CLA-2-84:OT:RR:NC:N2:220
Patrick Smith
Elo Touch Solutions, Inc.
445 S Gay Street Suite 406
Knoxville, TN 37902
RE: The country of origin of an all-in-one computer
Dear Mr. Deer:
In your letter dated July 19, 2019 you requested a country of origin ruling.
The merchandise under consideration is identified as the AIO Touch Screen (AIO), PN E462193, which is described as a touch screen computing device for use in commercial environments for point of sale machines and similar applications. The AIO consists of a motherboard, a LCD display module, various printed circuit board assemblies (PCBAs) such as a touch controller, two USB controllers, a keypad controller, an antenna, speaker, power supply, camera module and various cables and hardware.
The assembly of the AIO involves mounting the motherboard and control PCBAs into the enclosure, attaching the cabling, assembling the enclosure and wireless antenna module, and mounting the LCD module. The AIO then receives its firmware and operating system, is tested, and packaged for shipment. In your request, you indicate that all of the parts that make up the AIO are all sourced from China and the assembly of the AIO is conducted in Taiwan.
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), in pertinent part, 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.”
For tariff purposes, 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).
Further, 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 AIO, we would note that the finished machine consists of a number of discrete subassemblies that are previously manufactured in China. In our view, the assembly operations performed in Taiwan, which consists of attaching, fastening, and taping and/or gluing, is not complex. The AIO is produced by joining these subassemblies together to form a touch screen computing device, but the Chinese subassemblies do not undergo a physical change as a result.
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 AIO Touch Screen, PN E462193, 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