The country of origin of a banknote counter

N343175 October 25, 2024 OT:RR:NC:N1:118 CATEGORY: Origin Aaron Marx Crowell & Moring, LLP 1001 Pennsylvania Ave. NWWashington, DC 20004 RE:  The country of origin of a banknote counter Dear Mr. Marx: In your letter dated October 9, 2024, on behalf of your client, Giesecke+Devrient Currency Technology America, Inc., you requested a ruling on the country of origin of a ProNote 1.5 banknote counter.  The banknote counter will be manufactured in India from components made in various countries. The ProNote 1.5 uses sophisticated sensor technology in a compact design measuring 335 mm x 280 mm x 270 mm.  It is used in industry sectors such as cash centers, banks, retailers, and casinos, where the processing of banknotes entails stringent requirements, such as counting, sorting, and counterfeit recognition. You state in your submission that the Indian producer manufactures the machines using parts and subassemblies from various countries.  These sub-assemblies include, among others, the Control Panel, Integrative Power Supply, Keyboard, Top Cover, and Main Assembly.  The Indian producer also purchases certain subassemblies from a Chinese supplier for incorporation into the final machine. The Indian producer also makes nine printed circuit board assemblies (“PCBAs”) from individual components.  The PCBAs are the Main Board Assembly, Core Board Assembly, Secure Digital (“SD”) Card Assembly, Contact Image Sensor (“CIS”) Transfer Board, Motor Control Board, Magnetism Board, Display Control Board, External Interface Board, and Power Switching Board. You further attest that the manufacturing process primarily falls into three major phases.  First, certain components are manufactured in China for use in the final assembly.  Those components include the Main Body Subassembly, Top Cover Subassembly, Control Panel Subassembly, and other minor components.  These Chinese components are shipped to India for assembly into the final machine.  In the second phase, the nine PCBAs are manufactured in India from imported components.  The function of each PCBA is identified below: Main Board Assembly: handles sensor signal switching, signal pre-processing, power conversion and other functions; Core Board Assembly: the “motherboard” of the machine, it is responsible for information collection, computing and operation of the whole machine; SD Card Assembly: connects the system with the SD card and upgrades the system software via the SD card; CIS Transfer Board: power conversion for CIS sensors and light source control; Motor Control Board: processes the motor control signal from the Core Board Assembly to control the feeding motor, channel motor and commutator; Magnetism Board: controls the magnetic head power supply, magnetic signal amplification, and infrared signal transfer; Display Control Board: handles communication between the Main Board Assembly and the user interface display and control buttons; External Interface Board: handles data transfer between the external display, serial port, printers, network, and USB signals; Power Switching Board: handles the conversion from alternating current (“AC”) to direct current (“DC”) to provide low-voltage DC power supply for the control circuit of the whole machine. You state that the assembly process for the PCBAs include several intricate stages, reflecting high to medium complexity and requires specialized technical expertise. In the third phase of production, the banknote counter is assembled in India from components sourced in various countries.  The transfer of the assembly process from China to India is stated to be a twelve-month long project, involving multiple stakeholders, the creation of new procedures and training of new employees, and purchase of tooling and machinery. Regarding your request for the appropriate country of origin for the finished banknote counter, 19 C.F.R. § 134.1(b) provides in pertinent part as follows: Country of origin means 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; The test for determining whether a substantial transformation will occur is whether an article emerges from a process with a new name, character, or use, different from that possessed by the article prior to processing.  See Texas Instruments Inc. v. United States, 69 C.C.P.A. 151 (1982).  This determination is based on the totality of the evidence.  See National Hand Tool Corp. v. United States, 16 C.I.T. 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993). In order to determine whether a substantial transformation occurs when components of various origins are assembled into completed products, all factors such as the components used to create the product and manufacturing processes that these components undergo are considered in order to determine whether a product with a new name, character and use has been produced.  No one factor is decisive, and assembly operations that are minimal will generally not result in a substantial transformation.  Regarding the finished banknote counter, it is our view that the manufacturing and assembly operations done in India constitute a substantial transformation of the raw materials and foreign subassemblies.  Although most of the raw material components of the banknote counter originate in China, the manufacturing process is complicated and requires specialized manufacturing and machines.  The imported materials used to manufacture the ProNote 1.5 do not have the essential character of a banknote counter and have no functionality without the PCBAs, which are manufactured in India.  It is therefore the opinion of our office that the country of origin of the ProNote 1.5 banknote counter is India. 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 Anthony Grossi at anthony.e.grossi@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division