Country of origin determination of LED lighting fixtures

N314185 September 17, 2020 CLA-2 OT:RR:NC:N4:410 CATEGORY: Country of Origin Mr. Matthew Bock Middleton Shrull & Bock 100 Sylvan Road, Suite 660 Woburn, MA 01801 RE: Country of origin determination of LED lighting fixtures Dear Mr. Bock: This is in response to your letter dated August 25, 2020, on behalf of your client Agnetix, Inc. requesting a country of origin determination for LED lighting fixtures. The merchandise under consideration is referred to as A3 series. You state that the A3 series is a highly efficient, high-performing horticultural LED light that reduces HVAC and dehumidifier costs by efficiently removing heat from inside the room. The A3 contains three LED printed circuit board assemblies (PCBAs) bolted to a “chassis” composed of an aluminum extrusion and end caps, which contains a control/power supply and network/communications board, as well as various connectors. An LED PCBA is a complete light source in the A3 series, which consists of a PCBA and the LEDs. It also controls and allows all A3 functionality, such as light controls, temperature management, room management, data management, etc. The A3 series includes several variants which have different LED configurations, providing various spectra, colors, and efficacies. The chassis of the A3 is identical across all versions of the product, whereas the type of LED PCBA installed is the primary determinant of the characteristics and cost of the finished product. The provided cost material analysis information shows that the LED PCBA component cost for all versions represents between 39% and 78% of the value of the component materials (including packaging) in the finished product, and 37% to 76% of the finished product costs (also including packaging). In your submission, you present a scenario, in which the LED PCBAs will be manufactured in Mexico, Korea, or Vietnam using LEDs manufactured in various countries and other components sourced in Mexico or elsewhere. All other components, such as the housing, power supply, etc., will be purchased from manufacturers in China, where final assembly of the A3 will occur. Inspection and testing will then be conducted in China, after which finished A3 products will be packaged for exportation to the United States. You also specify that the LED PCBA production in Mexico, Korea or Vietnam will include assembling the LEDs of various country of origins into the PCBAs of Mexican, Korean or Vietnamese origin so that, once assembled, each finished LED PCBA will be a complete light source with connectors to allow for later hand-attachment via cables and screws to the chassis. The clear cover lens and its gasket will be attached with additional screws, leaving the LED PCBA clearly visible. All of the LED PCBAs will be manufactured using a process of surface mount technology (SMT), and will utilize a metal core printed circuit board (PCB) that provides superior thermal characteristics for removing the heat generated by the LEDs when in operation. The manufacturing of the LED PCBAs will also include a proprietary binning control process that allows consistent efficacy and spectrum PCBAs to be manufactured from the varying supply of LEDs received from the LED manufacturers and suppliers. Either the manufacturing facility will purchase the LEDs necessary for the PCBAs, or Agnetix will purchase and consign them to the PCBA manufacturing facility. The manufacturing facility will provide Agnetix with detailed information from each spool of LEDs (known as the binning information) about the received inventory. Agnetix will perform a bin configuration process at their offices in the United States, whereby the various spools of LEDs will be assigned to be used together in the manufacture of a series of LED PCBAs in a particular arrangement on each PCBA. The LED PCBA assembly instructions will include instructions as to which LED spool should be used in each LED location on the PCB, as well as spool loading instructions for the operators. The operator at the manufacturing facility will load the spools of LEDs containing the proper binning information in the appropriate feeder locations. Each PCBA will generally feed from between four and nine spools of LEDs of each color, with larger numbers of bins assigned to LED colors that experience larger variation (most notably white LEDs). Once LED assignment is complete, PCBs will be inspected and screen printed with solder paste. All LEDs, connectors, and other components will then be precisely placed in their intended locations on the PCB. The PCBs will then undergo a reflow process whereby the precisely screened solder will be melted, thereby permanently attaching the LEDs and other components to the PCB. The resulting LED PCBA will be inspected by both automated machinery as well as trained operators to verify proper soldering. The LED PCBAs will generally be manufactured on panels containing several individual LED PCBAs per panel, and will then be separated into individual LED PCBAs, tested, and packed into carriers for shipment to the final assembly location. Each A3 chassis will be composed of three identical LED PCBAs with the same country of origin (Mexico, South Korea or Vietnam) that are assembled in China, along with various mechanical parts. Chassis assembly will occur in China, where the power/control board, network board, and several cables will be connected and slid into the extruded aluminum housing. Connectors will be inserted into the end caps that will be secured with screws. The chassis assembly will be identical for all versions of the A3 product. The chassis assembly will then proceed to final assembly, where the LED PCBAs will be added, along with the plastic wire covers and clear cover lenses. Both will be assembled to the chassis with screws. The product will then be tested and operated for four to twenty-four hours (the “burn-in” period). The A3 will then be packaged to a box ready for exportation. All other components, such as the chassis, etc., will be purchased from manufacturers in China, where final assembly of the A3 will occur. Inspection and testing will then be conducted in China, after which finished A3 products will be packaged for exportation to the United States. Section 134.1(b), Customs 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”. In order to determine whether a substantial transformation occurs when components of various origins are assembled into completed products, CBP considers the totality of the circumstances and makes such determinations on a case-by-case basis. 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, the extent and nature of post-assembly inspection and testing procedures, and worker skill required during the actual manufacturing process will be considered when determining whether a substantial transformation has occurred. No one factor is determinative. Based on the information that you have provided, we are of the opinion that the LED PCBA is the single most important and critical component. It possesses the predetermined end-use for the making of the A3 LED light fixture. The use of the article has already been pre-determined upon importation to China. It controls and allows all A3 functionality and accounts considerably large in cost percentage. The assembly operations performed in China do not substantially transform the non-Chinese originating components into Chinse products. The assembly of the individual components to produce the finished light fixtures in China does not create a new and different article of commerce with a distinct character and use that is not inherent in the components imported into China. The LED PCBAs do not lose their individual identities as a result of the assembly process in China. Accordingly, it is of the opinion of this office that the country of origin for the A3 series will be the country in which the LED PCBAs were manufactured, i.e., Mexico, Korea, or Vietnam. 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 Michael Chen at michael.w.chen@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division