The country of origin of a pin pad device

N324366 March 11, 2022 MAR-2 OT: RR: NC: N4:410 CATEGORY: Country of Origin Ms. Dora Chiang XAC Automation Corp. 4F., No. 30 Industry E. Road IX Science-Based Industrial Park Hsin-Chu 300, Taiwan RE: The country of origin of a pin pad device Dear Ms. Chiang: This is in response to your letter dated February 16, 2022, on behalf of Fiserv, Inc., requesting a country of origin determination for a pin pad for the point-of-sale terminal (POS). The merchandise under consideration is a pin pad device identified as the PINPad model RP10 (the PINPad). The PINPad consists of a top cover module, keypad, case, battery, PCBA (printed circuit board assembly), an LCD (liquid crystal display), and IC (integrated circuit). It is designed for PCI PTS 5.0 (Payment Card Industry Data Security Standard or PCI DSS) with swiping, EMV (Europay, Mastercard, and Visa), PIN entry, and NFC/contactless reading capabilities into a small integrated handheld peripheral that can connect into a multitude of devices including terminals, POS systems, and ECRs (electronic cash registers). The top cover module (made from plastic and cannot properly function without the main board) and the potting cover module are imported from China to Taiwan to be assembled with other modules or components to manufacture the finished PINPad. The manufacturing processing scenario in Taiwan for the country of origin determination of the PINPad is described as follows. The manufacturing process includes the production of the main board, final assembly and product testing. It is stated that the PINPad will meet and even exceed the highest security standards (match Fiserv end product requirements and support the up-to-date EMV/PCI security standards for secure access to point-to-point encryption, etc.). The product is PCI and EMV LoA certificated. It protects customers’ data from fraud. Main Board: The main board is the key component to make the unit functional (MSR/SCR/Contactless Reader). The components and materials are imported from six countries and assembled in Taiwan into a functional PCBA. In Taiwan, the PCBA manufacturing involves the processes of SMD (surface Mount Device), and DIP (Dual In-line Package), in which, approximately 75 components (e.g., CPU, capacitors, resistors, IC, etc.,) are mounted onto the PCB (the PCB layout includes PCI design request). The processes also involve downloading the secure loader developed by XAC to the IC and installing the secure FW (firmware) to the PCBA. All software, e.g., PCI/EMV FW, is developed by XAC and installed in Taiwan. An ICT (In-Circuit-Test) will be performed for the main board circuit open/short test. Final Assembly: The components and modules mentioned above are combined with other parts and components, such as the bottom cover, cable, etc., to make the finished PINPads in the final assembly. The final assembly includes (1) assembling the front housing, top cover module and main board, (2) processing the front housing with potting cover module (PCI secure path), and (3) assembling all other parts and performing the function test accordingly. The most important process in the final assembly is inputting the encrypting keys for data transaction. The KI (key injection) must be conducted in a KI room (high secure controlled). This assembly process goes through 15 steps including various testing and inspection. Final Product Testing: 17 different tests are performed to the finished PINPads before packaging. These tests include measure battery voltage and current consumption, burn in test, SN set and check test, KeyInjection test, buzzer test, RTC test, MSR (magnetic head secure read) test, CTLS test, set configuration and check device, SCR test, Backlight test, USB test, KI Check, Tamper test, Keypad test, FW run-in and display test. Section 134.1(b), Customs Regulations (19 C.F.R. § 134.1(b)), defines "country of origin" 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”. In order to determine whether a substantial transformation occurs when components of various origins are assembled into completed products, CBP considers the totality of the circumstances and makes such determinations on a case-by-case basis. The country of origin of the item’s components, extent of the processing that occurs within a country, and whether such processing renders a product with a new name, character, and use are primary considerations in such cases. Additionally, factors such as the resources expended on product design and development, the extent and nature of post-assembly inspection and testing procedures, and worker skill required during the actual manufacturing process will be considered when determining whether a substantial transformation has occurred. No one factor is determinative. Based on the information submitted, the components and parts are imported into Taiwan where they are manufactured into different subassemblies/modules, which are ultimately assembled into the subject PINPad. We find that the processing performed in Taiwan with respect to the PINPad in the scenario does constitute a substantial transformation of the imported components and parts into "products of" Taiwan. The manufacturing process in Taiwan transforms the non-originating components and parts to produce the finished PINPad. It creates a new and different article of commerce with a distinct character and use that is not inherent in the components imported into Taiwan. Therefore, it is of the opinion of this office that the country of origin for the PINPad will be Taiwan. This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 CFR Part 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 Michael Chen at [email protected]. Sincerely, Steven A. Mack Director National Commodity Specialist Division