The country of origin and marking of active optical cables and optical transceivers

N319011 May 4, 2021 MAR-2-85:OT:RR:NC:N2:209 CATEGORY: Marking, Country of Origin Taeyong Kim Optomind Inc. 16, Deogyeongdaero 1556, B-301, Yeongtong-gu Suwon, 16690 South Korea RE: The country of origin and marking of active optical cables and optical transceivers Dear Taeyong Kim: In your letter dated April 21, 2021, you requested a country of origin and marking ruling. The items concerned are referred to as active optical cables and optical transceivers. Both active optical cables and optical transceivers are used for data transmission between two network devices such as servers, switches, or storage devices. The key difference between the active optical cables and optical transceivers is that the active optical cables incorporate a fiber optic cable, connecting the two optical transceiver modules on each end. The optical transceivers do not incorporate an optical cable. The production of active optical cables and optical transceivers are carried out in two phases, the upstream production, and the cabling/assembly production. The upstream production is carried out within South Korea. It involves the manufacture of the optical engine which is a printed circuit board assembly (PCB assembly). The upstream production that takes place in South Korean consist of the following: PCB design SMT/PCBA manufacturing Tx/Rx chipset die bonding to PCBA VCSEL/PD die bonding Wire bonding Firmware writing Inspection Packaging and shipping The cabling/assembly process is carried out within Vietnam. It consists of the following: Cable cutting Ribbonizing Optical coupling Casing Testing Inspection Packaging and 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 upstream production, which takes place within South Korea, imparts the essential character to the active optical cables and optical transceivers. The optical engines (PCBAs) are the dominant component of each product, as they form the actual transceiver module. The optical engines (PCBAs) manufactured within South Korean do not undergo a substantial transformation as a result of the manufacturing process that takes place in Vietnam. They retain their identity as optical engines with a predetermined end use. Therefore, since a substantial transformation does not occur as a result of the Vietnamese manufacturing/assembly process, the country of origin for origin and marking purposes will be South Korea 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 Steven Pollichino at steven.pollichino@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division