H304679

HQ H304679 June 11, 2024 OT:RR:CTF:VS H304679 JMV CATEGORY: Origin Long Vu Walgreens Co. 304 Wilmot Rd. MS #3163 Deerfield, IL 60015 RE: Country of Origin of LED Light Sets; Marking Dear Mr. Vu, This is in response to your letter dated May 29, 2019, on behalf of Walgreens Co. (“Walgreens”). In your letter, you request a ruling pursuant to 19 C.F.R. Part 177 regarding the country of origin of LED string lights. FACTS: The subject merchandise are LED string lights connected to a battery box (“LED Light Sets”), which are identified by Walgreens Item Codes (“WIC”) 150097, 150119, 150554 and 155564. WICs 150119, 150554, and 155564 are miniature LED Light Sets, which will be used for Christmas decorations. WIC 150119 is an assortment of two styles (15 White LEDs and 15 Multi Color LEDs). WIC 150554 contains 100 White LEDs and WIC 155564 contains 100 Multi Color LEDs. Most of the components/materials used in producing WICs 150119, 150554 and 155564 are of Chinese origin. The Chinese origin components include LED light bulbs, shrink sleeves, copper clips, color boxes, switches and integrated circuits. The main components of Cambodian origin are the battery/control boxes and electric wires. The label and instruction manual are also of Cambodian origin. The manufacturing operation process for these three WICs is as follows: Assemble the battery/control boxes. Cut the electric wires to specific length and peel the wires. Connect the light bulbs to lamp bases/sleeves to make the lamps. Workers manually assemble the lighting string with the lamp covers from Cambodia. Connect the incomplete light string to the battery/control box. Test and re-lamp the light sets. Perform the final inspection. Items in WIC 150097 are lighting sets for indoor use as Halloween decorations. WIC 150097 is in an assortment of three styles: ghost shape with white LED, pumpkin shape with yellow LED, and bat shape with white LED. Most of the components used in producing WIC 150097 are of Chinese origin. These Chinese originating components include copper wire lamps (wire incorporated with LED lamps), “TRY ME” battery case and metal parts, window color boxes and other small parts. The components of Cambodian origin are battery case, plastic flower shells (decorative lamp cover) and electric wires. The LED Light Sets of WIC 150097 are assembled in a different factory in Cambodia; however, the manufacturing process is similar to that for WICs 150119, 150554 and155564. It starts with affixing the lamp covers to the copper wire LED lamps to make the incomplete light strings. After the battery/control boxes and “TRY ME” units are assembled, the incomplete light strings, the battery/control boxes and the “TRY ME” units are connected together to make the complete light strings. Final inspection, packaging and packing are performed to complete the manufacturing process. ISSUE: Whether the country of origin is Cambodia for marking purposes. LAW AND ANALYSIS: Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. § 1304), provides that, unless excepted, every article of foreign origin imported into the United states 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 United States the English name of the country of origin of the article. By enacting 19 U.S.C. § 1304, Congress intended to ensure that the ultimate purchaser would be able to know by inspecting the marking on the imported goods the country of which the goods are the product. “The evident purpose is to mark the goods so that at the time of purchaser the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will.” United States v. Friedlaender & Co., 27 C.C.P.A. 297, 302 C.A.D. 104 (1940). Part 134, Customs and Border Protection (CBP) Regulations (19 C.F.R. 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. § 1304. Section 134.1(b), CBP 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’ within the meaning of [the marking regulations]. . . .” A substantial transformation is said to have occurred when an article emerges from a manufacturing process with a name, character, or use which differs from the original material subjected to the process. United States v. Gibson Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940); Texas Instruments v. United States, 681 F.2d 778, 782 (1982). 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. Minimal or simple assembly operations will generally not result in a substantial transformation. Factors which may be relevant in this evaluation may include the nature of the operation (including the number of components assembled), the number of different operations involved, and whether a significant period of time, skill, detail, and quality control are necessary for the assembly operation. See C.S.D. 80-111, C.S.D. 85-25, C.S.D. 89-110, C.S.D. 89-118, C.S.D. 90-51, and C.S.D. 90-97. If the manufacturing or combining process is a minor one, which leaves the identity of the article intact, a substantial transformation has not occurred. See Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983) (imported shoe uppers added to an outer sole in the United States were the “very essence of the finished shoe” and the character of the product remained unchanged and did not undergo substantial transformation in the United States). In Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308 (2016), the Court of International Trade (“CIT”) interpreted the meaning of the term “substantial transformation” as used in the Trade Agreements Act of 1979 (“TAA”) for purposes of government procurement. Energizer involved the determination of the country of origin of a flashlight, referred to as the Generation II flashlight, under the TAA. All the components of the Generation II flashlight were of Chinese origin, except for a white LED and a hydrogen getter. The components were imported into the United States where they were assembled into the finished Generation II flashlight. The court reviewed the “name, character and use” test in determining whether a substantial transformation had occurred and reviewed various court decisions involving substantial transformation determinations. The court noted, citing Uniroyal, 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. Furthermore, courts h

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. § 1304), provides that, unless excepted, every article of foreign origin imported into the United states 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 United States the English name of the country of origin of the article. By enacting 19 U.S.C. § 1304, Congress intended to ensure that the ultimate purchaser would be able to know by inspecting the marking on the imported goods the country of which the goods are the product. “The evident purpose is to mark the goods so that at the time of purchaser the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will.” United States v. Friedlaender & Co., 27 C.C.P.A. 297, 302 C.A.D. 104 (1940). Part 134, Customs and Border Protection (CBP) Regulations (19 C.F.R. 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. § 1304. Section 134.1(b), CBP 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’ within the meaning of [the marking regulations]. . . .” A substantial transformation is said to have occurred when an article emerges from a manufacturing process with a name, character, or use which differs from the original material subjected to the process. United States v. Gibson Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940); Texas Instruments v. United States, 681 F.2d 778, 782 (1982). In order to determine whether a substantial transformation occurs when components of various origins are assembled in