OT:RR:NC:N2:208
Larry Hampel
Attorney and Counselor
113 Douglas Manor Lane
Eastsound, WA 98245-8824
RE: The country of origin of RFID icons and badges.
Dear Mr. Hampel:
In your letter dated December 5, 2019, on behalf of LaFrance Corp (“LaFrance”), you requested a ruling on the country of origin for RFID icons and badges.
The merchandise under consideration is metal icons and plastic badges, each of which contains a radio frequency identification (“RFID”) chip. The subject RFID icons and badges are used for “asset protection.” Each of the subject icons and badges has an electronic IC (with a controller or microprocessor and ROM and/or RAM memory) in the form of an RFID chip and contains an embedded antenna, but do not contain any other active or passive elements. Moreover, each RFID icon and badge are imported recorded with a unique number that cannot be changed.
The applicable subheading for these products will be 8523.52.0090, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Discs, tapes, solid-state non-volatile storage devices, "smart cards" and other media for the recording of sound or of other phenomena, whether or not recorded, including matrices and masters for the production of discs, but excluding products of Chapter 37: Semiconductor media: "Smart cards": Other. The rate of duty will be Free.
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 World Wide Web at http://www.usitc.gov/tata/hts/.
As per the information provided, the RFID chips are produced and recorded in Japan. In China, the metal icons and plastic badges are produced. The RFID chips, which are produced in Japan, are attached with adhesive to the rear side of the metal icons or plastic badges. For the icons, after they are formed and the concave rear side is filled with epoxy, pressure-sensitive die-cut adhesive (similar to double-sided tape) is applied to that rear surface and the RFID chip is then pressed to the adhesive and multiple RFID icons are then mounted to an adhesive liner card for packaging and shipment. The RFID chips undergo no processing whatsoever, other than attachment (by adhesive) to the underside of the icon or badge.
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). Based on the facts presented, it is the opinion of this office that the recorded RFID chip, which is created in Japan, is the essence of the finished RFID icons and badges. The assembly processes that take place in China do not result in a substantial transformation of the recorded RFID chip. Therefore, the RFID icons and badges would be considered a product of Japan for origin and marking purposes at the 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 Lisa Cariello at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division