HQ 735306 - Country of origin marking requirements for printed circuit boards which have components mounted onto them in the United States; computer components; substantial transformation; 19 CFR 134.35; HQ 734021; HQ 733690 - United States International Trade Commision Rulings

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HQ 735306

December 21, 1993

MAR-2-05 CO:R:C:V 735306 RSD

CATEGORY: MARKING

Ms. Beth Birmingham
Export/Import Administrator
Distributed Processing Technology
140 Candace Drive
Maitland, Florida 32751

RE: Country of origin marking requirements for printed circuit boards which have components mounted onto them in the United States; computer components; substantial transformation; 19 CFR 134.35; HQ 734021; HQ 733690

Dear Ms. Birmingham:

This is in response to your letter dated August 10, 1993, requesting a ruling on the country of origin marking requirements for imported printed circuit boards. A copy of the layout for the board with these markings was enclosed with your letter.

FACTS:

Your company, Distributed Processing Technology, manufactures host bus adapters for personal computer peripheral devices. The product consists of a printed circuit board (PCB) with integrated circuits, resistors, resistor networks, capacitors, diodes, and other electronic components mounted onto the PCB. The primary application of these host bus adapters is to interface an ISA or EISA bus of a personal computer to the SCSI peripheral bus. When in use, the product is enclosed in a case which holds the computer motherboard and internal hard drive, and therefore it is not visible to the computer user. The product is sold throughout the United States, Canada, South America, Europe, Asia, Australia, New Zealand, and Africa, and to original equipment manufacturers in the United States and Europe.

At present, all components including the PCB's used in the manufacturing process are of U.S. origin. You are exploring the idea of having the raw PCB's supplied by a foreign manufacturer. It is our understanding that the other components will be of U.S. and foreign origin. The cost PCB will comprise about 25% of the total cost of the components involved in making the finished product.

You indicate that Distributed Processing Technology wants to have the raw PCB to be imported with the markings "PCB Made in (Country)" and with "DPT" logo, product mode number, and "Made in U.S.A. of American and Foreign Components".

ISSUE:

Are the proposed markings on the printed circuit boards acceptable?

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 container) will permit, in such 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 of the imported goods the country of which the goods is the product.

Part 134, Customs Regulation (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.1(b), Customs Regulations (19 CFR 134.1(b)), defines "county of origin" as the country of mnufacture, 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 law 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 circumstance, the imported article is excepted from marking and only the outermost container is required to be marked. (See Section 134.34, Customs Regulations, 19 CFR 134.35).

With respect to printed circuit boards, Customs has ruled that the complete assembly of all the components onto a printed circuit board was a substantial transformation of the printed circuit board because the assembly process was complex and involved a considerable amount of skill and time. See HQ 734021 (May 31, 1991) (Copy enclosed.)

Distributed Processing Technology assembles all the components onto the foreign raw printed circuit board in the United States, and thus the same rationale applies. The board would be substantially transformed. Therefore, in accordance with 19 CFR 134.35, Distributed Processing Technology is the ultimate purchaser of the imported printed circuit boards, and the boards are excepted from individual country of origin marking as long as the outermost containers are marked with the country of origin.

Distributed Processing wants to have the boards marked, at the time they are imported into the U.S., with "Made in U.S.A. of American and Foreign Components" and an indication of the country of origin of the PCB. It is Distributed Processing's intention to removed the reference to the country of origin of the PCB when the processing of the board takes place in the U.S. Customs has previously indicated that a "Made in the USA" marking appearing at the time of importation on an imported printed circuit board which will be substantially transformed in the U.S. is misleading and not acceptable. Furthermore, the use of the marking "Made in the U.S.A." is in the jurisdiction of the Federal Trade Commission and not the Customs Service. See 733690 (February 22, 1991) (Copy enclosed).

However, in this case we believe the marking regarding the U.S.A. will not be misleading because the board will also be marked at the time of importation with an indication of where the boards were made. The marking law, 19 U.S.C. 1304, is intended to inform the ultimate purchaser of the country of origin of an imported article. The ultimate purchaser, Distributed Processing, will informed by this marking regarding the origin of boards and will not be misled into believing that the boards are of U.S. origin. Additionally, as the ultimate purchaser of the boards, Distributed Processing is not prohibited from removing the country of origin marking on the boards when their processing after importation results as here, in a substantial transformation.

HOLDING:

The printed circuit boards are excepted from individual marking, provided that the importer satisfies Customs officials that in all instances the imported printed circuit boards will be substantially transformed in the United States by the processing described above. On this basis, Customs finds that the proposed marking are not objectionable under Section 304 of the Tariff Act and Part 134, Customs Regulations. Customs does not object to the markings described above, but it is suggested that you contact the Federal Trade Commission regarding the use of any "Made in U.S.A." markings.

Sincerely,

John Durant, Director

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