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NY R03637

April 12, 2006

MAR-2 RR:NC:1:120 R03637


Stuart P. Seidel, Esq.
Baker and McKenzie LLP
815 Connecticut Avenue, N.W.
Washington, DC 20006-4078

RE: Country of origin marking requirements applicable to the Brocade Silkworm SW 4100 Fibre Channel fabric switch for Storage Area Networks; substantial transformation; China; United States; 19 U.S.C. 1304

Dear Mr. Seidel:

This is in response to your letter dated April 3, 2006 requesting a ruling on behalf of your client Brocade Communications Systems, Inc. You inquire whether Brocade’s Silkworm SW 4100 Fibre Channel fabric switch for Storage Area Networks is required to be individually marked with the country of origin China if it is later to be processed in the U.S. by a U.S. manufacturer.

A marked sample was not submitted with your letter for review. The Brocade Silkworm SW 4100 Fibre Channel fabric switch is designed for rapidly growing storage area network (SANs) requirements in a mission critical environment. Its non-blocking architecture provides 1, 2, or 4 gigabits per second auto-sensing technology with 16, 24 or 32 ports in a 1U package.

This SW 4100 model comprises a printed circuit board assembly (PCBA), chassis, top cover, power supply, fans, AC filter, Brocade Fabric Operating System (FAS) and advanced software options. This model integrates with Windows, NT, UNIIX, Linux, Solaris, and AIX. It also provides FICON support on a flexible port-by-port basis in IBM xSeries server environments.

The SW 4100 will be partially manufactured in China and assembled to completion in the United States. The operations performed in China verses the United States is outlined below:


A bare metal chassis bottom mechanical assembly is built.

A metal top cover is manufactured.

A bare printed circuit board is populated with various electronic components to form a printed circuit assembly (PCA).  Diagnostic software is downloaded on the PCA, endowing the board with the basic software to enable the testing of the hardware.  The diagnostic software allows limited information to travel to and from the ports on the board.

4. The board undergoes what is described as the standard battery of tests to ensure the functionality of its components, connections and circuitry.  Examples of such tests are the In Circuit Test (ICT) and the Environmental Stress Screen (ESS).

5. The power supply (made in either China or Thailand) is assembled into the chassis.

Five fans (made in China) are assembled into the chassis.

A/C filter (made in either Canada or Mexico) is assembled into the chassis.

The PCA is installed into the chassis base.

The dummy cover is installed for testing.

The DBP connectors are assembled.

The power supply connector is assembled.

The fan cables are connected.

13. The permanent cable is assembled to the chassis bottom.

14. Serial numbers from the PCA, fan tray, and power supply are collected and appended to the unit serial number in a data tracking system.

Upon completion of the forgoing procedures, the following testing operations occur:

A “system test” is performed using automated scripts and diagnostics software.

A “run in” test is performed, including an automated system test at elevated temperatures and an ongoing reliability test.

United States:

Upon completion of the forgoing procedures, US-origin Brocade Fabric Operating System software, which has been developed in the United States at a significant cost to Brocade, is downloaded onto 512 MB compact flash memory chips on the PCBA and the following testing operations occur:

A.  A “hi-pot” test is performed per safety agency standards and requirements.

B. Software configuration and the final tests are performed. First, the FOS is downloaded.  Then a full suite of customer-selected software options are downloaded.  A dust cap is put on the DB9 connector and an ethernet plug is installed on the RJ45 connector.

C. Final quality assurance tests are performed. After software download and testing, the completed products are packaged and prepared for shipment.

The SW 4100 is substantially transformed to a fabric switch; a product with a new name, character, and use during the assembly process that occurs within the United States. The operating system and software loaded in the United States provide the “intelligence” characteristics to the PCBA. Furthermore, the tests for the software and how it works in conjunction with the hardware are performed in the United States. Only the hardware is manufactured and tested in China.

The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. 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 U.S. the English name of the country of origin of the article.

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.41(b), Customs Regulations (19 CFR 134.41(b)), mandates that the ultimate purchaser in the U.S. must be able to find the marking easily and read it without strain. Section 134.1(d) defines the ultimate purchaser as generally the last person in the U.S. who will receive the article in the form in which it was imported. 19 CFR 134.1(d)(1) states that if an imported article will be used in manufacture, the manufacturer may be the ultimate purchaser if he subjects the imported article to a process which results in a substantial transformation of the article. 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 circumstances, the imported article is excepted from marking and only the outermost container is required to be marked. See, 19 CFR 134.35.

In this case, the imported Silkworm SW 4100 Fibre Channel fabric switch for Storage Area Networks is substantially transformed in the United States, and the country of origin of this new product is the United States. Pursuant to 19 CFR 134.35 (a), the imported article would be exempt from marking. Only the outermost container in which the hardware is imported must be marked to indicate China as the country of origin.

This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 CFR Part 177).

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Denise Faingar at 646-733-3010.


Robert B. Swierupski

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