The country of origin, application of Section 301 trade remedies, and marking of two digital blood pressure monitors

N334538 September 5, 2023 OT:RR:NC:N3:135 CATEGORY: Origin Olga Torres Torres Trade Law, PLLC 1201 Main St, Suite 1350Dallas, TX 75202 RE:  The country of origin, application of Section 301 trade remedies, and marking of two digital blood pressure monitors Dear Ms. Torres: In your letter dated August 7, 2023, you requested a country of origin, application of Section 301trade remedies, and marking ruling on behalf of Microlife Corporation. Photographs, bills of materials, and manufacturing process steps accompanied your inquiry. A marked sample was not submitted with your request. The products under consideration are two automatic digital blood pressure monitors (the “BPMs”): 1) Model No. BP3KC1 - worn on the wrist for measurement (hereinafter referred to as the “wrist BPM”) and 2) Model No. BP3NG1 - worn on the upper arm (hereinafter referred to as the “upper arm BPM”). In both models, a Micro Controller Unit (“MCU”) connected to a miniature air pump and valve system controls cuff inflation and deflation to change cuff pressure and facilitate blood pressure measurements. The inflated cuff senses pressure waveforms generated by cardiac contraction and relaxation and transmits these waveforms via the tube to the internal pressure sensor, which provides the input signal for estimation of systolic and diastolic blood pressure via the processing unit. Both BPMs contain an acrylonitrile butadiene styrene (“ABS”) plastic case housing electronic components, an LCD screen to display the measurement, a six-volt battery power adaptor, a buzzer, and other components. For the wrist BPM, the monitoring device is locked to the cuff, whereas for the upper arm BPM, the cuff is an independent component that is not locked to the monitoring device. A summary of the manufacturing processes are provided below. MANUFACTURING PROCESS OF WRIST BPM The wrist BPM model is assembled in Vietnam using parts from China, Taiwan, Japan, and Vietnam, including the cuff made in China and a printed circuit board assembly (“PCBA”) made in Vietnam. Firmware designed in Taiwan is burned into the MCU in Vietnam.   The hardware and mechanism, as well as basic software/firmware source code are all designed in Taiwan. After completion of the design and development in Taiwan, all the manufacturing processes for the wrist BPM occur in Vietnam. The PCBA is assembled in Vietnam using components from Taiwan, China, Japan, and Vietnam. The parts of the BPM, including the MCU for running the blood pressure program, are assembled into a PCBA via Surface Mount Technology (“SMT”) and Chip on Board (“COB”) technology. The SMT machining process consists of (1) printing the solder paste on the surface of two pieces of PCB; (2) mounting 28 SMT parts in the correct position on the PCB; (3) soldering the parts to the PCB using a hot air soldering furnace; and (4) checking the welding using Auto Optical Inspection (“AOI”) equipment. Next, the COB process requires the gluing of the MCU to the PCBA and connecting the MCU to the PCBA with precision bonding equipment. After connection, AOI equipment is used to check the accuracy of the connection, then epoxy resin is used to seal the MCU and wire. Finally, the SMT and COB are processed using the In-Circuit Test and the Functional Verification Tester. Final processing of the wrist BPM occurs at another factory in Vietnam. That Vietnamese factory is responsible for inspection of all incoming materials, module processing, “program burning” and “feature option burning,” which is the key process to enable the PCBA to perform the function of the BPM, final product assembly, inspection, packaging, and marking of the wrist BPM. The module assembly process involves joining together the components into the following module blocks: 1. Lower case cover module, consisting of an LED indicator, battery spring, and buzzer; 2. Pump and air circuit path module, requiring assembly of the pump, air valve, and air circuit; 3. Upper case cover assembly, consisting of the upper cover and buttons; and 4. LCD and PCBA assembly, which is the assembled LCD and PCBA with conductive zebra paper spliced into the module with hot melt equipment. The final product assembly stage consists of (1) assembling the PCBA, air path, and case; (2) calibrating the pressure sensor; (3) a function test; and (4) pressure accuracy testing. MANUFACTURING PROCESS OF UPPER ARM BPM Similarly, the upper arm BPM hardware and basic software/firmware source code are designed in Taiwan. After the completion of the design and development in Taiwan, all the manufacturing processes for the upper arm BPM occur in Vietnam. The PCBA is assembled from components from Taiwan, China, Japan, and Vietnam in a Vietnamese factory. The parts of the BPM, including the MCU for running the blood pressure program, are assembled into a PCBA via Surface Mount Technology (“SMT”) and Chip on Board (“COB”) technology as described above. Finally, the factory ensures the SMT and COB are processed correctly using the In-Circuit Test and the Functional Verification Tester. Final processing of the upper arm BPM occurs at another factory in Vietnam. That Vietnamese factory is responsible for inspection of all incoming materials, module processing, “program burning” and “feature option burning,” finished product assembly, inspection, packaging and marking of the upper arm BPM. The module processing includes: 1. Air path module assembly, consisting of the air path, quick release valve, and slow release valve; 2. Bottom assembly, requiring the welding of flat signal cables to the PCBA; 3. Battery connector assembly, requiring the welding of the power cable to the positive/negative battery spring; 4. Pump assembly, requiring welding of the power cable with the pump and adding shock-absorbing foam to the pump; 5. LCD module assembly, consisting of the LCD and a conductive strip on the LCD holder; and 6. Upper cover module, consisting of the upper cover and I/O (on/off) buttons. The finished product assembly involves: 1. PCBA welding and assembly; 2. Calibrating the pressure sensor; 3. Assembling key materials into the lower case; 4. Assembling the air path conduit and locking the case sections; 5. Completing the device pressure calibration; 6. Testing function; 7. Testing pressure accuracy; 8.  Inspecting appearance COUNTRY OF ORIGIN AND SECTION 301 APPLICABILITY "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.” 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). 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). The issue of whether a substantial transformation occurs is determined on a case by case basis. See HQ 561353, dated September 19, 2002. HQ ruling H241177, dated December 3, 2013, states “the programming of a device that defines its use generally constitutes substantial transformation.” Customs and Border Protection (“CBP”) has consistently held that the assembly of components onto a printed circuit board is a substantial transformation. See HQ ruling 735306, dated December 21, 1993, wherein CBP stated: With respect to printed circuit boards, Customs has ruled that the complete assembly of all the components onto a printed circuit board was a substantial transformation of the printed circuit board because the assembly process was complex and involved a considerable amount of skill and time. See also, HQ ruling H302801, dated October 3, 2019, wherein CBP stated: The SMT [surface-mount technology] operations result in a new and different product with an overall use and function different from any one function of the individual components. Each individual component serves a particular purpose or function once incorporated into the PCBA. Prior to the SMT operations, these components are stand-alone, general use items. In this case, for both BPMs, the printed circuit board assembly occurs in Vietnam using surface-mount technology. The assembled PCBA constitutes a substantially transformed intermediate article. The blank MCUs are programmed in Vietnam using Taiwanese-origin firmware. The specific BPM code and function-setting data are burned on the MCU, located on the PCBA. This process enables the PCBA to perform the functions of the BPM. The programming of the MCU constitutes a substantial transformation. Additionally, the final assembly in Vietnam completes the blood pressure monitors. As such, we agree that the country of origin for the wrist BPM will be Vietnam for the purposes of marking and for the assessment of both the normal trade relations duty rate and the Section 301 duties. As the imported merchandise will not be a product of China, Section 301 duties will not apply. In the case of the upper arm BPM, the country of origin of the entire upper arm BPM for the purposes of duties (both normal trade relations duty rate and Section 301 duties) will be Vietnam. As the imported merchandise will not be a product of China, Section 301 duties will not apply. However, since the cuff is merely packaged with the monitor, the cuff does not undergo a substantial transformation. The country of origin of the cuff remains China.  Therefore, for the purposes of marking, the countries of origin of the upper arm BPM will be Vietnam and China. MARKINGThe 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 “ultimate purchaser” is defined in section 134.1(d), Customs and Border Protection (CBP) Regulations (19 CFR 134.1(d)), as the “last person in the U.S. to receive the article in the form in which it was imported.” If an imported article is to be sold at retail in its imported form, the purchaser at retail is the ultimate purchaser.As provided in section 134.41(b), Customs Regulations (19 CFR 134.41(b)), the country of origin marking is considered conspicuous if the ultimate purchaser in the U.S. is able to find the marking easily and read it without strain.With regard to the permanency of a marking, section 134.41(a), Customs Regulations (19 CFR 134.41(a)), provides that as a general rule marking requirements are best met by marking worked into the article at the time of manufacture. For example, it is suggested that the country of origin on metal articles be die sunk, molded in, or etched. However, section 134.44, Customs Regulations (19 CFR 134.44), generally provides that any marking that is sufficiently permanent so that it will remain on the article until it reaches the ultimate purchaser unless deliberately removed is acceptable.Section 134.22, CBP regulations (19 CFR 134.22), provides general rules for marking of containers or holders. Section 134.22(a), CBP regulations (19 CFR 134.22(a)), states: [w]hen an article is excepted from the marking requirements by subpart D of this part, the outermost container or holder in which the article ordinarily reaches the ultimate purchaser shall be marked to indicate the country of origin of the article whether or not the article is marked to indicate its country of origin. Pursuant to 19 U.S.C. 1304(a)(3)(D) and section 134.32(d), CBP Regulations (19 CFR 134.32(d)), articles for which the marking of the containers will reasonably indicate the country of origin of the articles are excepted from individual marking. This exception would apply, for example, in cases where the articles are imported in a properly marked container and CBP officials at the port of entry are satisfied that the ultimate purchaser will receive it in its original unopened marked container.Section 134.46, CBP Regulations (19 CFR 134.46), requires that in any case in which the words “United States,” or “American,” the letters “U.S.A.,” any variation of such words or letters, or the name of any city or locality in the United States, or the name of any foreign country or locality other than the country or in which the article was manufactured or produced, appears on an imported article or its container, there shall appear, legibly and permanently, in close proximity to such words, letters, or name, and in at least a comparable size, the name of the country of origin preceded by “Made in,” Product of,” or other words of similar meaning. In order to satisfy the close proximity requirement, the country of origin marking must generally appear on the same side(s) or surface(s) in which the name or locality or other than the actual country of origin appears.Microlife proposes to mark the wrist and upper arm BPMs with the following language, “Manufactured in Vietnam, Designed in Taiwan.” CBP has previously allowed the phrase "designed in" to be used in conjunction with country of origin information. See HQ ruling 559886, dated August 16, 1996. Since the country of origin of the wrist BPM is Vietnam, the marking of “Manufactured in Vietnam, Designed in Taiwan” or alternatively, “Made in Vietnam” is acceptable assuming it is marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the articles (or their containers) will permit and the close proximity and comparable size of 19 CFR 134.46 is met. However, the countries of origin of the upper arm BPM are determined to be Vietnam and China. It should be marked as “Monitoring device manufactured in Vietnam, designed in Taiwan; cuff made in China” or alternatively, “Monitoring device made in Vietnam; cuff made in China.” This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection 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, please contact National Import Specialist Fei Chen at fei.chen@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division