The country of origin and marking of ceramic multilayer capacitors

N316237 December 17, 2020 MAR-2-85:OT:RR:NC:N2:209 CATEGORY: Marking, Country of Origin Jonathan Wiens PricewaterhouseCoopers LLP 1420 Fifth Avenue Seattle, Washington 98101 RE: The country of origin and marking of ceramic multilayer capacitors Dear Ms. McCadney: In your letter dated December 02, 2020, you requested a country of origin and marking ruling on behalf of your client, Samsung Electro-Mechanics Co., Ltd. The items concerned are multilayer ceramic capacitors (MLCCs). The production process for theses capacitors is divided into two phases, the front-end production process, which occurs in China and the back-end process which occurs in the Philippines. The front-end process forms the layered ceramic/conductor structure. The number of layers will affect the capacitance of the item. The front-end manufacturing process that takes place within China consist of the following: Batch Mixing. Casting. Screen Printing. Stacking. Lamination and cutting. Bake-out /Firing. Tumbling. Next the ceramic/conductor blocks are shipped to the Philippines for the backend manufacturing process. Within the Philippines the ceramic/conductor blocks have their external conductors added (terminations) and are sorted, inspected, tested and packaged. The manufacturing process that takes place in the Philippines includes the following: Termination. Termination Firing. Plating. Sorting and Inspection and Testing. Taping to reels for shipping. A complete manufacturing process description and explanation has been provided. 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.” 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 front-end manufacturing processes that take place within China imparts the dominant charactistics to the capacitors. The Chinese manufactured ceramic blocks, which contain the specific number of ceramic/electrode layers necessary for the intended end use (number of layers determines the capacitance of the device), do not undergo a substantial transformation as a result of the manufacturing process that takes place in the Philippines. The ceramic blocks have a predetermined end use at time of export from China. The addition of the external electrodes, which takes place in the Philippines, does not effect a substantial transformation. For origin and marking purposes the country of origin of the capacitors will be China. 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