MAR-2 RR:NC:1:120
Mr. John Griffin
HID Global
9292 Jeronimo Road
Irvine, CA 92618-1905
RE: COUNTRY OF ORIGIN MARKING OF IMPORTED PRINTED CIRCUIT
BOARD ASSEMBLIES IN PLASTIC SMART CARD READER HOUSINGS
Dear Mr. Griffin:
This is in response to your letter dated January 12, 2007, requesting a ruling on whether five (5) imported printed circuit board assemblies in plastic smart card reader housings are required to be individually marked with the country of origin if it is later to be processed in the US by a US manufacturer. A marked sample was not submitted with your letter for review. However, the five smart card reader models, all from the same reader family are as follows: Reader R10, R40, RP40, RK40, and RPK40.
In China, components are assembled to the printed circuit board (PCB) then assembled into plastic housings with/without keypads and wired together. A visual inspection is performed. The PCB has a Microchip known as the PIC processor that is not able to process information until it is programmed in the US. The PCB does not have digital memory chips to store data or electronic chips with antennas to receive or send data at the time of importation and is not functional at this point.
In the United States the imported printed circuit boards assembled in plastic smart card reader housings are further processed into iClass Readers at HID’s facility. The PIC processors are flashed and programmed with firmware and an operating system. An expansion module enabling read/write capabilities is assembled to the PCB, information is downloaded from a smart card, and the PCB is configured with the applicable protocol or application. At this time, the PCB emits a low-level KHz field and can transmit signals to activate a smart card or receive signals and convert it to digital code. They are readers capable of writing data to a smart card and programming card data.
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 US 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 exceptions of 19 U.S.C. 1304. Section 134.41(b), Customs Regulations (19 CFR 134.41(b)), mandates that the ultimate purchaser in the U.S. must be able to find the marking easily and read it without strain. Section 134.1(d) defines the ultimate purchaser as generally the last person in the U.S. who will receive the article in the form in which it was imported. 19 CFR 134.1(d)(1) states that if an imported article will be used in manufacture, the manufacturer may be the ultimate purchaser if he subjects the imported article to a process which results in a substantial transformation of the article. 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 such circumstances, the imported article is excepted from marking and only the outermost container is required to be marked. See, 19 CFR 134.35.
In determining whether there is a substantial transformation, it is necessary to analyze whether programming the PCBs change their name, character, or use. In HRL 732087, we ruled that a blank computer diskette is substantially transformed by having a program written onto it and the party performing the programming is considered the ultimate purchaser of the blank diskette for country of origin marking purposes. We noted that the character of the diskette had changed from one of a blank storage medium to one with a predetermined pattern coded onto it. The use of the diskette had changed from that of an unreadable, therefore meaningless, article of software, to that of an encoded instruction guide to enable a computer to perform various commands.
The PCBs can only be called smart card readers after they are programmed. The function of the readers is to generate a code that is compatible with a code on a security system to gain access. The programming of the PCB gives it its character so that it can function as part of a computer security system. The programming also makes a permanent change in the reader that cannot be undone by the user. Accordingly, since the programming is so integral to proper functioning of the iClass readers, it creates a new and different article of commerce and it results in a substantial transformation.
In this case, the imported printed circuit boards in plastic smart card reader housings are substantially transformed into smart card readers as a result of the US processing; and therefore the US manufacturer is the ultimate purchaser of the imported printed circuit boards in plastic smart card reader housings. Under 19 CFR 134.35 only the outermost containers which reach the ultimate purchaser are required to be marked with the country of origin China.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 CFR Part 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Denise Faingar at 646-733-3010.
Sincerely,
Robert B. Swierupski
Director,
National Commodity
Specialist Division