The country of origin of vaping control units

N334757 August 28, 2023 CLA-2-85:OT:RR:NC:N2:212 CATEGORY: Country of Origin Lynlee Brown Ernst & Young LLP 4365 Executive Drive, Suite 1600San Diego, CA 92122 RE:  The country of origin of vaping control units Dear Ms. Brown: In your letter dated August 16, 2023, you requested a country of origin ruling on behalf of your client, Nexify, Inc. There are five items at issue with this request, which are all described as electronic vaping control devices. The five are identified as follows: LUXE X, LUXE XR, XROS 1, XROS 2, and XROS 3. You state that the five versions function virtually identically with only slight differences in power capacity, air flow, and additional plastic or metal pieces. In sum, the subject devices consist of a Printed Circuit Board Assembly (PCBA) and a rechargeable battery within a plastic enclosure. The device further incorporates an LED light, magnets, plugs, gaskets, and various other small components. You state in your request that the subject control devices are attached to a mouthpiece after importation to create a finished personal vaporization device. In the imported condition, the subject device only powers and controls the vaporization. A mouthpiece, which will be added after importation, contains the substance and heating element and allows the user to draw the vapor. We further note that the mouthpiece is not subject to this request. The manufacturing process is, again, substantially similar among all five items and is described in the following. In Indonesia or Vietnam, the PCBA is created, via Surface Mount Technology (SMT), and populated with a microcontroller and various resistors, capacitors and other electronic components. This PCBA is then tested and packaged for shipment to China. In China, the rechargeable battery is placed within a battery cell bracket and then combined with the PCBA. Pogo pins are then soldered to the end of the PCBA wires before this subassembly is further placed within a plastic enclosure and positive and negative electrodes are added to each end along with the LED indicator light. The finished device is then tested for functionality and packaged for shipment to the United States. 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 origin of the subject control devices, it is the opinion of this office that the control PCBA is the essential component of the finished article. Further, the creation of the PCBA in Indonesia or Vietnam renders its end use predetermined and all subsequent assembly performed in China is not significantly complex to change its name, character, or use. As such, based upon the facts presented, the origin of the LUXE X, LUXE XR, XROS 1, XROS 2, and XROS 3 vaping control devices will be Indonesia or Vietnam. The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in Title 19, Code of Federal Regulations (CFR), Section 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, whether directly, by reference, or by implication, is accurate and complete in every material respect. In the event that the facts are modified in any way, or if the goods do not conform to these facts at time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and submit a request for a new ruling in accordance with 19 CFR 177.2. Additionally, we note that the material facts described in the foregoing ruling may be subject to periodic verification by CBP. 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 Luke LePage at luke.lepage@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division