The classification and country of origin of network routers from Taiwan

N312735 July 9, 2020 CLA-2-85:OT:RR:NC:N2:209 CATEGORY: Classification, Country of Origin TARIFF NO.: 8517.62.0020, 9903.88.04 Apollo Yang Tatung Technology Incorporation 10F., No.288, Sec. 6, Civic Blvd. Xinyi Dist., Taipei City 110 Taiwan RE: The classification and country of origin of network routers from Taiwan Dear Mr. Yang: In your letter dated June 24, 2020, you requested a classification and country of origin ruling. The item concerned is referred to as a WAP-8111, CAT 4, 4G LTE, dual band Wi-Fi router. This router incorporates a 4G modem and SIM card slot/reader which allows the router to connect to a 4G LTE service provider without a wired internet connection. The user would install a SIM card into the router which would then provide connectivity to a specific 4G LTE network. The applicable subheading for the WAP-8111, CAT 4, 4G LTE, dual band Wi-Fi router will be 8517.62.0020, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Telephone sets…; other apparatus for the transmission or reception of voice, images or other data…: Other apparatus for transmission or reception…: Machines for the reception, conversion, and transmission or regeneration of voice, images or other data, including switching and routing apparatus: Switching and routing apparatus.” The general rate of duty will be Free. Regarding your country of origin determination request, it is stated that there are four main components that make up the router, the motherboard, the daughterboard (SIM), the housing/case and accessories. The motherboard is of Chinese origin and the daughterboard, housing/case and accessories are of Taiwanese origin. Within Taiwan the components are assembled into the finished router. 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.” 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, it is the opinion of this office that the Chinese origin motherboard, which is the dominant component of the router, does not undergo a substantial transformation as a result of the processing that takes place in Taiwan. The motherboard has a predetermined end use when it is exported from China and retains that identity after the processing that takes place within Taiwan. Therefore, since a substantial transformation does not occur as a result of the Taiwanese processing, the country of origin of the finished router will be the China for origin and marking purposes at time of importation into the United States. Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8517.62.0020, HTSUS, unless specifically excluded, are subject to an additional 25 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.04, in addition to subheading 8517.62.0020, HTSUS, listed above. The HTSUS is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Note cited above and the applicable Chapter 99 subheading.  For background information regarding the trade remedy initiated pursuant to Section 301 of the Trade Act of 1974, you may refer to the relevant parts of the USTR and CBP websites, which are available at https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions and https://www.cbp.gov/trade/remedies/301-certain-products-china, respectively. Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at https://hts.usitc.gov/current. 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 Steven Pollichino at steven.pollichino@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division