The tariff classification and country of origin of an electronic diffuser

N318984 May 11, 2021 CLA-2-85:OT:RR:NC:N2:212 CATEGORY: Classification; Origin TARIFF NO.: 8543.70.9960 Nathan Reed The Yankee Candle Company, Inc. 16 Yankee Candle Way South Deerfield, MA 01373 RE: The tariff classification and country of origin of an electronic diffuser Dear Mr. Reed: In your letter dated April 20, 2021, you requested a tariff classification and country of origin marking ruling. The merchandise under consideration is identified as the Serene Air Portable Diffuser, which is described as an electronic fragrance diffuser. The subject device consists of a plastic housing within which is a piezoelectric transducer, Printed Circuit Board Assembly (PCBA), a rechargeable lithium battery, and a holder for a fragrance oil cartridge. The diffuser is designed in such a way that when the transducer comes in contact with the wick within the fragrance oil cartridge, it vibrates at an ultrasonic frequency. This action creates micro particles that are dispersed into the air. We note that the unit does not contain a heating element or a fan. You state that the manufacturing process occurs in India with components sourced from both India and China. An unpopulated PCB is manufactured in China along with the transducer and various other parts and subsequently sent to India. In India, the PCB is populated with the necessary components through surface mount technology to create a finished PCBA. The transducer is then attached to the PCBA. The remainder of the electrical and plastic parts are then assembled and the PCBA and transducer are installed within. The finished device is then tested and packaged for export and sale. As an initial matter, we address the classification of the subject device. In your request, you suggest that the correct classification for the diffuser is 8543.70.9960, Harmonized Tariff Schedule of the United States (HTSUS). We agree. The applicable subheading for the Serene Air Portable Diffuser will be 8543.70.9960, HTSUS, which provides for “Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof: Other machines and apparatus: Other: Other: Other: Other.” The general rate of duty will be 2.6% ad valorem. 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. The “country of origin” is defined in 19 CFR 134.1(b), in pertinent part, 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). Further, 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, “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. Regarding the origin of the subject diffusers, it is the opinion of this office that the manufacturing process performed in India is significantly complex and substantially transforms the individual components into new and different articles of commerce. Through the process performed in India, including the population of the PCBA as well as the incorporation of the transducer, the Chinese components lose their individual identity and are deemed integral to the finished item. Based on the facts presented, the country of origin for the Serene Air Portable Diffuser will be India. 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 Luke LePage at luke.lepage@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division