The country of origin of ForeSight tissue oximetry sensors

N335974 November 8, 2023 OT:RR:NC:N3:135 CATEGORY: Origin Ryan Supek Measurement Specialties Inc. 1000 Lucas WayHampton, VA 23666 RE:  The country of origin of ForeSight tissue oximetry sensors Dear Mr. Supek: In your letter dated October 18, 2023, you requested a country of origin ruling on two ForeSight tissue oximetry sensors for the purpose of the Section 301 trade remedy duties.  Additional information was provided by email dated October 20 and October 27, 2023. The products identified in your letters are ForeSight Large Sensor (PN 20020033-00) and ForeSight Medium Sensor (PN 20020032-00).  Both sensors, as imported, consist of a flexible printed circuit board, two photodiodes, an LED emitter, a 1024 bit 1-wire EEPROM chip, a molded plastic top guide and bottom guide, a foam top cover, a bottom foam laminate, a foam gasket, adhesives, a release liner, various tapes, and labels.  The Large Sensor also contains a plastic stiffener.  Both are developed specifically to use with the Hemosphere medical monitoring platform, which delivers advanced pressure, flow, and tissue oximetry insights from a single, comprehensive monitor.  The sensor and the Hemosphere monitor are collectively known as the ForeSight Tissue Oximetry system.  The sensor will be applied directly to the patient’s skin.  It will generate light and convert the reflected light signal into a current signal, then transfer the current signal through the circuit in the flexible printed circuit board assembly of the sensor to the monitoring system via a separate cable (not part of this ruling request).  The system will process the current signal and calculate the StO2 percentage value in human patients. The emitter consists of 5 LED chips with different wavelengths.  It will emit lights alternatively to the human tissue.  The first photodiode, a deep detector, will receive the reflected lights with deeper penetration and transfer the light received to an electrical signal.  The second photodiode, a shallow detector, is smaller and functions similarly, receiving reflected lights with shallow penetration and transferring them to an electrical signal.  The electrical signal is transmitted as a current by the sensor into the monitoring system through the circuit in the printed circuit board assembly.  The monitor provides proactive and continuous hemodynamic monitoring of critically ill and surgical patients.  You propose two scenarios of the manufacturing process for each sensor.  Scenario 1 – Large Sensor – the PCBA will be completed in Mexico The emitter, two photodiodes, and the flexible printed circuit board are made in China.  The EEPROM chip is made in Thailand or the Philippines.  These components will be sent to Mexico where they will be assembled to create a printed circuit board assembly (PCBA) using a surface mount technology (SMT) manufacturing process.  A Chinese plastic stiffener will be added to the PCBA in Mexico.  The PCBA will be sent back to China for final assembly and testing.  In China, the foam top cover, bottom foam laminate, and additional components will be manually assembled onto the PCBA. Then, the plastic connector guides will be ultrasonically welded onto the assembly to make a sensor.  The sensor will undergo the programming and testing phase prior to packaging.  The goal of this phase will be to evaluate, calibrate, and program the ForeSight sensor after it is fully built to be suitable for clinical use.  The sensor will be run through a test station that was originally developed and programmed in the US.  The test station will perform three functions: Component verification: corroborate that all the components in the sensor are functional and behave within a specified range. Component calibration: quantify variations from nominal values for those parameters that are critical to the system. Sensor Programming: proper identification of each sensor will be programmed on their EEPROM component as well as the calibration values and an overall test status. The programming of the EEPROM will also be used for authentication purposes when used in the end system.  After that, the sensor will be packaged for shipping. Scenario 2 – Large Sensor – the PCBA will be completed in Malaysia All the steps in this scenario will be the same as Scenario 1, except that the PCBA is made in Malaysia using the SMT manufacturing process. Scenario 3 – Medium Sensor – the PCBA will be assembled in Mexico In this scenario, the flexible printed circuit board will be sourced from China.  The emitter will be sourced from Japan and the EEPROM Chip will be made in Thailand or the Philippines (depends on the batch).  These components will be assembled in Mexico using the SMT manufacturing process to create an incomplete PCBA.  The PCBA will be sent to China where two China-origin photodiodes will be attached to the unfinished PCBA from Mexico with conductive epoxy.  They will undergo a wire bonding and potting/curing process.  After that, the PCBA is completely assembled and fully-functional.  Then, the foam top cover, bottom foam laminate, and additional components will be manually assembled onto the PCBA assembly.  The plastic connector guides will be ultrasonically welded onto the assembly to make a sensor.  The sensor will undergo the same programming and testing phase as described in Scenario 1 prior to packaging.  After that, the sensor will be packaged for shipping. Scenario 4 – Medium Sensor – the PCBA will be assembled in Malaysia All the steps in this scenario will be the same as Scenario 3, except that the incomplete PCBA is made in Malaysia using the SMT manufacturing process. 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." When determining the country of origin for purposes of applying Section 301 measures, the substantial transformation analysis applies. See, e.g., Headquarters Ruling (“HQ”) H301619, dated November 6, 2018. 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. The U.S. Court of International Trade has indicated that “[f]or courts to find a change in character, there often needs to be a substantial alteration in the characteristics of the article or components.”  See Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308, 1318 (2016) (citing Ran-Paige Co., Inc. v. United States, 35 Fed. Cl. 117, 121 (1996) and Nat’l Hand Tool Corp. v. United States, 16 Ct. Int’l Trade 308, 311 (1992)).  Courts have also considered “the ‘essence’ of a completed article to determine whether an imported article has undergone a change in character as a result of post importation processing.”  Id. (citing Uniden America Corp. v. United States, 120 F. Supp. 2d 1091, 1095-1098 (Ct. Int’l Trade 2000) and Uniroyal, Inc., 542 F. Supp. 1030).  In Uniroyal, Inc., 542 F. Supp. at 1029-1030, the court determined that the shoe upper was “the very essence of the completed shoe” and that the attachment of the imported shoe uppers to an outer sole in the United States was a “minor manufacturing or combining process which leaves the identity of the upper intact,” therefore, the shoe upper was not substantially transformed in the United States. 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 than 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 Scenarios 1 and 2, the SMT operations in Mexico or Malaysia result in a substantial transformation of the components from China, Thailand, or the Philippines into the PCBA, which is a new and different article of commerce with a new name, character, and use distinct from the individual components and the blank flexible printed circuit board.  The country of origin of the PCBA is Mexico or Malaysia.  The final assembly in China consists of minor assembly and finishing operations that do not result in a substantial transformation of the PCBA.  You state the programming is related to authentication, calibration, and test purposes and provides no significant operational function to the sensor.  The programming or testing phase does not substantially transform the PCBA either.  Thus, no substantial transformation will occur in China.  The last substantial transformation of the sensor takes place in Mexico or Malaysia where the SMT operations occur.  Furthermore, the PCBA forms the “brain” of the sensor and determines how the sensor operates.  It imparts the essence of the sensor.  As such, the PCBA of the sensor determines the country of origin of the sensor.  Accordingly, in Scenario 1 and 2, the country of origin of the sensor for the purpose of the Section 301 trade remedy duties will be Mexico and Malaysia, respectively.  It will not be subject to additional duties under Section 301 of the Trade Act of 1974, as amended, upon importation into the United States. In Scenarios 3 and 4, the PCBA will be populated in two different countries.  The individual components (emitter, flexible printed circuit board, and EEPROM chip) will be assembled into a PCBA using the SMT manufacturing process in Mexico or Malaysia.  The PCBA is mostly complete and has a pre-determined end-use as a part of the sensor.  It will be sent to China for further processing.  Adding two photodiodes to the PCBA with conductive epoxy and performing a wire bonding and potting/curing process does not render the Mexican or Malaysian-origin PCBA into a product with a new name, character, or use.  Same as Scenarios 1 and 2, the final assembly and the programming or testing phase do not substantially transform the PCBA.  The last substantial transformation of the sensor takes place in Mexico or Malaysia where the SMT operations occur.  Furthermore, the PCBA forms the “brain” of the sensor and determines how the sensor operates.  The Mexican or Malaysian-origin PCBA is mostly complete as imported into China.  As such, the country of origin for the sensor is where the SMT operations occur.  Accordingly, in Scenarios 3 and 4, the country of origin of the sensor for the purpose of the Section 301 trade remedy duties will be Mexico and Malaysia, respectively.  It will not be subject to additional duties under Section 301 of the Trade Act of 1974, as amended, upon importation into the United States. 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 the 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 Fei Chen at fei.chen@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division