The country of origin of TFT-LCD modules.

N325572 May 12, 2022 OT:RR:NC:N2:208 CATEGORY: Country of Origin Mr. Lucas Rock Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP 599 Lexington Ave New York, NY 10022 RE: The country of origin of TFT-LCD modules. Dear Mr. Rock: In your letter dated April 20, 2022, on behalf of InnoLux Corporation., you requested a country of origin ruling determination. There are three 10.2” FHD TFT-LCD modules at issue with this request that are all described as TFT-LCD modules that are designed for exclusive use in specific automobiles and identified separately by part numbers, DD102ZA-01C, DD102SA-01B and DD102ZA-01B. In your request, you state that the three LCD modules have an identical manufacturing process but are varied in the dimensions of the cover lens outline and the weight of the LCD modules In your submission, you state that the subject modules are comprised of various components, with major components consisting of a TFT-LCD panel cell, TFT panel source and gate Integrated Circuit (IC) drivers, Printed Circuit Board Assembly (PCBA), flex printed circuit (FPC), a backlight, and a cover glass. The process begins in Taiwan with the production of the TFT-LCD panel. First, the transistors are applied to a glass substrate then followed by the application of a photo-resistive coating. The substrate is then exposed to light and etched. This process is repeated to build the TFT circuit. Next, the color filter glass substrate is created through a step-by-step photo-resistive process of depositing a black matrix color pigmentation. The liquid crystals are then dispensed onto the panel and the two substrates are bonded together. This process creates the TFT-LCD panel cell. The TFT panel source and gate IC drivers are also produced in Taiwan. The process starts by coating photo resistors on a silicon wafer substrate disc then exposing to light, bonding, and cleaning. After the ICs are produced on the wafer substrate, the substrate is cut into chips (dice). Then, the chips will be wire bonded, packaged, and tested, thus creating an individual IC. The Printed Circuit Board Assembly (PCBA) and the glass cover are manufactured in Taiwan as well. The PCBA is produced by using electronic components such as capacitors, resistors, etc., that are sourced from China, Taiwan, USA, and Japan. The glass cover process begins with applying an ink area to a glass substrate then exposing it to the light before etching. Lastly, the TFT-LCD cells, cover glass, ICs, and PCBA are shipped to China for final standard assembly operations such as bolting and use of similar fasteners. 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 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. Accordingly, it is our opinion, that the components manufactured in Taiwan impart the essential functional components of the finished module. The manufacturing process of the TFT-LCD panel cell, TFT panel source and gate IC drivers, PCBA and glass cover is significantly complex and renders the end use of the components predetermined. Further, the assembly process performed in China is not complex enough to substantially transform any of the components 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 10.2” FHD TFT-LCD modules, part numbers DD102ZA-01C, DD102SA-01B and DD102ZA-01B, is Taiwan. 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 Lisa Cariello at lisa.a.cariello@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division