin electrical contacts and Chinese origin operating mechanism into the Chinese origin plastic housing unit.
ISSUE:
Under each production scenario, what is the country of origin of the AFCI/GFCI Circuit Breaker?
LAW & 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 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).
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.
If the manufacturing or combining process is a minor one which leaves the identity of the article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 C.I.T. 220, 542 F. Supp. 1026 (1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983). Accordingly, if assembly operations are minimal or simple, as opposed to complex or meaningful, they will generally not result in a substantial transformation.
The Court of International Trade more recently interpreted the meaning of "substantial transformation" in Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308 (2016). Energizer Battery 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 Battery 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 Battery 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 Battery at 1319, citing as an example, National Hand Tool Corp. v. United States, 16 C.I.T. 308, 312 (1992), aff'd, 989 F.2d 1201 (Fed. Cir. 1993).
The court applied the "essence test" in Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026 (1982), aff'd per curiam, 702 F.2d 1022 (Fed. Cir. 1983). There, the court held that imported shoe uppers added to an outer sole in the U.S. were the "very essence of the finished shoe" and were not substantially transformed into a product of the U.S. The attachment of the outsole to the upper was a minor manufacturing or combining process which left the identity of the upper intact.
In a number of rulings, CBP has stated that "in our experience, these inquiries are highly fact and product specific; generalizations are troublesome and potentially misleading. See e.g., Headquarters Ruling Letter ("HQ") H327993 (Nov. 10, 2022); H282391 (Mar. 16, 2017); HQ 735608 (Apr. 27, 1995); HQ 559089 (Aug. 24, 1995). The determination is in this instance 'a mixed question of technology and Customs law, mostly the latter.'" Texas Instruments, Inc. v. United States, 681 F.2d 778, 783 (CCPA 1982).
In HQ H219519, dated April 3, 2013, CBP addressed the substantial transformation of a laser jet printer and fax machine that included parts which were produced in China and where the final assembly of all component parts occurred in Mexico. The laser jet printer/fax machine was composed of a print engine, motors, control board (with firmware), paper trays, rollers, transfer belt, a formatted printed circuit boards, and other components. In HQ H219519, CBP determined that the assembly in Mexico was not complex or significant enough to result in a substantial transformation. CBP explained that the assembly in Mexico did not change or define the use of the finished laser jet printer/fax machine. Finally, CBP reasoned that the since the print engine was the central mechanism by which the printer/fax machine performed its printing and because the controller board and PCB were the central command components which determined when and how the machines were to function-that these components combined to constitute the essence of the overall printer/fax machine.
Similarly, in HQ H287548, dated March 23, 2018, CBP determined that the country of origin of a monochrome laser printer was Japan despite having component parts made in Vietnam and where the final assembly took place in the United States. There, CBP determined that a substantial transformation had not occurred during the processing in the United States where the production of the feeder unit, fuser unit, photo conductor, toner cartridge and operation panel was inexpensive and did not require a sophisticated skill set to effect production. Moreover, CBP determined that the PCB and firmware embodied the primary essence of the laser printer because the firmware provided the control program for the printers and enabled the main PCB assembly to function as the electronic "brains" of the printers by controlling all printer functions.
As in HQ H219519 and HQ H287548, we agree with your assertion that the operations in China under both production scenarios do not result in a substantial transformation in China. Here, the assembly operations performed in China, which consist mainly of attaching, connecting, fastening and inserting the components into a plastic housing unit, are neither complex nor do they substantially transform the articles being assembled. Moreover, as we explained in HQ H219519 and HQ H287548, the component or components which constitute the primary essence of a product is a significant factor in determining the country of origin of that product. Here, the purpose of the dual function AFCI/GFCI Circuit Breaker is to protect against overcurrent, arc, and ground fault conditions. To meet this purpose, the AFCI/GFCI Circuit Breaker is specially designed to detect and trip the flow of current whenever there is an imbalance of electrical current or an abnormal arcing condition. In particular, the trip unit, which consists of a thermal bimetal strip, provides the tripping mechanism of the circuit breaker so that when the strip is overheated due to an overcurrent, it will deflect and trip the circuit breaker. Additionally, the magnetic current coil component of the trip unit provides tripping when large currents associated with short circuits are present and induce a magnetic field in the current coil, thus driving a plunger forward and tripping the breaker. In conjunction with the trip unit, the arc chute components are essential to the functionality of the AFCI/GFCI Circuit Breaker by protecting and safely extinguishing any arc when the circuit breaker interrupts a fault, thereby minimizing damage to the contacts. While other components such as the PCBA add important features to the workings of the AFCI/GFCI Circuit Breaker, they do not provide the tripping and make/break functionality that is the essence of the circuit breaker. Accordingly, we find that the trip unit and arc chute components establish the essence of the AFCI/GFCI Circuit Breaker in carrying out its primary function because they are the components within the assembly that are performing the thermal and magnetic tripping of the electrical circuit.
As the trip unit and arc chute components used in producing the AFCI/GFCI Circuit Breaker under both of your proposed production scenarios are manufactured in Malaysia, we find that the country of origin where the last substantial transformation occurs of the subject AFCI/GFCI Circuit Breaker is Malaysia.
HOLDING:
Based on the information provided, we find that under both of your proposed production scenarios, the country of origin of the AFCI/GFCI Circuit Breaker is Malaysia.
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 [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 and Special Programs Branch