The country of origin of a bill validator

N350814 July 17, 2025 OT:RR:NC:N1:105 CATEGORY: Origin Thomas Pennington-Brookfield Innovative Technology Limited Innovative Business Park, Derker Street Oldham OL14EQ United Kingdom RE: The country of origin of a bill validator Dear Mr. Pennington-Brookfield: In your letter dated July 1, 2025, you requested a country of origin ruling on a bill validator. Descriptive literature was provided for our review. The item under consideration is described as the NV200 bill validator, which is a banknote authentication device used to verify the authenticity of paper currency and detect security features embedded in genuine banknotes. The device helps prevent the acceptance of counterfeit money by businesses and banks. The bill validator is completely assembled in China from numerous components of predominately Chinese origin. These components include the printed circuit board assemblies (PCBAs), the head (which consists of drives and cable assemblies), the inner (which consists of smaller drives, gears, and cranks), the chassis, and the bezel. Only a few components that make up the head are other than Chinese components including the Taiwanese motor cable and motor cable assembly, German drawn cup holder, and United Kingdom (UK) disk pin. However, each of these items is transformed when creating the head in China. After assembly, the validator is exported from China to the UK where UK origin proprietary software is installed and tested. The programming operation in the UK includes compiling, customizing, debugging, and validating code on each unit. Additionally, each unit is tested with real banknotes to ensure functionality. This process requires specialized test rigs which are used to validate sensor calibration and performance. The software is securely programmed into the device’s flash memory, making it non-modifiable without rendering the device non-functional. Additionally, source code is compiled to object code (the compilation process that transforms human-readable instructions into a machine-understandable format), which can then be further processed to create an executable program), then linked with the dataset before being applied to each unit. The software then further customizes the code on each unit to the customer’s requirements, and each unit is calibrated to allow for sensor variations. In your letter, you have provided three separate manufacturing scenarios. In scenario one, the imported bill validators are assembled in China from components of Chinese origin. The proprietary software is then downloaded in the UK and the bill validators are tested before being shipped to the United States. The software in this scenario is developed in the UK. In scenario two, all assembly continues to be done in China, however, the standard firmware and datasets are also applied in China to allow testing of the units with dummy bank notes. This firmware is then removed prior to shipping to the UK, therefore the finished unit is shipped to the UK with no firmware. In the UK, the relevant firmware and dataset is applied along with final testing and configuration before shipping. In scenario three, the main PCBA is manufactured in the UK instead of China and final assembly is completed in the UK in addition to the firmware and dataset being added. When determining the country of origin, the substantial transformation analysis is applicable. See, e.g., Headquarters Ruling Letter H301619, dated November 6, 2018. 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, 681 F.2d 778 (C.C.P.A. 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). Based upon the facts presented, it is the opinion of this office that the assembly of the bill validator in China, in scenarios one and two, provides the essence of the finished bill validator. The item can only be used as a bill validator when it leaves China, and the addition of the proprietary software only enhances the usability. The addition of the software, calibration and testing performed in the UK does not substantially transform the article into a new and different article with a name, character, and use different than when it leaves China. Accordingly, the origin of the bill validator for scenarios one and two will be China. For scenario three, the creation of the PCBA in the UK using surface mount technology along with the addition of the firmware, transforms the individual Chinese components into a bill validator with a new name, character, and use, different from that possessed by the article prior to the processing. The assembly process performed in China then enhances the use of the PCBA but does not substantially change the ability to verify the authenticity of paper currency. Accordingly, the origin of the bill validator for scenario three will be the United Kingdom. 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 Jason Christie at jason.m.christie@cbp.dhs.gov. Sincerely, (for) James Forkan Acting Director National Commodity Specialist Division