Country of Origin of Printed Circuit Board Assemblies

H344034 April 8, 2026 OT:RR:CTF:FTM H344034 MJD CATEGORY: Origin Mr. Robert J. Leo Meeks, Sheppard, Leo & Pillsbury LLP 570 Lexington Avenue New York, New York 10022 RE: Country of Origin of Printed Circuit Board Assemblies Dear Mr. Leo: This letter is in response to your request, on behalf of Axis Communications AB, (hereinafter “Axis AB” or “Requestor”) dated November 27, 2024, for a binding ruling regarding the country of origin of certain Printed Circuit Board Assemblies (“PCBAs”). You have asked that certain information submitted in connection with this ruling be treated as confidential. Inasmuch as this request conforms to the requirements of 19 C.F.R. § 177.2(b)(7), the request for confidentiality is approved. The confidential information contained in the attachments to the ruling request will not be released to the public and will be withheld from published versions of this ruling. FACTS: The products at issue are several types of PCBAs that are manufactured in the United States from component parts from the United States and parts imported from China, Sweden, and other European Union countries. Axis AB uses two different processes to manufacture the boards into PCBAs: Surface Mount Technology (“SMT”) and Pin-Through-Hole (“PTH”). The SMT and PTH process are performed in the United States and are described as follows: For both the SMT and PTH, the process begins with: 1. Marking (via laser and if not practical then via labeling): For traceability all boards need to be marked (approximately 2 to 3 hours). 2. Electrostatic Discharge (“ESD”): When preparing for PCBA assembly ESD is needed to secure the production environment against unwanted ESD events that may damage the assembly (approximately 2 to 3 hours). 3. Printed Circuit Board (“PCB”) Panel Design: The majority (if not all) of the PCB’s needs to have a PCB panel designed in order to run production of the PCB boards in the automated production lines (approximately 1 hour). For the SMT process, components are placed and soldered on plated pads on the surface of the PCB. This consists of: 1. Solder paste application: This is the process where the solder paste is printed on the board, this is needed to be able to solder components to the board and get the required electrical connection. All boards need to go through the solder paste application process (approximately 2.5 to 3 hours). 2. Dispensing: The process where either solder paste and/or adhesive is applied on the board via dots from a nozzle (needle type) (approximately 1 hour). 3. Solder Paste Inspection: Inspection of solder paste application. All boards need to go through the solder paste inspection process (approximately 2 to 3 hours). 4. Component Mounting: This process involves populating the board. This is done in the mounting machines. An SMT line today consists of a minimum two SMT machines. For larger and more populated boards – there are more than two SMT machines in the line. All boards go through the mounting process (approximately 2 to 3 hours). 5. Reflow Soldering: In order to use the boards they now need to be soldered and that is done in the reflow oven where the PCB panels are put through 12 – 14 different heating zones to build up the temperature to the point where the alloy in the solder paste melts, this is done in a controlled and regulated way to allow the solder paste flux to clean the surfaces of the PCB and components, as well as the metal alloy spheres in the solder paste before it melts and binds it together. After the solder paste has melted it needs to be cooled down and solidified again (approximately 2 to 4 hours). 6. Automated Optical Inspection (“AOI”): When the PCB panel has been soldered it needs to be checked and verified so that the solder connections are reliable and able to perform the standard requirements. For solder connections that are visible, this is done in the AOI. All the visible solder connections on all the boards in the PCB panel are scanned by a camera (in 2D or 3D depending on the equipment) (approximately 2 to 3 hours). 7. Automated X-ray Inspection (“AXI”): Since the solder connections are not visible, an x-ray inspection needs to be done. This is done on all hidden solder connections on all the boards in the PCB (approximately 2 to 3 hours). For the PTH process, the process continues with through hole technology where components are mounted and soldered through holes in the PCB. Also sometimes called THT (“Through Hole Technology”). This consists of the following procedures: 2 1. Soldering: All boards that have PTH components need to be soldered either by (1) wave soldering, (2) selective soldering or (3) robot soldering ? Wave soldering: In wave soldering the PCB panel are put in a fixture that holds the panel in place. The fixture with the PCB panel is loaded into the wave soldering oven, flux is applied (sprayed) on the areas to be soldered, then it is pre-heated to activate the flux so that it cleans the area where the solder will flow to and create a connection. The fixture with the PCB panel then passes over a wave of molten solder which makes the molten solder attach to the component pins and copper around it (approximately 2 to 4 hours). ? Selective soldering: In selective soldering a small wave, located in a cup is moved around, only going up against the board soldering the exact points where PTH component solder connections need to be created (approximately 2 to 4 hours). ? Robot soldering: a standalone process with just the robot soldering equipment (approximately 2 to 4 hours). 2. Depaneling: Since the boards are placed in panels they need to be depaneled either by laser or router (approximately 2 to 3 hours). 3. Inspection: When the board is fully assembled on a PCBA level it is inspected, oftentimes manually with the help of a microscope (approximately 10 minutes). Each step in manufacturing the PCBA’s undergoes the following three phases: (1) preparation, (2) optimization/startup, and (3) production. The preparation phase is performed by an engineer with several years of experience, who has specialized knowledge of their area of expertise, while also having a general knowledge of the whole process and production equipment and machines, and receives extensive training for one to two weeks depending on the machines and/or process. The optimization/startup phase is performed by an engineer or technician with a minimum of one to two years of experience with process knowledge in their area of expertise as well as a general understanding of the whole process, who receives training for one to two weeks depending on the machines and/or process. The production phase is performed by an operator who is either the head operator who has a minimum of one year of experience, operators in a team that have relevant training for their area, a single operator that has a minimum of year of experience, or the operator inspector that has relevant training and knowledge for their area. The Requestor provides that once the PCBAs are completed they also will be programmed in the United States with Axis AB’s proprietary software. This software is designed in Sweden. ISSUE: What is the country of origin of the PCBAs? 3 LAW AND ANALYSIS: The marking statute, section 304 of the 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 United States 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 an ultimate purchaser in the United States the English name of the country of origin of the article. Congressional intent in enacting 19 U.S.C. § 1304 was “that the ultimate purchaser should be able to know by an inspection of the markings on the imported goods the country of which the good is the product. The evident purpose is to mark the goods so that at the time of purchaser the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will.” United States v. Friedlaender & Co., 27 C.C.P.A. 297, 302 C.A.D. 104 (1940). Part 134 of the U.S. Customs and Border Protection (“CBP”) Regulations (19 C.F.R. Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. § 1304. Section 134.1(b), CBP Regulations (19 C.F.R. § 134.1(b)), defines “country of origin” 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 [the marking regulations]. . . .” A substantial transformation is said to have occurred when an article emerges from a manufacturing process with a name, character, or use which differs from the original material subjected to the process. United States v. Gibson Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940); Texas Instruments v. United States, 681 F.2d 778, 782 (1982). In order to determine whether a substantial transformation occurs when components of various origins are assembled into completed products, the determinative issue is the extent of operations performed and whether the parts lose their identity and become an integral part of the new article. See Belcrest Linens v. United States, 6 CIT 204 (1983), aff’d, 741 F.2d 1368 (Fed. Cir. 1984). 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, and use are primary considerations in such cases. Additionally, factors such as the resources expended on product design and development, extent and nature of post-assembly inspection and testing procedures, and the degree of skill required during the actual manufacturing process may be relevant when determining whether a substantial transformation has occurred. No one factor is determinative. Minimal or simple assembly operations will generally not result in a substantial transformation. Factors which may be relevant in this evaluation may include the nature of the operation (including the number of components assembled), the number of different operations involved, and whether a significant period of time, skill, detail, and quality control are necessary for the assembly operation. See C.S.D. 80-111, C.S.D. 85-25, C.S.D. 89-110, C.S.D. 89-118, C.S.D. 90-51, and C.S.D. 90-97. If the manufacturing or combining process is a minor one, which leaves the identity of the article intact, a substantial transformation has not occurred. See Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026 (1982), aff’d, 702 F.2d 1022 (Fed. 4 Cir. 1983) (imported shoe uppers added to an outer sole in the United States were the “very essence of the finished shoe” and the character of the product remained unchanged and did not undergo substantial transformation in the United States). In Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308 (2016), the Court of International Trade (“CIT”) interpreted the meaning of the term “substantial transformation” as used in the Trade Agreements Act of 1979 (“TAA”) for purposes of government procurement. Energizer involved the determination of the country of origin of a flashlight, referred to as the Generation II flashlight, under the TAA. All of the components of the Generation II flashlight were of Chinese origin, except for a white LED and a hydrogen getter. The components were imported into the United States where they were assembled into the finished Generation II flashlight. The court reviewed the “name, character and use” test in determining whether a substantial transformation had occurred and reviewed various court decisions involving substantial transformation determinations. The court noted, citing Uniroyal, 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. 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. In reaching its decision in the Energizer case, 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 pre-determined 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. The court determined that China, the source of all but two components, was the correct country of origin of the finished Generation II flashlights under the government procurement provisions of the TAA. In C.S.D. 85-25, 19 Cust. Bull. 844 (1985), which you cite to, CBP held that for purposes of the Generalized System of Preferences (“GSP”), the assembly of multiple fabricated components onto a PCB 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 PCBAs involved a significant number of components and a significant number of different operations, required a relatively significant period of time, skill, attention to detail, and quality control. 5 CBP has also examined the country of origin of PCBAs in Headquarters Ruling Letter (“HQ”) 734021, dated May 21, 1991, where CBP considered the country of origin marking of components used to make the T1200XE PCBAs. The PCBAs were manufactured in the United States from approximately 92% of foreign made components (by value). In making the determination of whether the component parts were substantially transformed in the United States when assembled into completed PCBAs, CBP stated the following: We note that the assembly process in this case is quite complex and involves a considerable amount of skill and time. The assembly also involves a large number of different components and a significant number of distinct skilled operations. We also note that there is an extensive increase in value when the printed circuit boards are completed. Through the assembly processes, the separate components of the printed circuit boards acquire new attributes. The completed printed circuit boards have a name, character, and use differing from that of the individual components. Consequently, a new article of commerce is created. Therefore, we conclude that of the assembly of the components into the completed printed circuit boards constitutes a substantial transformation. In the instant case, based on the totality of circumstances, and consistent with Energizer, C.S.D. 85-25, and HQ 734021, we find that the assembly process using either the SMT or PTH process results in a substantial transformation. The manufacturing process in the United States involves complex operations with experienced professionals and specialized equipment, which is more than a simple assembly. The individual components used to create the PCBAs lose their identities when they are made into the final PCBAs creating an article of commerce with a new name, character, and use. Specifically, the product at issue transitions from a bare PCB or “green board” to a functioning PCBA when the components are soldered onto it and the components are programmed with software, which results in a product that has a new name, PCBA, after importation and assembly in the United States. In addition, all of the components, many of which are foreign sourced, do not have a predetermined end use at the time of importation. Therefore, when the components are soldered on to the PCB and programmed with Axis AB’s proprietary software in the United States, they become a product with a new character and use as well. In addition, the manufacturing process of creating functional PCBAs requires a certain level of experience and knowledge, and a significant amount of time. The process takes anywhere from 22 to 34 hours in total depending on the PCB. All of the PCBAs are assembled, in part, by engineers with several years of experience who have a specialized knowledge of their area of expertise and general knowledge of the production process, equipment, and machinery used to make the PCBAs. Also, all of the PCBAs go through an optimization/startup phase performed by an engineer or technician that has at least one to two years of relevant experience and a general understanding of the entire process. Moreover, these engineers or technicians are equipped with specialized training depending on the machine or process they are involved with. Lastly, the production phase is performed by an operator with at least one year of experience and/or training or knowledge for their specific operation. 6 Accordingly, we find that the PCBs are substantially transformed from the processing operations in the United States. As such, the country of origin of the PCBAs is the United States. HOLDING: Based on the information provided, the country of origin of the PCBAs is the United States. Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a CBP field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.” A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction. Sincerely, Sarah Kafka, Chief Food, Textiles, and Marking Branch 7