CLA-2-84:OT:RR:NC:N2:220
James Pai
BDO USA, LLP
600 Anton Boulevard, Suite 500
Costa Mesa, CA 92626
RE: The country of origin of an input/output device
Dear Mr. Pai:
In your letter dated January 3, 2020 you requested a country of origin ruling on behalf of your client, Wacom Technology Corporation.
The merchandise under consideration is identified as the Wacom Cintiq 16 with Pro Pen 2 (Cintiq 16), PN DTK1660, which is described as a LCD display with a touch screen that is said to be primarily used with automatic data processing machines (ADP). The Cintiq 16 consists of an LCD display module, front and back cover assemblies, and various printed circuit board assemblies (PCBAs) such as the electro-magnetic resonance (EMR) board, the keypad board, the scaler board, the sensor control board (SCB). The Cintiq16 is retail packaged with a power adapter, specialized cables, and a stylus pen.
In use, the Cintiq 16 is connected to an ADP machine via the specialized cables for the purpose of displaying the ADP machine’s screen and providing users with an ability to interact with, manipulate, and create content via the stylus and touch screen overlay. In this respect, the Cintiq 16 functions as a combined input/output unit where the EMR board is the touch surface allowing for input, and the LCD is the display output. You state that the function of the various PCBAs consist of: the SCB capturing the pen stroke’s pressure and images applied on the EMR board control and communication with the attached ADP machine; the keypad board turning the Cintiq 16 on and off and showing power status; the scaler board receiving the connected ADP machine’s display signals through the HDMI connector and regenerating those signals onto the LCD panel.
In your request, you indicate that all of the subassemblies originate in China with the exception of the SCB that you state is manufactured in Taiwan. In Taiwan, the assembly of the Cintiq 16 consists of mounting the PCBAs into the front and back cover assemblies, attaching the cabling, and assembling the enclosure. The Cintiq 16 then receives its firmware, is tested, and packaged for shipment.
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.
The “country of origin” is defined in 19 CFR 134.1(b) 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 this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin.”
The test for determining whether a substantial transformation will occur is whether an article emerges from a process with a new name, character or use, different from that possessed by the article prior to processing. See Texas Instruments Inc. v. United States, 69 C.C.P.A. 151 (1982). This determination is based on the totality of the evidence. See National Hand Tool Corp. v. United States, 16 C.I.T. 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993).
In Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308 (2016), the Court of International Trade (“CIT”) interpreted the meaning of “substantial transformation” as used in the Trade Agreements Act of 1979 (“TAA”) for purposes of government procurement. In Energizer the court reviewed the “name, character and use” test in determining whether a substantial transformation had occurred in determining the origin of a flashlight, and reviewed various court decisions involving substantial transformation determinations. The court noted, citing Uniroyal, Inc. v. United States, 3 C.I.T. 220, 226, 542 F. Supp. 1026, 1031, aff’d, 702 F.2d 1022 (Fed. Cir. 1983), 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. 308, 310, aff’d 989 F.2d 1201 (Fed. Cir. 1993). 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.
Regarding the country of origin of the Cintiq 16, we would note that the finished machine consists of a number of discrete subassemblies that are previously manufactured in China. Each of the Chinese subassemblies are dedicated for use with the Cintiq 16, such that they have no other purpose other than as components of the subject input/output device. In our view, the assembly operation performed in Taiwan, which consists of attaching, fastening, and taping and/or gluing, is not complex. The Cintiq 16 is produced by joining these subassemblies together to form a touch screen input/output device, but the Chinese subassemblies do not undergo a physical change as a result of assembly operations performed.
Therefore, based upon the facts presented, it is the opinion of this office that the assembly process performed in Taiwan does not result in a substantial transformation of the Chinese goods. The components themselves are not transformed in Taiwan into a new and different article of commerce with a name, character, and use distinct from the articles exported from China. Therefore, the Wacom Cintiq 16 with Pro Pen 2, PN DTK1660, is considered a product of China for origin and marking purposes at time of importation into the United States.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 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 Karl Moosbrugger at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division