CLA-2-85:OT:RR:NC:N2:209
Ryan Supek
TE Connectivity Corporation
2800 Fulling Mill Road Middletown, PA 17057
RE: The tariff classification and country of origin of two cable assemblies imported from China or Mexico
Dear Mr. Supek:
In your letter dated July 25, 2024, you requested a tariff classification and country of origin determination ruling.
The items concerned are two cable assemblies, an active copper cable (ACC) assembly - PN 2485332; and an active electrical cable (AEC) assembly PN 2463447.
Both cable assemblies are used in datacenters to connect and transmit high-speed signals between the datacenter equipment (i.e. servers and switches). These cables are considered to be active cables and they contain an electronic circuit which enables and enhances high speed data transmission.They contain printed circuit board assemblies (PBCAs) with microcontrollers, re-timers or re-drivers, and some logic devices which modify, enhance and amplify the signal in a data transmission. They are hot-pluggable transceivers (OSFP or QSFP) which are used for both telecommunication and data communications applications.
The first item, ACC cable assembly PN 2485332, is an active copper cable (ACC) assembly. It consists of a length of cable terminated by two paddle cards with die cast back shells enclosing them. It contains a re-driver, microcontroller, and some logic devices on a circuit board. The ACC is used to amplify and equalize the high-speed signals between datacenter equipment. The amplified signal is then transmitted down the cable, either the line side or the host side. The chips on the circuit board condition and transmit data without creating any additional data by manipulating the shape of the waveform in the data transmission.
The second item, AEC cable assembly PN 2463447, is an active electrical cable (AEC) assembly. It consists of a length of cable terminated by two paddle cards with die cast back shells enclosing them. It contains a re-timer, a microcontroller, and other components. One of the key components in the AEC is the re-timer which is used to clean up or re-time signals by recovering the original clock from the data (also known as CDR or clock data recovery) and recreating the initial signal. The recreated signal is then amplified, equalized, and transmitted down the cable, either the line side or the host side.The cable assembly manipulates the shape of the waveform but not the data itself.
The applicable subheading for the active copper cable (ACC) assembly - PN 2485332; and an active electrical cable (AEC) assembly PN 2463447 will be 8517.62.0090, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Telephone sets, including smartphones and other telephones for cellular networks or for other wireless networks; other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network : Other apparatus for transmission or reception of voice, images or other data: Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus: Other. The general 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 at https://hts.usitc.gov/.
Regarding the country of origin for marking purposes:
Both the ACC and AEC cable assemblies are comprised of a PCBA and bulk cable.The PCBA contains the chips, microcontrollers, and logic devices, and the bulk cable is made from electrical copper wire. The manufacture of these specific PCBAs dictates the unique/specific functionality of the cable assemblies. The PCBA is assembled with the bulk cable to make the complete active cable assembly.
Manufacturing process of the PCBA:
The PCBA assembly process for the ACC and AEC is accomplished the same way, through the surface mount technology (SMT) process.Various integrated circuit chips, microcontrollers, and logic devices will be mounted to a bare PC board via the SMT process.The two PCBAs have many of the same components, including resistors, capacitors, power switch, and transistors. There are some different components, and the main one is that the ACC contains two continuous-time linear equalizers (CTLE) which are referred to as the re-drivers, and the AEC contains the re-timer.Collectively, the components on the PCBA perform the functions of modifying, enhancing and amplifying signals for high-speed data transmission.
The ACC (PN 2485332) PCBA incorporates: several capacitors and resistors, a MOSFET (metaloxidesemiconductor field-effect transistor), Schottky barrier diode, power switch, gate, low voltage comparators, low-dropout (LDO) linear regulator, microcontroller, dual bilateral analog switches, and EEPROM (electrically erasable programmable memory).
The AEC (PN 2463447) PCBA incorporates: several capacitors and resistors, ferrite beads, fixed inductors, a DSP re-timer, a switching regulator, voltage regulator, flash memory, microcontroller, two voltage-level translators, power switches, and a crystal oscillator.
Bulk cable manufacturing:
There are two processes associated with the cables and the active cable assembly. The first is the manufacturing of the bulk cables themselves. The second process is the final assembly of combining the PCBA with the bulk cables to make the complete active cable assembly.
Chinese origin copper wire will be purchased from a third-party supplier. Then, the bulk cable will be manufactured.
For cable assembly - PN 2485332, bulk copper wire (26 AWG Solid Silver-Plated Copper) will be first extruded (insulated) with plastic LDPE (low density polyethylene) insulation. Then, it will be taped with an
aluminum/polyester (Mylar) tape with a special forming tool to smoothly wrap the tape tightly to form a shield. Next, two drain wires made of 34 AWG solid tin-plated copper will be pulled in longitudinally on each side of the taped/shielded pair. The pair will then be wrapped with two heat seal Mylar tapes (pair jacket).
For cable assembly - PN 2463447, the cable will be constructed similar to that used for PN 2485332, but without the addition of the drain wires. The copper wire will be insulated with plastic insulation and wrapped with a pair shield (aluminum/polyester Mylar tape) and pair jacket (heat seal Mylar tape).
Final cable assembly: PCBA integrated with the bulk cable.
The bulk cable, copper braid, and plastic sleeving will be cut. The PCBA will undergo a diecast pre-tinning process, which is an operation done to ensure the cables can be soldered and terminated to the board (i.e. ensure it can have a good connection). Then the process to assemble the cable onto the PCBA will begin. The bulk cable will undergo a wire lacing operation. Then, the wires will undergo a stripping process and the insulation dielectric will be cut with a CO2 laser so that the wires can be soldered onto the PCBA. Next, a bus cover will be soldered onto the PCBA, aluminum flux will be applied, a curing process will be initiated, and aluminum foil will be soldered onto the PCBA. The cable assembly will then be fed into a copper braid and a plastic sleeving. After that, the back shell will be assembled onto the cable assembly, and a label will be attached. Finally, the cable assembly will undergo testing and a final inspection.
After the testing phase, the firmware will be installed onto the PCBA (specifically the Microcontroller). The firmware is used to ensure that the equipment the cable is plugged into can recognize and communicate with the cable and vice versa. It is not actually performing any of the functions of the PCBA or cable but is merely used to ensure the various components of the cable assembly and channels of communication within the cable assembly are communicating properly within the designated host network.
There are four different manufacturing location scenarios to consider:
Regarding your request for the country of origin of the active copper cable (ACC) assembly- PN 2485332; and an active electrical cable (AEC) assembly PN 2463447, we note the marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), which 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 or USMCA country, the marking rules set forth in part 102 of this chapter (hereinafter referred to as the part 102 Rules) will determine the country of origin.
Regarding scenarios 2 and 4, where the finished cable assembly is imported from Mexico:
Pursuant to section 102.0, interim regulations, related to the marking rules, tariff-rate quotas, and other USMCA provisions, published in the Federal Register on July 6, 2021 (86 FR 35566), the rules set forth in 102.1 through 102.18 and 102.20 determine the country of origin for marking purposes with respect to goods imported from Canada and Mexico. Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes, with the exception of textile goods which are subject to the provisions of 19 C.F.R. 102.21. See 19 C.F.R. 102.11.
Applied in sequential order, 19 CFR Part 102.11(a) provides that the country of origin of a good is the country in which:
(1) The good is wholly obtained or produced;
(2) The good is produced exclusively from domestic materials; or
(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in Part 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
Since the active copper cable (ACC) assembly- PN 2485332; and an active electrical cable (AEC) assembly PN 2463447 are neither wholly obtained or produced nor produced exclusively from domestic materials, paragraphs (a)(1) and (a)(2) cannot be used to determine the country of origin of these products and paragraph (a)(3) must be applied to determine the origin of the finished article. As the active copper cable (ACC) assembly - PN 2485332; and an active electrical cable (AEC) assembly PN 2463447 are classified under subheading 8517.62.0090, HTSUS, the applicable tariff shift requirement in Part 102.20 for the assemblies under consideration states:
A change to other transmission apparatus for radiotelephony or radiotelegraphy or to other transmission apparatus incorporating reception apparatus for radiotelephony or radiotelegraphy of subheading 8517.61 through 8517.69 from any other good of subheading 8517.61 through 8517.69 or from any other subheading, except from subheading 8517.13 through 8517.14, or 8525.50 through 8525.60.
The identified foreign components used in the production of the active copper cable (ACC) assembly - PN 2485332; and the active electrical cable (AEC) assembly PN 2463447 are all classified outside of 8517.61 through 8517.69, HTSUS. As a result, the country of origin of the active copper cable (ACC) assembly - PN 2485332; and the active electrical cable (AEC) assembly PN 2463447, imported from Mexico, will be Mexico at the time of importation into the United States and should be marked accordingly.
Regarding scenarios 1 and 3, where the finished cable assembly is imported from China:
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 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).
Based upon the facts presented, it is the opinion of this office that the manufacturing processes that take place within Malaysia to create the PCBA is both substantial and complex. The character of this product is imparted by the PCBAs which would be considered the dominant components of this assembly. The assembly/manufacturing process that takes place in China does not change the end use of the PCBAs. The PCBAs do not under go a substantial transformation as a result of the Chinese processing. Therefore, since a substantial transformation does not occur as a result of the Chinese processing, the country of origin for marking purposes would be Malaysia upon importation into the United States.
The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in Title 19, Code of Federal Regulations (CFR), Section 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, whether directly, by reference, or by implication, is accurate and complete in every material respect. In the event that the facts are modified in any way, or if the goods do not conform to these facts at time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and submit a request for a new ruling in accordance with 19 CFR 177.2. Additionally, we note that the material facts described in the foregoing ruling may be subject to periodic verification by CBP.
This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection 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, please contact National Import Specialist Steven Pollichino at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division