The country of origin and marking of an active optical cable assembly

N324639 March 28, 2022 MAR-2-85:OT:RR:NC:N2:209 CATEGORY: Marking, Country of Origin Jing Zhang Mayer Brown LLP 1999 K Street, NW Washington, DC 20006 RE: The country of origin and marking of an active optical cable assembly Dear Ms. Zhang: In your letter dated March 4, 2022, you requested a country of origin and marking ruling on behalf of your client, EverPro Technologies Company, Ltd. (Everpro) The item concerned is an active optical cable (AOC), referred to as the FIBBR F-H3M-QT. This AOC is a type of data cable that accepts an electrical signal input at an input connector, converts that signal into an optical signal, transmits the optical signal over optical fibers, and re-converts the optical signal to an electrical signal at the output connector. The components that perform the electro-optical and opto-electrical conversion functions are the HDMI transmitter printed circuit board assemblies (PCBA), commonly referred to as the “TX Module,” and the HDMI receiver PCBA, commonly referred to the “RX Module.” Production Processes PCBA Production in Thailand: The HDMI transmitter and HDMI receiver PCBAs, (the TX and RX modules), are designed in Germany and manufactured in Thailand from a bare printed circuit board (PCB) using the surface mount technology (SMT). Through this process, dozens of electrical components, all but one of which are sourced outside of China (from Thailand, Taiwan, the United States and Japan), will be surface-mounted to the PCB. Specifically, in Thailand, the bare board will be inspected first and then electronic components, such as inductors, resistors, and capacitors, will be surface-mounted to the board. Then integrated circuits and optical subassemblies, which contains optical devices such as vertical cavity surface-emitting lasers and photodiodes, will be mounted to the board using die bonding or similar processes. Next, wires connecting the electronic components will be bound to the board and firmware will be downloaded. Finally, the finished TX and RX modules will be tested, packaged and shipped from Thailand to China. Assembly Process in China: After the TX and RX modules are produced in Thailand, they will be shipped to China for assembly with components of Chinese origin. The process that takes place within China involves simple operations that consist of combining optical fibers and insulated copper wires (products of China) within a cable cover through the use of storage and take-up racks. Then the PCBAs (product of Thailand) are welded to the HDMI connectors (product of China). Next, the cable assembly is cut to the appropriate length and optically coupled and welded to the PCBAs. Finally, plastic covers are added, and the product is tested, inspected and packaged. 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 manufacturing process that takes place within Thailand to create the TX and RX modules/PCBAs, which are the dominant components and impart the essence of the finished product, is substantial and complex. The various electrical elements are transformed within Thailand into a different article with a new name, character, and use. They lose their separate identities and become an integral part of a new article as a result of the manufacturing process. The final assembly process that takes place in China simply consists of fixing components, with a predetermined end use, together and does not involve a complex assembly process. As a result, no substantial transformation takes place within China. Therefore, since a substantial transformation does not occur as a result of the Chinese manufacturing/assembly process, the country of origin for marking purposes would be Thailand at the time of importation into the United States. The AOC, referred to as the FIBBR F-H3M-QT should be legibly, conspicuously and permanently marked in accordance with the requirements of 19 U.S.C. 1304 to indicate that its country of origin is Thailand. Additionally, as the country of origin has been determined to be Thailand, the AOC, referred to as the FIBBR F-H3M-QT, would not be subject to the Section 301 trade remedies. 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