In ruling NY N324862 (March 31, 2022), Customs and Border Protection (CBP) discussed the country of origin of , known as the Sense Asset+ device. The device is attached to an object and relays information regarding the location and movement of that object to a smartphone application. It can be used in a variety of settings, including construction yards, manufacturing facilities, and hospitals.
The manufacturing process begins with a printed circuit board assembly (PCBA) that is manufactured in the Philippines. The Philippines-origin PCBA accounts for the majority of the device’s total manufacturing cost. In addition, a South Korean GPS is installed using surface mount technology (SMT) onto the PCBA in the Philippines. The device is then programmed in the Philippines with its code and tested to make sure it can perform its locating and tracking functions before it leaves the Philippines for China. Once in China, the PCBA is assembled into the final product using China-origin plastic cases and other minor components. Lastly, the device is tested for functionality before it is imported into the United States.
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 to render such other country the ‘country of origin’ within the meaning of this part.” CBP also established substantial transformation takes place “when an article emerges from a process with a new name, character or use different from that possessed by the article before processing.” However, if the manufacturing or combining process is minor and leaves the identify of the article intact, a substantial transformation has not occurred.
For its determination, CBP stated that the manufacturing process of the PCBA – the dominant component – that takes place in the Philippines is substantial and complex. This is because the various electrical elements used to create the PCBA are transformed in the Philippines into an article with a new name, character, and use. As such, CBP determined that the country of origin of the Sense Asset+ device would be the Philippines.