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HQ 562595




March 5, 2002

CLA-2 RR:CR:SM 562595 KSG

CATEGORY: CLASSIFICATION

Mr. Alex Capri
KPMG
1901 Avenue of the Stars
Suite 200
Los Angeles, California 90067-6004

RE: Country of origin marking for a wireless modem; Article 509; Good of a NAFTA Country;19 CFR 134.35(b); kit

Dear Mr. Capri:

This is in response to your submissions of December 4, 2002, and February 5, 2003, on behalf of Sierra Wireless Inc., requesting a binding ruling regarding the appropriate country of origin marking of the AirCard 750 wireless modem kit.

FACTS:

Imported PC cards are manufactured in Mexico for Sierra Wireless, Inc. You state that the PC cards are classified in subheading 8471.81.1000 of the Harmonized Tariff Schedule of the United States ("HTSUS").

The imported PC cards are then shipped to a subcontractor in California. The PC cards are inserted into an automatic configuration tool. The PC card is then loaded with the wireless modem embedded software and customized for the required target carrier's configuration. At this point, the cellular phone aspect of the device is enabled. In summary, the PC card is programmed and loaded with operating software needed to render it operational and specific settings and security encryption are configured into the cards.

You state that the finished wireless modem is classified in subheading 8525.20.3080, HTSUS. The wireless modem is then packaged in the U.S. in a retail box and sleeve with the CD software, RF antenna, quick start guide and plastic jewel case. The CD software, quick start user guide, and sleeve are products of Canada. The antenna is a
product of Taiwan. The box and jewel case are products of the U.S.

ISSUE:

What are the country of origin marking requirements applicable to the wireless modem kit?

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 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. 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, 302 (1940). Part 134 of the Customs Regulations implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.

I. The PC card

Section 102.11, Customs Regulations (19 CFR 102.11), sets forth the required hierarchy for determining whether a good is a good of a NAFTA country for the purposes of country of origin marking and determining the rate of duty and staging category applicable to an originating good as set out in Annex 302.2. Paragraph (a) of this section states that the country of origin of a good is the country in which:

(1) The good is wholly obtained or produced; (2) The good is produced exclusively from domestic materials; or (3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.

Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because the wireless network card is neither wholly obtained or produced in a single country, nor produced exclusively from domestic materials. Since an analysis of 19 CFR 102.11(a)(1) and 102.11(a)(2) will not yield a country of origin determination, we look to 19 CFR 102.11(a)(3).

Section 102.11(a)(3) provides that the country of origin is the country in which “each foreign material incorporated in that good undergoes an applicable change in tariff classification as set forth in 19 CFR 102.20...”

You advised that the wireless modem involved in this case would be classified in subheading 8525.20.3080, HTSUS. For purposes of this ruling, we are assuming that this is the correct classification.

The applicable tariff shift rule found in section 102.20(o) provides as follows:

HTSUS Tariff Shift and/or other requirements

8525.10-8525.20..........................A change to subheading 8525.10 through 8525.20 from any other subheading outside that group.

You state that the PC card is classified in subheading 8471.80.1000, HTSUS. For the purposes of this ruling, we are assuming the correctness of this classification. Based on the rule set forth above, the foreign material, the PC card, undergoes the applicable tariff shift in the United States.

However, 19 CFR 102.17 provides, in pertinent part, as follows:

A foreign material shall not be considered to have undergone an applicable change in tariff classification specified in section 102.20 or 102.21 or to have met any other applicable requirements of those sections merely by reason of one or more of the following:

(c) Simple packing, repacking or retail packaging without more than minor processing;

The various operations which comprise “minor processing” are set forth in 19 CFR 102.1(m)).

In this case, the PC card is programmed in the U.S. and packaged. Programming is not included in the list of operations considered “minor processing” in 19 CFR 102.1(m). Therefore, since programming constitutes “more than minor processing,” we find that the PC card’s change in tariff classification in the U.S. is not disqualified by 19 CFR 102.17.

Accordingly, as the PC card undergoes the applicable tariff shift in the United States, pursuant to 19 CFR 102.11(a)(3), the country of origin of the wireless modem is the U.S.

Section 134.35(b), provides as follows:

A good of a NAFTA country which is to be processed in the United States in a manner that would result in a good becoming a good of the United States under the NAFTA Marking Rules is excepted from marking. Unless the good is processed by the importer or on its behalf, the outermost container of the good shall be marked in accord with this part.

Pursuant to 19 CFR 134.35(b), the imported PC cards and completed modem would be excepted from marking.

II. The remainder of the kit

The PC card is packaged in the U.S. with the CD software, RF antenna, jewel case, quick start user guide, and sleeve.

With regard to the assembled kit, Customs stated in T.D. 91-7, dated January 8, 1991, that "the tariff treatment of an article under the HTSUS generally has no effect on the country of origin marking requirements under 19 U.S.C. 1304." Customs held that the mere inclusion of an item in a collection will not substantially transform it into an article with a new name, character or use and, therefore, each imported item included in the kit must be separately marked with its own country of origin. Further, under the NAFTA Marking Rules, merely packaging the foreign items with the modem and U.S. origin items will not change the origin of the foreign items.

Accordingly, the imported antenna, CD software, and quick start user guide must be marked with their country of origin. Marking the outermost container in which the antenna, CD software, and user guide are contained and sold would satisfy the marking requirements. The sleeve is part of the packaging and would not be required to be marked with its country of origin.

HOLDING:

Based on the information provided, the wireless modem is considered a product of the United States under the NAFTA Marking Rules. Pursuant to 19 CFR 134.35(b), the imported PC cards and completed modem are excepted from country of origin marking.

The imported antenna, CD software, and quick start user guide must be marked with their country of origin. Marking the outermost container in which the antenna, CD software, and user guide are contained would satisfy the marking requirements.

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.

Sincerely,

Myles B. Harmon
Director, Commercial Rulings Division

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