In ruling NY N324366 (March 11, 2022), Customs and Border Protection (CBP) discussed the country of origin of a pin pad device. The product, identified as the PINPad model RP10, consists of a top cover module, keypad, case, battery, printed circuit board assembly (PCBA), a liquid crystal display, and an integrated circuit. The product is designed for PCI PTS 5.0 (Payment Card Industry Data Security Standard or PCI DSS) with swiping, EMV (Europay, Mastercard, and Visa), PIN entry, and NFC/contactless reading capabilities into a small integrated handheld peripheral that can connect into a multitude of devices including terminals, POS systems, and electronic cash registers.

The manufacturing process, which includes the production of the main board, final assembly, and testing, takes place in Taiwan. In addition, the top cover module and the potting cover module are imported from China to Taiwan in order to be assembled with the other components to manufacture the finished version of the PINPad.

The main board assembly is identified as the key component to make the product functional. The components and materials to create the main board are imported from six countries and assembled in Taiwan into a functional PCBA. In Taiwan, the PCBA manufacturing involves the processes of surface mount device (SMD), and dual in-line package (DIP), in which, approximately 75 components are mounted onto the printed circuit board. In addition, the main board assembly process also includes downloading the secure loader to the integrated circuit and installing the secure firmware to the PCBA. The software is developed and installed in Taiwan.

Following the manufacturing of the main board assembly, the components and modules are all combined to make the finished PINPad in the final assembly. This final assembly process includes:

  • Assembling the front housing, top cover module and main board
  • Processing the front housing with potting cover module (PCI secure path)
  • Assembling all other parts and performing the function test accordingly.

Notably, the most important process in the final assembly is inputting the encrypting keys for data transaction. The key injection (KI) must be conducted in a KI room. This assembly process goes through 15 steps including various testing and inspection. Finally, 17 different tests are performed on the finished PINPad before packaging – such as measuring battery voltage, USB tests, tamper tests, and keypad tests.

CBP noted that, as defined under 19 CFR 134.1(b), the country of origin is 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 change the country of origin of the article. CBP also established that it makes substantial transformation determinations on a case-by-case basis in circumstances where components of various origins are assembled into a completed product. For its determination, CBP stated that the processing performed in Taiwan does constitute a substantial transformation of the imported components and parts into “products of” Taiwan. Specifically, the manufacturing process in Taiwan transforms the non-originating components and parts to produce the finished PINPad. As such, because the process creates a new and different article with a distinct character and use that is not inherent in the imported components, the country of origin is Taiwan.