The country of origin of TFT-LCD modules.

N325627 May 13, 2022 OT:RR:NC:N2:208 CATEGORY: Country of Origin Mr. Richard Suh Toshiba Logistics America 501 Burning Tree Road Fullerton, California 92833 RE: The country of origin of TFT-LCD modules. Dear Mr. Suh: In your letter dated April 22, 2022, on behalf of JDI Display America Inc., you requested a country of origin ruling determination. There are four items at issue with this request that are all described as TFT-LCD modules for automobiles and are separately identified by part numbers, LAM070G043D, LAM080G042D, LPM123G351B, and LPM123G358B. In your request, you state that the manufacturing process for all four modules is identical. This process begins in Japan with the glass substrate. Multiple steps are done in CVD (chemical vapor deposition) machines to build up a TFT (thin-film transistor) array structure on the substrate. Next, a color filter is built-up on a matching and separate glass substrate, color-by-color, starting with "BM"(black matrix), then adding red, green, and blue, for every subpixel. After that, the LCD panel is filled using a one-drop fill (ODF) process, applied to the entire TFT array substrate, in which the liquid crystal material is compressed between the TFT array side when the color filter glass substrate is added and aligned on top. These steps create the LCD cells. Then, the LCD cells are shipped to China, where the substrate is cut into individual LCD panels. Lastly, the module is assembled and completed by taking the LCD cell and affixing the driver integrated circuits (ICs), polarizers, flexible printed circuit(s), and then a backlight, printed circuit board (PCB), frame, etc., and passing through outgoing quality testing. The finished modules are then packaged for shipment to the United States 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 to render such other country the 'country of origin' within the meaning of this part.” For tariff purposes, 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, “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. Accordingly, it is our opinion, that the completed TFT-LCD cell, regardless of when it is cut to size, is the dominant component of the finished device. The complex manufacturing process performed in Japan renders the end-use of the cell predetermined, as it could not be used for any other purpose than a display. Further, the assembly processes performed in China would not substantially transform the cell into a new and different article of commerce with a name, character, and use distinct from that of the exported good. Therefore, based upon the facts presented, the country of origin of the TFT-LCD modules, part numbers LAM070G043D, LAM080G042D, LPM123G351B, and LPM123G358B, is Japan. 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 Lisa Cariello at [email protected]. Sincerely, Steven A. Mack Director National Commodity Specialist Division