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HQ 562504

November 13, 2002

MAR-05 RR:CR:SM 562504 NL


Mr. L. Thomas Heiser, General Manager
Hitachi Electronic Devices (USA), Inc.
6200 The Corners Parkway, Suite 300
Norcross, GA 30092

RE: Country of Origin of TFT Display Modules; Substantial Transformation

Dear Mr. Heiser:

This is in reply to your letter dated August 15, 2002, on behalf of Hitachi Electronic Devices (USA), Inc. (Hitachi) concerning the country of origin of a device that will result from manufacturing operations in China. You seek a ruling that the device, a Thin Film Transistor (TFT) Liquid Crystal Display (LCD) module will be considered a product of China for the purposes of country of origin marking under Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. §1304).


The Hitachi TFT LCD module that is the subject of this ruling is used to display the image on cellular telephones, digital cameras, car navigation systems and other devices.

All parts and materials used in the China manufacturing operations are of Japanese origin. These parts and materials consist of: The TFT LCD No Cutting Cell; the Flexible Printed Circuit; and module parts. The module parts include: liquid crystal agent, epoxy acrylic resin, upper and lower side polarizers, integrated circuit chips, epoxy film, light guide unit, plastic mold, and tapes and resins. There are two main aspects of the Chinese manufacturing operations: 1) production of the TFT LCD Cell from the TFT LCD No Cutting Cell; and 2) assembly of the TFT LCD Module.

Production of the TFT LCD Cell from the No Cutting Cell consists of breaking and cutting the prepared materials into 32 pieces, filling the cells with liquid crystal agent under vacuum conditions, drying and hardening, sealing the filling entrance, and rounding sharp edges, washing and quality inspection.

The TFT LCD Cell is the component that forms the basis of the module. First the cell is covered with a polarizer on both sides. Then the Flexible Printed Circuit is attached at the edge. Then a light guide unit and cover sheet are attached. Finally, the unit is encased in a plastic mold and sealed with adhesive.

The submission is supported by manufacturing flow charts and other technical materials setting forth the operations performed. This office has relied upon them in its evaluation.

You submit that the operations described here concern a product that is identical except for size to a product that was reviewed by this office in Headquarters Ruling Letter (HQ) 562385 (May 14, 2002). In that ruling it was concluded that the production of a TFT LCD module for notebook and desktop computers effected substantial transformation of the individual components, and that the production operations resulted in a product of China. It is urged that the same conclusion is appropriate for the instant operations.


Do the manufacturing operations in China result in substantial transformation of the materials from Japan such that the completed TFT LCD module may be marked as a product of China?


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 its 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. By enacting 19 U.S.C. 1304, Congress intended to ensure that the ultimate purchaser would be able to know by inspecting the marking on the imported goods the country of origin of which the goods were 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. Friedlander & Co., 27 C.C.P.A. 297, 302 C.A.D. 104 (1940).

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 United States. 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 this part; however for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin.

Accordingly, the country of origin of an article is the country in which it was wholly grown, or, if processed in several countries, the country in which the last substantial transformation occurred. The well-established test for determining whether a substantial transformation has occurred is derived from language enunciated by the court in Anheuser-Busch Association v. United States, 207 U.S. 556, 562 (1908), which defined the term “manufacture” as follows:

Manufacture implies a change, but every change is not manufacture and yet every change in an article is the result of treatment, labor and manipulation. But something more is necessary, as set forth and illustrated in Hartranft v. Wiegmann, 121 U.S. 609. There must be transformation; a new and different article must emerge, having a distinctive name, character or use.

Simply stated, a substantial transformation occurs “when an article emerges from a process with a new name, character, or use different from that possessed by the article prior to processing.” See Texas Instruments, Inc. v. United States, 69 CCPA 152, 681 F. 2d 778 (1982)(cited with approval in Torrington Co. v. United States, 764, F.2d 1463, 1568 (1985).

In determining whether a substantial transformation occurs in manufacture by combining of parts or materials, the inquiry concerns the extent of operations and whether the parts lose their identity and become an integral part of the new article. Belcrest Linens v. United States, 3 CIT 204, 573 F. Supp. 1149 (1983), aff’d 2 Fed. Cir. 105, 741 F. 2d 1368 (1984).

Based on the facts provided, it is our opinion that the assembly of the various components used in producing the TFT/LCD module in China, effects a substantial transformation of the individual components. The numerous individual components, which are made in Japan, lose their identity and become integral part of the new article – TFT/LCD module. The assembly operations are also not minimal or simple. Thus, the TFT/LCD module as imported into the United States qualifies as a product of China and therefore should be marked as such. This office is in agreement with you that the conclusion reached in HQ 562385 is applicable to the production operations described herein.

Also, you have asked whether the TFT-LCD modules may be marked “Made in China” or Assembled in China from foreign (Japanese) components”. Either of these markings would be acceptable. “Assembled infrom components of” is specifically approved under 19 CFR 134.43(e).


The operations described in the submission result in substantial transformation such that the TFT-LCD module is considered to be a product of China for the purposes of country of origin marking under Section 304 of the Tariff Act of 1930, as amended. The marking indications proposed are acceptable.

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are 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.


Myles B. Harmon, Acting Director

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