CLA-2-90:OT:RR:NC:N2:212
Holly Valk
Gentex Corporation
600 N. Centennial Street
Zeeland, MI 49464
RE: The tariff classification and country of origin of optical elements from Taiwan and China
Dear Ms. Valk:
In your letter dated June 19, 2019, you requested a tariff classification and country of origin ruling.
At issue are five items described as optical elements (SKU 625-1330-000, 625-0689-000, 625-1112-000, 625-1670-000, and EXP625-1112-000) for which samples were provided to this office. You state that the optical elements are to be incorporated into automobile rear view mirrors that are designed to also function as backup cameras when the vehicle is placed into reverse. The optical elements are designed in such a way as to direct and enhance the light from backlit LEDs through an LCD screen. We would note that the optical elements are imported without the LEDs, LCD screen, mirrored glass, or printed circuit board needed to make the end product. The elements differ in size and layered composition based on the final assembly into which they will be incorporated.
SKU 625-1330-000 is made up of a custom-designed diffuser plate onto which is affixed two layers of brightness enhancing film (BEF). The edges are sealed with specially designed tape and a final liner is placed over the BEF in order to protect it in transport. The diffuser plate spreads the light emitted from backlit LEDs to the two layers of BEF where it is then redirected, refracted and collimated in order to produce a brighter, more intense light to be directed to the LCD.
SKU 625-0689-000 is made up of an optic tray onto which is affixed an enhanced specular reflector (ESR) film, a custom-designed light guide, a diffuser, and two layers of BEF. The same tape and liner are used to finish the product. The ESR reflects light from the incorporated LEDs to the light guide, which uniformly allows light to pass to the diffuser that produces an even illumination. The BEF then takes the light out of the diffuser, both vertically and horizontally, and reflects it back to the viewing area allowing the light to be as bright as possible.
SKU 625-1112-000 and EXP625-1112-000 are manufactured and function identically. They begin with an optic tray, ESR, light guide, and diffuser. There are three layers of BEF affixed to the element before the tape and liner are attached. The first two layers of BEF allow management of the angular output of light from the LCD by refracting and reflecting it back to the viewing area. The third layer is a reflective polarizer that only allows polarized light that matches the back polarizer of the LCD to pass through. All other light will recycle back into the element.
SKU 625-1670-000 is made up of an optic tray, reflector, light guide, diffuser, and two layers of BEF. The light is reflected then sent through the light guide and diffused where it is refracted, reflected, and collimated to create a more intense light on the LCD.
In your request, you suggest that the correct classification for these elements is 9001.90.9000, Harmonized Tariff Schedule of the United States (HTSUS). As the optical elements are permanently mounted to a plastic backing, we disagree. You also suggest that the optical elements should be classified under 9002.90.9500, HTSUS. We agree as the optical elements would be considered mounted for tariff purposes.
The applicable subheading for the optical elements (SKU 625-1330-000, 625-0689-000, 625-1112-000, 625-1670-000, and EXP625-1112-000) will be 9002.90.9500, HTSUS, which provides for “Lenses, prisms, mirrors and other optical elements, of any material, mounted, being parts of or fittings for instruments or apparatus, other than such elements of glass not optically worked; parts and accessories thereof: Other: Other: Other.” The general rate of duty will be free.
With regard to the country of origin of the optical elements, 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.
The courts have held that a substantial transformation occurs when an article emerges from a process with a new name, character or use different from that possessed by the article prior to processing. United States v. Gibson-Thomsen Co., Inc., 27 CCPA 267, C.A.D. 98 (1940); National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff’d, 989 F. 2d 1201 (Fed. Cir. 1993); Anheuser Busch Brewing Association v. The United States, 207 U.S. 556 (1908) and Uniroyal Inc. v. United States, 542 F. Supp. 1026 (1982). However, if the manufacturing or combining process is merely a minor one that leaves the identity of the article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983). Substantial transformation determinations are based on the totality of the evidence. See Headquarters Ruling (HQ) W968434, date January 17, 2007, citing Ferrostaal Metals Corp. v. United States, 11 CIT 470, 478, 664 F. Supp. 535, 541 (1987).
You state that all optical elements are assembled in Taiwan from both originating and non-originating goods and that the assembly constitutes a substantial transformation into a functioning optical element. It is the opinion of this office that the reflector, diffuser, and BEF impart the essence of the optical element as they are performing the essential alteration of the light. In SKUs 625-1330-000, 625-0689-000, 625-1112-000, and 625-1670-000, each of the critical optical components listed above is molded and die-cut in Taiwan while the optic tray and light guide are molded in China. The parts are then assembled into a finished optical element in Taiwan. It is the opinion of this office that the transformation of the critical optical elements in Taiwan would impart the essence of the finished good. Therefore, the country of origin of the aforementioned SKUs is Taiwan.
With regard to SKU EXP625-1112-000, all parts are molded and die-cut in China, and then sent to Taiwan for final assembly. In our view, the process performed on the Chinese components does not constitute a substantial transformation and the country of origin of SKU EXP625-1112-000 is China.
Effective July 6, 2018, the Office of the United States Trade Representative (USTR) imposed an additional tariff on certain products of China classified in the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(b), HTSUS. The USTR imposed additional tariffs, effective August 23, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(d), HTSUS. Subsequently, the USTR imposed further tariffs, effective September 24, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(f) and U.S. Note 20(g), HTSUS. For additional information, please see the relevant Federal Register notices dated June 20, 2018 (83 F.R. 28710), August 16, 2018 (83 F.R. 40823), and September 21, 2018 (83 F.R. 47974). See also “Notice of Action and Request for Public Comment Concerning Proposed Determination of Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation” (June 20, 2018, 83 F.R. 28710). Products of China that are provided for in subheading 9903.88.01, 9903.88.02, 9903.88.03, or 9903.88.04 and classified in one of the subheadings enumerated in U.S. Note 20(b), U.S. Note 20(d), U.S. Note 20(f) or U.S. Note 20(g) to subchapter III shall continue to be subject to antidumping, countervailing, or other duties, fees and charges that apply to such products, as well as to those imposed by the aforementioned Chapter 99 subheadings.
Products of China classified under subheading 9002.90.9500, HTSUS, unless specifically excluded, are subject to the additional 25 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.01, in addition to subheading 9002.90.9500, HTSUS, 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.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at https://hts.usitc.gov/current.
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 Luke LePage at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division