The country of origin of switching power supplies from Vietnam

N304854 July 8, 2019 CLA-2-85:OT:RR:NC:N2:220 CATEGORY: Origin Ken Kao High Power Electronic Co., Ltd 6F-6, No.21, Lane 583, Ruiguang Rd. Nei Hu Dist., Taipei 11492 Taiwan RE: The country of origin of switching power supplies from Vietnam Dear Mr. Kao: In your letter dated June 18, 2019 you requested a country of origin ruling. There are three switching power supplies under consideration that are identified as HP1-J600GD-F12S, HP1-J650GD-F12S, and HP1-J800GD-F12S. Each power supply is intended to be used with a desktop personal computer and is assembled in Vietnam from component materials that are sourced from China. In your request, you state that the power supplies are assembled in Vietnam by wave soldering components, such as resistors, capacitors, integrated circuits, fuses, diodes, etc., onto a bare printed circuit board (PCB). Once the board is completed and functional tested, the PCB assembly is mounted inside a power supply enclosure, a fan is installed, various wiring and connectors are attached, and the finished product is quality control tested again to ensure operability in harsh environments. With regard to the origin of the switching power supplies, 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 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 country, the NAFTA Marking Rules will determine the country of origin.” 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). Additionally, in Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308 (2016), the Court of International Trade (“CIT”) interpreted the meaning of “substantial transformation” as used in the Trade Agreements Act of 1979 (“TAA”) for purposes of government procurement. In Energizer the court reviewed the “name, character and use” test in determining whether a substantial transformation had occurred in determining the origin of a flashlight, and reviewed various court decisions involving substantial transformation determinations. The court noted, citing Uniroyal, Inc. v. United States, 3 C.I.T. 220, 226, 542 F. Supp. 1026, 1031, aff’d, 702 F.2d 1022 (Fed. Cir. 1983), 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 Corp. v. United States, 16 C.I.T. 308, 310, aff’d 989 F.2d 1201 (Fed. Cir. 1993). 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. Based upon the facts presented and the pertinent authorities, it is the opinion of this office that the assembly process described above results in a substantial transformation of the Chinese components into a new and different article of commerce with a name, character, and use distinct from the individual components used in the production of the power supplies. As such, the switching power supplies HP1-J600GD-F12S, HP1-J650GD-F12S, and HP1-J800GD-F12S are considered a product of Vietnam for origin and marking purposes at the time of importation into 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