The country of origin and application of Section 301 trade remedy of a controller from Serbia

N302824 March 20, 2019 CLA-2-85:OT:RR:NC:N2:220 CATEGORY: Origin Thomas Keating Hodes Keating & Pilon 134 North LaSalle Street Suite 1300 Chicago, Illinois 60602 RE: The country of origin and application of Section 301 trade remedy of a controller from Serbia Dear Mr. Keating: In your letter dated January 2, 2019 you requested a ruling on the country of origin and application of Section 301 additional duties for an actuator controller on behalf of your client, Johnson Electric North America. The subject controller consists of a printed circuit board (PCB) assembly containing capacitors, an application specific integrated circuit (ASIC), and a bare board. The stated function of the subject PCBA is to electrically control a motorized actuator for a vehicle’s ventilation system. You indicate that the PCB is a product of China, the ASIC a product of Korea, one capacitor a product of Mexico, and one capacitor a product of Japan. All of the components are said to be assembled onto the PCB by a surface mount solder machine in Serbia. In your request you provided a brief description of the manufacturing process for the controller which includes preparation of the PCB, the soldering of the ASIC and the capacitors onto the board, laser etching for traceability, and quality control. With regard to your request for the appropriate country of origin marking of the subject controller PCB assembly, 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 U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or 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. The regulations implementing the requirements and exception to 19 U.S.C. § 1304 are set forth in Part 134, Customs and Border Protection Regulations (19 C.F.R. Part 134). 19 C.F.R. § 134.1(b) provides in pertinent part as follows: Country of origin means 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; As stated in HQ 735009 dated July 30, 1993, “The country of origin is the country where the article last underwent a “substantial transformation”, that is, processing which results in a change in the article's name, character, or use”. Customs and Border Protection (CBP) maintains, based on United States v. Gibson-Thomsen Co., 27 C.C.P.A. 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), that “A substantial transformation occurs when an article emerges from a manufacturing process with a name, character, and use that differs from the original material subjected to the processing.” 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. See Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983). Further, in Texas Instruments Inc. v. United States, 681 F.2d 778 (Fed. Cir. 1982), the court implicitly found that the assembly of three integrated circuits, photodiodes, one capacitor, one resistor, and a jumper wire onto a flexible circuit board constituted substantial transformation. In determining the origin of the subject controller PCB assembly, noting the similarity with Texas Instruments, the SMT manufacturing process performed in Serbia is one that substantially transforms the individual electrical components and bare printed circuit board into a new article. As such, the country of origin of the controller PCB assembly will be Serbia. Furthermore, it is the view of this office that the controller PCB assembly is not subject to the Section 301 trade remedies as provided for under 9903.88.03, Harmonized Tariff Schedule of 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 karl.moosbrugger@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division