OT:RR:NC:N2:201
7. 1. Inspection of soldering quality and improper placement through automatic optical inspection to identify defects. 8. Integrated ICT/FCT (Korea) 1. Check for circuit abnormalities through ICT inspection, followed by software download and Secure Debug FCT testing. 9. Coating (Korea) 1. Apply coating liquid uniformly on the PCB substrate to protect it from moisture and contamination. 10. Connector AOI & Coating Inspection (Korea) 1. Perform automatic optical inspection to check the mounting condition of the Waveless-type connector and automatically inspect the coated areas and thickness to confirm the coating status. 11. Manufacturing process of Light Source Module in SL ELECTRONICS (Korea) 1. Router Process : Cut the PCB substrate into individual modules(Routing) and load them onto trays. 2. Selective Soldering : Selectively solder components such as capacitors. Finally, export the finished light source modules to the SL Mexico factory 12. Final Assembly Process at SL’s facility (Mexico) 1. Assembling LAM, heat sink, bezel, lens and wiring (Assembly equipment). 13. Inspection (Mexico) 1. Conducting appearance and lighting inspection (Inspection equipment). 14. Packaging & Delivery (Mexico) 1. Storing and sealing in a dedicated packaging container Shipping finished products from SL MEXICO to SL TENNESSEE (U.S). When determining the country of origin for purposes of applying current trade remedies under Section 301, the substantial transformation analysis is applicable. 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 order to determine whether a substantial transformation occurs when components of various origins are assembled into completed products, CBP considers the totality of the circumstances and makes such determinations on a case-by-case basis. The country of origin of the item’s components, extent of the processing that occurs within a country, and whether such processing renders a product with a new name, character, or use are primary considerations in such cases. Additionally, factors such as the resources expended on product design and development, the extent and nature of post-assembly inspection and testing procedures, and worker skill required during the actual manufacturing process may be considered when determining whether a substantial transformation has occurred. No one factor is determinative. Substantial transformation, including the “name, character and use” test, was at issue in National Hand Tool Corp. v. United States. Therein, the Court of International Trade determined that certain mechanics’ tools did not undergo substantial transformation in the United States, and therefore, were not exempt from the marking requirements set forth in 19 U.S.C. § 1304. The court found that there was no change in name because each article as imported had the same name in the completed tool. The court also found that there was no change in character because the articles, which were either hot-forged or cold-formed into its final shape in Taiwan, remained the same after heat treatment, electroplating, and assembly in the United States. The court further determined that the use of the imported articles was predetermined at the time of entry – noting that each component was intended to be incorporated in a particular finished mechanics’ hand tool, except for one exhibit. Lastly, the court rejected the Plaintiff’s claim that the value added in the United States was relatively significant to the operation in Taiwan so that that substantial transformation should be found, noting that such a finding could lead to inconsistent marking requirements for importers who perform the same processes on imported merchandise, but sell at different prices. Id.
The Court of International Trade more recently interpreted the meaning of “substantial transformation” in Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308 (2016). Energizer involved the determination of the country of origin of a flashlight, referred to as the Generation II flashlight. All the components of the flashlight were of Chinese origin, except for a white LED and a hydrogen getter. The components were imported into the United States and assembled into the finished Generation II flashlight. The Energizer court reviewed the “name, character and use” test utilized in determining whether a substantial transformation had occurred and noted, citing Uniroyal, Inc., 3 C.I.T. at 226, 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.” 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. In reaching its decision in Energizer, the court expressed the question as one of whether the imported components retained their names after they were assembled into the finished Generation II flashlights. The court found “[t]he constitutive components of the Generation II flashlight do not lose their individual names as a result [of] the post-importation assembly.” The court also found that the components had a predetermined end-use as parts and components of a Generation II flashlight at the time of importation and did not undergo a change in use due to the post-importation assembly process. Finally, the court did not find the assembly process to be sufficiently complex as to constitute a substantial transformation. Thus, the court found that Energizer’s imported components did not undergo a change in name, character, or use because of the post-importation assembly of the components into a finished Generation II flashlight. Virtually all the components of the military Generation II flashlight, including the most important component, the LED, were of Chinese origin. Thus, the court determined that China was the correct country of origin of the finished Generation II flashlights for purposes of government procurement. The Court of International Trade has also looked at the essential character of an article to determine whether its identity has been substantially transformed through assembly or processing. For example, in Uniroyal, Inc. v. United States, 3 C.I.T. at 225, the court held that imported shoe uppers added to an outer sole in the United States were the “very essence of the finished shoe” and thus the character of the product remained unchanged and did not undergo substantial transformation in the United States. Similarly, in National Juice Products Association v. United States, 10 C.I.T. 48, 61, 628 F. Supp. 978, 991 (1986), the court held that imported orange juice concentrate “imparts the essential character” to the completed orange juice and thus was not substantially transformed into a product of the United States. CBP has often found that the origin of a light source to be a significant factor in determining the country of origin of a product. For example, in Headquarters Ruling Letter (“HQ”) H017620, dated February 5, 2008, CBP determined that the various imported components (individual parts and subassemblies) were substantially transformed because of the operations performed in the United States to produce both the lens head subassembly and the finished flashlight. In support of this conclusion, CBP noted that the U.S. origin LED imparted the essential character to the lens head subassembly and flashlight as it generated the primary light of the flashlight. See also HQ H215657, dated April 29, 2013, (referring to the LED as the “most important component” of the flashlight). However, CBP has also found the manufacture of components onto a PCBA is a substantial transformation. In C.S.D. 85-25, 19 Cust. Bull. 844 (1985), CBP held that for purposes of the Generalized System of Preferences (“GSP”), the assembly of many fabricated components onto a printed circuit board in a process involving a considerable amount of time and skill resulted in a substantial transformation. In that case, more than 50 discrete fabricated components (such as resistors, capacitors, diodes, integrated circuits, sockets, and connectors) were assembled onto a PCB. CBP determined that the assembly of the PCBA involved a very large number of components and a significant number of different operations, required a relatively significant period of time, skill attention to detail, and quality control.
In HQ H114395, dated May 18, 2011, CBP considered the country of origin of a digital light processing projector for the purposes of U.S. government procurement to be where the PCBA main board and the light source were assembled. ?The projector used LEDs from Taiwan as its light source for projecting photos and videos from mobile devices onto any surface. CBP considered origin of the projector under two manufacturing scenarios. In both scenarios, parts from Japan, China, Korea, Thailand, Taiwan and the United States were assembled to create the light engine and PCBA main board. ?In the first scenario, the light engine and PCBA main board were assembled in China and in the second scenario, the light engine and PCBA main board were assembled in Taiwan. ?In both scenarios, final assembly occurred in Taiwan. CBP determined that the light engine and the PCBA main board were the essence of the projector, and their production was the last substantial transformation. ?Therefore, the country where the light engine module and PCBA main board module were assembled and programmed was the country of origin, meaning China in the first scenario and Thailand in the second. In accordance with C.S.D. 85-25 and HQ H114395, for the Main Beam Module Assembly currently under consideration, the assembly of the Korean and Mexican origin LEDs and the Korean origin PCBAs in Mexico does not result in a substantial transformation. ?We find that the processes performed in South Korea are sufficiently ?complex and meaningful? so as to result in a substantial transformation of the underlying components.? The processing and manufacturing of components in Korea, which consists of assembling components together with screws, connectors, and soldering, is sufficient to amount to a substantial transformation of the PCBA with LED lights. ?While the plastic lenses and reflector contribute to the car lamp?s ability to diffuse the light in accordance with customer expectations, as in HQ H114395, the PCBA is already a complete light source with a fully integrated LED and circuitry. ?Consistent with the finding in Energizer, the processes occurring in Mexico are minor and do not change the shape or material composition of the component parts. The parts still retain their names once assembly is complete. For example, the lens is still the lens, and the gasket is still the gasket. Therefore, we find that the country of origin of the LED vehicle lamps is South Korea, where the PCBA with LED lights is manufactured, and Section 301 measures will not apply. 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 Matthew Sullivan at [email protected].
Sincerely,
Steven A. Mack Director National Commodity Specialist Division Sincerely,
(for) Steven A. Mack Director National Commodity Specialist Division