The country of origin marking of a desktop personal computer

N305852 September 6, 2019 CLA-2-84:OT:RR:NC:N2:220 CATEGORY: Marking Brian Atwood Samsung Electronics America, Inc. 85 Challenger Rd. Ridgefield Park, NJ 07660 RE: The country of origin marking of a desktop personal computer Dear Mr. Atwood: In your letter dated August 15, 2019 you requested a country of origin marking ruling. The merchandise under consideration is identified as the Desktop Computer Model DB400S7B, which is described as a personal computer (PC) consisting of an enclosure having a motherboard, a memory board, a storage drive, a power supply, various subassemblies, and runs on the Windows operating system. On the rear of the PC are multiple USB ports, an RJ-45 Ethernet port, HDMI/DVI/VGA ports, audio input and output jacks, and a parallel port connection. You state the subject PC is assembled in Korea as described hereafter and is packaged together with a mouse and keyboard upon importation into the United States. Based on the information provided, the assembly process conducted in Korea includes populating an enclosure, identified as the Barebone subassembly, with the additional components and software necessary to produce a functioning automatic data processing machine. The Barebone subassembly, which is imported into Korea from China, consists of the metal enclosure with drive slots and brackets, a motherboard, a power supply, and electrical cables. In Korea, the operating system is loaded onto the hard drive and the CPU, the memory module, the hard drive, the CPU cooler, and cabling are installed into the Barebone subassembly. Once assembly is complete, the PC is connected to a display device and the functionality and operating systems is configured and tested. 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. 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.” 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 that “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 country of origin of the subject PC, we are of the opinion that the Barebone subassembly, which is manufactured in China and contains the motherboard, provides the essence of the finished machine. In our view, the assembly operations performed in Korea that consist of inserting the various subassemblies identified above is not complex. The PC is produced by merely joining these subassemblies together to form an automatic data processing machine, but the Barebone subassembly does not undergo a substantial transformation as a result. Therefore, based upon the facts presented, it is the opinion of this office that the Barebone subassembly is not transformed in Korea into a new and different article of commerce with a name, character, and use distinct from the articles exported from China. Consequently, the Desktop Computer Model DB400S7B, is considered a product of China for origin and marking purposes at the time of importation into the United States. 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, Steven A. Mack Director National Commodity Specialist Division