The country of origin marking of Tracker Beacons

N263718 May 4, 2015 MAR-2-85:OT:RR:NC:N1:112 CATEGORY: Marking Michael V. Cerny Attorney Cerny Associates, P.C. 24 Smith Street Building 2, Suite 102 Pawling, NY 12564 RE: The country of origin marking of Tracker Beacons Dear Mr. Cerny: In your letter dated April 14, 2015, you requested a ruling on behalf of your client, Backcountry Access Inc. as to whether U.S. Country of Origin could be claimed for the avalanche tracking beacons. You state that the components used in the assembly of the beacons are sourced from China, while the assembly, programming, and quality control testing is performed in the U.S. A sample was provided with your letter for review. There are three models of Tracker Beacons submitted for consideration: the Tracker DTS, the Tracker2, and the Tracker3. All of the beacons operate in a similar fashion with the differences between them being transmission and reception ranges, number of antennas, multiple burial detection, and physical sizes. Each of the beacons are equipped with a transmitter, which emits a pulsed radio signal that can be detected by other transceivers, and a receiver that detects and provides directional indicators to locate other beacons. In use, a person wearing the tracking beacon who experiences a snow avalanche and is trapped can be located and rescued. Conversely, search and rescue personnel can use tracking beacons to locate trapped victims wearing similar devices. Your client imports all of the parts necessary to assemble the beacons at its manufacturing facility in the U.S. The major components for the beacons consist of printed circuit board assemblies (PCBA), molded plastic housings, batteries, a gasket, a holster with lanyard, and assembly hardware. You state that the PCBAs containing the processor and transmission/reception components are non-functional until the time they are programmed and tuned. For the purposes of this review, all assembly components are considered to be of foreign origin. Upon importation, the PCBAs are loaded with U.S. developed firmware and operating software by connecting them to a Peripheral Interface Controller that allows for the software to be embedded on each device. The firmware and software code provides the basic drivers that allow the microprocessor to communicate with the components performing the transmit/receive functions as well as the visual and audible notification features. Once the PCBAs are programmed with the correct drivers and firmware, they are function tested and the fabrication process begins where the beacons are assembled, tested, and tuned. The process varies by the type of beacon being assembled, however nearly half of the value of each beacon is derived from the cost of developing the firmware, the assembly, and the testing operations. We note in your submission that you claim each of the beacons require electrical testing prior to firmware programming and assembly, and some models are tested prior to export to the U.S. However, you maintain that no programming is performed outside of the U.S. manufacturing facility and that the devices are non-functional at the time of importation. Concerning the individual imported components, the 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. Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.41(b), Customs Regulations (19 CFR 134.41(b)), mandates that the ultimate purchaser in the U.S. must be able to find the marking easily and read it without strain. Section 134.1(d) defines the ultimate purchaser as generally the last person in the U.S. who will receive the article in the form in which it was imported. 19 CFR 134.1(d)(1) states that if an imported article will be used in manufacture, the manufacturer may be the ultimate purchaser if he subjects the imported article to a process which results in a substantial transformation of the article. The case of U.S. v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940), provides that an article used in manufacture which results in an article having a name, character or use differing from that of the constituent article will be considered substantially transformed and that the manufacturer or processor will be considered the ultimate purchaser of the constituent materials. In such circumstances, the imported article is excepted from marking and only the outermost container is required to be marked. See, 19 CFR 134.35. In this case, the assembly of the tracking beacons, and the installation of U.S. developed firmware and operating software, was performed in the U.S. These operations transform the imported foreign components into a product with a new name, character and use. Therefore, the U.S. manufacturer is the ultimate purchaser of the imported components and under 19 CFR 134.35, the imported articles would be excepted from the individual marking requirements of 19 U.S.C. 1304, provided that the containers in which the parts are imported are properly marked with the country of origin and the ultimate purchaser will receive them in the marked containers. Regarding your question whether Backcountry Access Inc. may claim U. S. country of Origin for this item, based upon the above factors, we find that the Tracker DTS, the Tracker2, and the Tracker3 have all undergone an assembly and programming process that substantially transforms the foreign components into the finished U.S. origin beacon. Accordingly, the country of origin of the finished avalanche beacons, pursuant to section 19 CFR 134.1 of the Customs Regulations, is the United States. If a good is determined to be an article of U.S. origin, it is not subject to the country of origin marking requirements of 19 U.S.C. 1304. However, please note that the Federal Trade Commission has jurisdiction concerning the use of the phrase “Made in the USA” and similar claims of U.S. origin. Whether an article, in this case, the Tracker DTS, the Tracker2, and the Tracker3, may be marked with the phrase "Made in the USA" or similar words denoting U.S. origin, is an issue under their authority. Inquiries should be directed to the FTC Division of Enforcement, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580 regarding the propriety of marking indicating that the article is made in the U.S. This ruling is being issued under the provisions of Part 177 of the Customs 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, contact National Import Specialist Karl Moosbrugger at [email protected]. Sincerely, Gwenn Klein Kirschner Director National Commodity Specialist Division