Country of Origin

N304035 May 15, 2019 MAR-2 OT:RR:NC:N2:208 CATEGORY: ORIGIN Mr. Michael Leightman Ernst & Young LLP 1401 McKinney Street Suite 2400 Houston, TX 77010 RE: Country of Origin Dear Mr. Leightman: In your letter dated April 19, 2019, you requested a country of origin ruling on behalf of your client, Microelectronics Technology Inc. (MTI). This request concerns the country of origin for a low noise block downconverter (LNB) specifically identified as SLIMLINE WA TRIPLE LNB, which is used for the first frequency down conversion of downlink satellite broadcast signal. According to the information provided the first two stages of the manufacturing process takes place in Taiwan. The initial stage of the manufacturing process is Flash programming, which is the downloading of software to flash devices (integrated circuits) that will be incorporated into the printed circuit board (PCB). The second stage of the manufacturing process is the Surface Mount Technology (SMT) process, which includes a series of sequential procedures where electrical components, including flash devices, resistors, transistors, diodes, etc., are permanently mounted onto bare printed circuit boards by a soldering and reflow process to create the printed circuit board assembly (PCBA). At the end of the SMT process, the product is referred as a Device Under Test (DUT). It has the characteristics and functionalities of a LNB. The next stage of the manufacturing process is the Plated Through Hole (PTH). This takes place in China. In this stage, the PCBA is permanently attached to the casting and matrix cover to form the physical structure of the final LNB. At the end of the PTH production process, the LNB becomes fully assembled. It is ready for final testing and packaging for sales to customers. MTI has two scenarios for the last stages of the production process: • In Scenario 1, the final testing will be conducted in Taiwan along with the packaging and final shipping of finished products to its US customers. • In Scenario 2, MTI will conduct the testing and packaging in China and ship the products directly to its US customers from its Chinese facility. The marking statute, section 304, 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 its container) will permit, in such a manner as to indicate to the ultimate purchaser in the United States 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 country, the NAFTA Marking Rules will determine the country of origin.” For tariff purposes, 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 upon the facts presented and the pertinent authorities, it is the opinion of this office that the PCBA, which is created in Taiwan, is the essence of the finished LNB. The assembly processes that take place in China do not result in a substantial transformation of the PCBA. Therefore, in both scenarios, the LNB would be considered a product of Taiwan and should be marked accordingly at time of importation into the United States. This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 CFR Part 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 lisa.a.cariello@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division