The country of origin of an LCD module

N319770 June 10, 2021 CLA-2-90:OT:RR:NC:N2:212 CATEGORY: Country of Origin Ashley Hong Niss International Transport USA Inc. 1540 West 190th Street Torrance, CA 90501 RE: The country of origin of an LCD module Dear Ms. Hong: In your letter dated May 31, 2021, you requested a country of origin ruling on behalf of your client, Stanley Electric Sales of America, Inc. The merchandise under consideration is described as an LCD module, which is comprised of a glass sandwich injected with liquid crystals, polarizer, diffuser, and flexible printed circuit (FPC) connector. No size dimensions are defined for the finished module. The subject module is meant to be used as a display device after inclusion within a variety of end units. In your request, you state that the manufacturing process begins in China where strips of glass are cut to size and placed into fixtures. The liquid crystals are then injected between the two strips before the unit is sealed and cut into the final desired size. This glass segment is then sent to Thailand for final processing. In Thailand, the segment is cleaned and a polarizer film is added to the front and back. The FPC connector is then adhered to the back before the finished unit is tested for function and packaged to be shipped to the U.S. 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 country of origin of the subject modules, it is our opinion that the segment with the liquid crystals manufactured in China imparts the essential functional component of the finished module. The manufacturing process in China renders the end-use of the segments predetermined as they could not be used for any other purpose. Further, the additional steps performed in Thailand would not substantially transform the LCD segment into a new and different article of commerce with a name, character, and use distinct from that of the exported good. Therefore, based upon the facts presented, the country of origin of the LCD module 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 Luke LePage at luke.lepage@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division