HQ 0734617 - Country of origin marking requirements for a medical device used for the intravenous injection of fluids; tubing; combining; assembly; substantial transformation; 19 CFR 134.35 - United States International Trade Commision Rulings

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HQ 734617
August 17, 1993

MAR-2-05 CO:R:C:V 734617 RSD

CATEGORY: MARKING

April Konopa
Director of Manufacturing
Medical Disposable Products
Siemens Infusion Systems
12744 San Fernado Road
Sylmar, California 91342-3728

RE: Country of origin marking requirements for a medical device used for the intravenous injection of fluids; tubing; combining; assembly; substantial transformation; 19 CFR 134.35

Dear Ms. Konopa:

This is in response to a letter dated April 9, 1992, submitted on behalf of Siemens Infusion Systems, by Timothy Stanceau of the law firm Hogan and Hartson, regarding the country of origin marking requirements for a medical device, known as the MiniMed Infusion System Universal Cassette. In addition, we have received several samples of the MiniMed infusion device. An additional submission dated January 19, 1993 has been received. This submission contained confidential business information regarding costs. This information, as indicated by brackets, will be kept confidential and will not be disclosed in copies of this ruling made available to the public.

FACTS:

The MiniMed Infusion System Universal Cassette, or "Uni- Set," (hereinafter "Cassette") is a patented medical device used for intravenous administration of fluids for hospital patients. It is designed and manufactured only for use in conjunction with the MiniMed III Infusion System, which is a computerized programmable, multi-channel infusion pump and fluid delivery system. The cassette and the infusion pump are designed to function together to provide safe, accurate, and monitored user- programmable fluid delivery to the patient under a wide range of operating conditions. Fluid administration is monitored by a computerized sensoring system, consisting of sensor interfaces incorporated into the cassette and electronic monitoring sensors which are present in the infusion pump chassis. Delivery is electronically monitored for rate, cassette placement, occlusions, and to detect the presence of air in the system. The product consists of two basic components; the cassette subassembly and the tubing assembly. The cassette subassembly performs all the essential functions of the finished product except for the delivery of the fluid from the medication source and the final delivery of the fluid to the patient.

The cassette subassembly performs several functions. It pumps the fluid by the use of a reciprocating piston mounted within a cylinder and a silicone piston sleeve that serves as a piston seal. The pumping mechanism of the subassembly is designed to function when attached to a "drive module" located on the chassis of the infusion pump. The drive module and infusion pump contain a close-loop feedback system, utilizing a logic circuit, that accurately maintains fluid delivery at the rate programmed into the infusion pump by the user, regardless of the varying loads that are experienced during the medication infusion.

The cassette subassembly contains an elastomeric membrane that functions as a valve diaphragm. When attached to the valve actuators located in the drive module, this valve diaphragm functions as an inlet valve and an outlet valve to regulate fluid delivery from the pumping chamber immediately above the piston. This valving arrangement, operated by a cam in the drive module, ensures that the fluid pathway between the medication source and the patient is always closed.

A pressure-sensing dome, consisting of an elastomeric membrane on the top of the subassembly, allows for monitoring and regulation of fluid pressure. The pressure-sensing dome transmits fluid pressure to a semiconductor pressure transducer in the chassis of the infusion pump. The transducer senses any occlusion in the line between the subassembly and the patient.

The cassette subassembly is equipped with an optical sensing system which monitors for correct placement of the subassembly in the infusion pump and the position of the pump latch. The optical sensing system functions by transmitting light beams through the optical elements of the subassembly to sensors in the chassis. It also contains a length of tubing that serves as the site for monitoring the fluid exiting the subassembly for the presence of air. When the subassembly is installed in the infusion pump, the air-in line sensing tubing in the subassembly is aligned between an ultrasonic transmitter and receiver crystals in the infusion pump.

The second component of the MiniMed system is the tubing assembly, which has the sole function of the transmission of fluid from the medication source to the cassette assembly and the transmission of medication from the subassembly to the patient. The tubing assemblies vary with the particular model of Cassette being produced, but in each case they are relatively simple arrangements of plastic tubes and fittings. For example, on the "Standard Half Set," the upper tubing assembly consists of a plastic tube and a single end-fitting and the lower tubing assembly is comprised of a plastic tube, a tubing collar, an end fitting, and a Y-fitting. The "Standard Full Set" contains the same subassembly as the Standard half Set. In addition to the fittings present on the Half Set, the Full Set has the following additional fittings for use with medication bags and bottles: a roller clamp, an addition Y-fittings, and a universal spike for connection with a medication bag or bottle.

The Cassette is manufactured at a factory in Sylmar, California. All components used to manufacture the subassembly are of U.S. origin except for a short (approximately one-fourth inch) length of tubing. The finished product is produced by attaching the cassette subassembly to the two tubing assemblies. The tubing assemblies are assembled in Taiwan from tubing made in Taiwan and various components that are of foreign and U.S. origin. The tubing assemblies are attached permanently by bonding. After attachment of the upper and lower tubing assembles, the Cassette is packaged, labeled, and tested at the MiniMed factory in Sylmar, California, and sterilized at a U.S. facility.

The total production cost of the Standard Full Set unit is [ ] of which [ ] represents processing costs and [ ] represents the cost of the materials. All of the processing costs are incurred in the United States. U.S. materials account for [ ] of the material costs, while the remaining [ ] are from Taiwan- origin materials. The U.S. content of the products accounts for [ ] or [ ] of its costs.

ISSUE:

Are the imported tubing assemblies substantially transformed when they are combined with the a domestically made cassette subassembly to form the MiniMed Infusion System Universal Cassette?

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 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. Congressional intent in enacting 19 U.S.C. 1304 was "that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase 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 at 302; C.A.D. 104 (1940).

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and the exceptions of 19 U.S.C. 1304. Section 134.1(b), Customs Regulations (19 CFR 134.1(b)), defines "country of origin" as the country of manufacture, production or growth of any article of foreign origin entering the U.S. 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 laws and regulations. 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 section 134.35, Customs Regulations).

This case concerns the assembly of two finished components, the cassette subassembly and the tubing subassembly. In determining whether the combining of parts or materials constitutes a substantial transformation, the issue is the extent of operations performed and whether the parts lose their identity and become an integral part of the new article. Belcrest Linens v. United States, 6 CIT 204, 573 F.Supp. 1149 (1983), aff'd, 2 Fed Cir. 105, 741 F.2d 1368 (1984). Assembly operations which are minimal or simple, as opposed to complex or meaningful, will generally not result in a substantial transformation.

In T.D. 67-173, 1 Cust.Bull. 366 (1967), we considered the application of the country of origin marking requirements to the domestic assembly of imported fishing rod parts into completed fishing rods and reels. Finding in some instances that fishing reels were imported in an unassembled or partially assembled condition and that only minor parts made in the U.S. were used in assembling the completed product, we stated that the assembly of such finished products, where all or substantially all of the components were imported, could not be considered to result in the manufacture of a new and different article in the U.S. However, in those instance where major U.S. components were added, the domestic manufacturer was considered the "ultimate purchaser" of the imported rod parts, as contemplated by 19 CFR 134.35.

The question that must be resolved in this case is whether the imported tubing assembly changes its name, character, or use when it is combined with the cassette subassembly to make the finished MiniMed infusion system. As imported, the tubing subassembly is a fairly simple device that could be used for many different applications. However, when combined with the cassette subassembly the use of the imported article is determined as it becomes a part of a new article, the MiniMed infusion device. This MiniMed infusion system is a fairly sophisticated product which is designed to deliver the proper amount of medication intravenously to hospital patients. We believe that the addition of the cassette subassembly causes the tubing assembly to lose its identity because it becomes a part of a new product, a sophisticated medical device, which has a different character from its components. The tubing assembly and cassette subassembly function together in one unit as the MiniMed infusion system. In other words, once combined, the tubing and cassette are not two separate articles, but one product. This is evidenced by the fact that the finished article, the MiniMed infusion system, is patented.

Although the assembly appears to be fairly simple, a comparison of the processing and the components in the MiniMed system indicates that the most complex work in producing the product is done in the United States. The chief function of the MiniMed system is to regulate and to ensure that the proper amount of intravenous medication gets to the patient. This function is performed mostly by the U.S. made component which is a complex mechanism in that it contains a reciprocating piston, elastomeric membrane, optical sensors, etc. On the other hand, the tubing is only a simple fluid delivery mechanism with a few fittings attached. We also note that more than 75 percent of the value of the finished article is attributable to the U.S. operations.

An additional consideration is that the classification of the finished article is different from that of the imported tubing assembly. Although a change in classification is not determinative of a substantial transformation, it can be highly persuasive evidence that an article has been substantially transformed.

Because the imported tubing assembly is a very simple device which is combined with a more complex U.S. made component to make the finished article and because most of the value and work on the finished article is attributable to U.S. operations, we find that the name, character, and use of the imported tubing assemblies have been changed.

HOLDING:

The imported tubing assembly is substantially transformed as a result of its combining with the cassette subassembly to form the MiniMed infusion system. In accordance with 19 CFR 134.35, Siemens, the maker of the MiniMed infusion system, is the ultimate purchaser of the tubing assembly. Only the outermost container of the tubing assembly which reaches the ultimate purchaser must be marked to indicate the country of origin of the tubing assembly.

Sincerely,

John Durant, Director

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