[Federal Register Volume 75, Number 107 (Friday, June 4, 2010)]
[Notices]
[Pages 31803-31805]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-13497]
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DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
Notice of Issuance of Final Determination Concerning a Lift Unit
for an Overhead Patient Lift System
AGENCY: U.S. Customs and Border Protection, Department of Homeland
Security.
ACTION: Notice of final determination.
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SUMMARY: This document provides notice that U.S. Customs and Border
Protection (``CBP'') has issued a final determination concerning the
country of origin of a lift unit for an overhead patient lift system.
Based upon the facts presented, CBP has concluded in the final
determination that Sweden is the country of origin of the lift unit for
purposes of U.S. government procurement.
DATES: The final determination was issued on May 28, 2010. A copy of
the final determination is attached. Any party-at-interest, as defined
in 19 CFR 177.22(d), may seek judicial review of this final
determination within July 6, 2010.
[[Page 31804]]
FOR FURTHER INFORMATION CONTACT: Heather K. Pinnock, Valuation and
Special Programs Branch: (202) 325-0034.
SUPPLEMENTARY INFORMATION: Notice is hereby given that on 2010,
pursuant to subpart B of part 177, Customs Regulations (19 CFR part
177, subpart B), CBP issued a final determination concerning the
country of origin of the lift unit which may be offered to the U.S.
Government under an undesignated government procurement contract. This
final determination, in HQ H100055, was issued at the request of Hill-
Rom Company, Inc., under procedures set forth at 19 CFR part 177,
subpart B, which implements Title III of the Trade Agreements Act of
1979, as amended (19 U.S.C. 2511-18). In the final determination, CBP
concluded that, based upon the facts presented, the lift unit,
assembled in Sweden from parts made in a non-TAA country and in Sweden,
is substantially transformed in Sweden, such that Sweden is the country
of origin of the finished article for purposes of U.S. government
procurement.
Section 177.29, Customs Regulations (19 CFR 177.29), provides that
notice of final determinations shall be published in the Federal
Register within 60 days of the date the final determination is issued.
Section 177.30, CBP Regulations (19 CFR 177.30), provides that any
party-at-interest, as defined in 19 CFR 177.22(d), may seek judicial
review of a final determination within 30 days of publication of such
determination in the Federal Register.
Dated: May 28, 2010.
Harold M. Singer,
Acting Executive Director, Regulations and Rulings, Office of
International Trade.
Attachment
HQ H100055
May 28, 2010
OT:RR:CTF:VS H100055 HkP
CATEGORY: Marking
Karen A. McGee, Esq.
Linda M. Weinberg, Esq.
Barnes & Thornburg LLP
750 17th Street, N.W., Suite 900
Washington, DC 20006-4675
RE: Government Procurement; Country of Origin of a Lift Unit for an
Overhead Patient Lift System; Substantial Transformation
Dear Mses. McGee and Weinberg: This is in response to your
letter dated April 1, 2010, requesting a final determination on
behalf of Hill-Rom Company, Inc., pursuant to subpart B of part 177
of the U.S. Customs and Border Protection Regulations (19 C.F.R.
Part 177).
Under these regulations, which implement Title III of the Trade
Agreements Act of 1979 (TAA), as amended (19 U.S.C. 2511 et seq.),
CBP issues country of origin advisory rulings and final
determinations as to whether an article is or would be a product of
a designated country or instrumentality for the purposes of granting
waivers of certain ``Buy American'' restrictions in U.S. law or
practice for products offered for sale to the U.S. Government.
This final determination concerns the country of origin of a
lift unit for the Likorall Overhead Patient Lift System. We note
that as a U.S. importer Hill-Rom is a party-at-interest within the
meaning of 19 C.F.R. Sec. 177.22(d)(1) and is entitled to request
this final determination.
FACTS:
According to the information submitted, the Likorall Overhead
Patient Lift System is a ceiling-mounted or free-standing patient
lift system. The system is capable of lifting and transporting
patients with limited mobility, weighing up to 550 pounds, from one
part of a room to another or from one room to another. It can also
be used for weighing and lifting in combination with a stretcher and
for walking, standing, gait and balance training. The system is
designed to lift and move patients safely while avoiding injuries to
caregivers.
The merchandise at issue, the Likorall lift unit, is the
motorized component of the Overhead Patient Lift System that extends
and retracts the lift belt to which the patient-supporting sling is
attached. The unit is manufactured in 3 basic models: (1) 242, which
has a lifting capacity up to 440 pounds; (2) 243, which has a
lifting capacity up to 507 pounds; and (3) 250, which has a lifting
capacity up to 550 pounds. Models 243 and 250 come in an ``ES''
version, which is equipped with an infrared (IR) receiver for
optional use with a remote control. Model 242 comes in the ``S''
version, which operates only with an attached hand control, as well
as in the ES version. In addition, the 242 model has ``R2R''
versions, which feature a contact for a transfer motor so that the
patient can be moved between two independent overhead rail systems
in separate rooms, without the need for openings above doorways. The
lift unit was designed, developed and engineered in Sweden. It
incorporates approximately 100 components imported from non-TAA
countries, except for the motor, which is imported from a TAA
country and the IR remote control, which is made in Sweden.
At the manufacturing facility in Sweden, teams of employees
assemble the lift unit in a four segment process and perform a 25-
step final functional test under specified conditions. The segments
are: Manufacturing the electrical motor, drum and motor package in a
17-step process; mounting batteries and installing the exterior
covers of the drum/motor assembly in a 5-step process; connecting a
printed circuit board assembly (PCBA) to the motor, housed drum and
batteries in a 3-step process; and, assembling the emergency strap,
cover and end caps in a 14-step process. The PCBA is assembled and
programmed prior to importation into Sweden but is designed in
Sweden and its software program is written in Sweden. During the
final functional test the electronics of the lift unit are checked
and the maximum load is attached to check performance. At the
conclusion of the test, the employee performing the test must
complete a test protocol form, with the original being provided to
the customer and a copy retained by the manufacturer in a test log
that tracks units by serial number. The full manufacturing process
takes approximately 45 minutes and the testing process takes
approximately 15 minutes.
According to the information submitted, the employees
manufacturing the lift unit have mechanical knowledge and skill
related to their work gained from technical secondary education,
product specific training, and certified final functional test
training. The lift unit is also tested by an accredited testing
institute and complies with the requirements of directives for
medical-technical Class 1 products in the European Union (MDD 93/42/
EEC).
Packaged for retail sale with the lift unit is a hand control,
which is attached by cable to the overhead unit and is used to
control power, lifting and lowering of the lift unit's belt, and the
moving of the lift unit along the rails. The hand control plugs into
a contact on one of the end plates and is physically and
electrically connected to the overhead lift unit. It is made in a
non-TAA country. An IR remote hand control (ES versions and 242
ESR2R), which can be used as an alternative to the attached hand
control is also imported with the unit. The remote control and the
PCB it incorporates are made in Sweden. A battery charger, into
which the wired hand control is inserted to charge the batteries
inside the lift unit, is also imported with the lift unit. The
charger is made in the same non-TAA country as the hand control.
ISSUE:
What is the country of origin of the lift unit for purposes of
U.S. government procurement?
LAW AND ANALYSIS:
Pursuant to Subpart B of Part 177, 19 CFR Sec. 177.21 et seq.,
which implements Title III of the Trade Agreements Act of 1979, as
amended (19 U.S.C. Sec. 2511 et seq.), CBP issues country of origin
advisory rulings and final determinations as to whether an article
is or would be a product of a designated country or instrumentality
for the purposes of granting waivers of certain ``Buy American''
restrictions in U.S. law or practice for products offered for sale
to the U.S. Government.
Under the rule of origin set forth under 19 U.S.C. Sec.
2518(4)(B):
An article is a product of a country or instrumentality only if
(i) it is wholly the growth, product, or manufacture of that country
or instrumentality, or (ii) in the case of an article which consists
in whole or in part of materials from another country or
instrumentality, it has been substantially transformed into a new
and different article of commerce with a name, character, or use
distinct from that of the article or articles from which it was so
transformed.
See also 19 CFR Sec. 177.22(a).
In determining whether the combining of parts or materials
constitutes a substantial transformation, the determinative issue is
the
[[Page 31805]]
extent of operations performed and whether the parts lose their
identity and become an integral part of the new article. Belcrest
Linens v. United States, 573 F. Supp. 1149 (Ct. Int'l Trade 1983),
aff'd, 741 F.2d 1368 (Fed. Cir. 1984). Assembly operations that are
minimal or simple, as opposed to complex or meaningful, will
generally not result in a substantial transformation. See C.S.D. 80-
111, C.S.D. 85-25, C.S.D. 89-110, C.S.D. 89-118, C.S.D. 90-51, and
C.S.D. 90-97. In C.S.D. 85-25, 19 Cust. Bull. 844 (1985), CBP held
that for purposes of the Generalized System of Preferences
(``GSP''), the assembly of a large number of fabricated components
onto a printed circuit board in a process involving a considerable
amount of time and skill resulted in a substantial transformation.
In that case, in excess of 50 discrete fabricated components (such
as resistors, capacitors, diodes, integrated circuits, sockets, and
connectors) were assembled. Whether an operation is complex and
meaningful depends on the nature of the operation, including the
number of components assembled, number of different operations,
time, skill level required, attention to detail, quality control,
the value added to the article, and the overall employment generated
by the manufacturing process.
In order to determine whether a substantial transformation
occurs when components of various origins are assembled into
completed products, CBP considers the totality of the circumstances
and makes such determinations on a case-by-case basis. The country
of origin of the item's components, extent of the processing that
occurs within a country, and whether such processing renders a
product with a new name, character, and use are primary
considerations in such cases. Additionally, factors such as the
resources expended on product design and development, the extent and
nature of post-assembly inspection and testing procedures, and
worker skill required during the actual manufacturing process will
be considered when determining whether a substantial transformation
has occurred. No one factor is determinative.
CBP has held in a number of cases that complex and meaningful
assembly operations involving a large number of components result in
a substantial transformation. In Headquarters Ruling Letter (HQ)
H047362, dated March 26, 2009, CBP found that 61 components
manufactured in China and assembled into ground fault circuit
interrupters (GFCIs) in Mexico in a two-phase process by skilled
workers using sophisticated equipment were substantially transformed
in Mexico. In particular, we took into consideration that the first
phase involved the assembly of a PCB in a 42-step technically
complex process that took 12 minutes and that the completed PCB had
all the major components necessary for the GFCI to fulfill its
function. We also took into consideration that in the second phase
the PCB would be assembled with 29 other components to form the
GFCIs in a 43-step process taking approximately 10 minutes, after
which the components would have lost their individual identities and
become an integral part of the interrupters with a new name,
character and use.
By contrast, assembly operations that are minimal or simple will
generally not result in a substantial transformation. For example,
in HQ 734050, dated June 17, 1991, CBP held that Japanese-origin
components were not substantially transformed in China when
assembled in that country to form finished printers. The printers
consisted of five main components identified as the ``head'',
``mechanism'', ``circuit'', ``power source'', and ``outer case.''
The circuit, power source and outer case units were entirely
assembled or molded in Japan. The head and mechanical units were
made in Japan but exported to China in an unassembled state. All
five units were exported to China where the head and mechanical
units were assembled with screws and screwdrivers. Thereafter, the
head, mechanism, circuit, and power source units were mounted onto
the outer case with screws and screwdrivers. In holding that the
country of origin of the assembled printers was Japan, CBP
recognized that the vast majority of the printer's parts were of
Japanese origin and that the operations performed in China were
relatively simple assembly operations.
In this case, approximately 100 components manufactured in non-
TAA countries will be assembled in Sweden in four phases requiring
specialized training. The manufacturing process has 39 steps and
takes 45 minutes. After manufacturing, the unit is subjected to a
25-step testing process, which takes approximately 15 minutes. We
find these manufacturing and testing operations in Sweden to be
sufficiently complex and meaningful, in that individual components'
names, uses and identities are lost and are transformed in Sweden
into the lift unit. Therefore, the country of origin of the lift
unit is Sweden.
You argue that of the lift unit, detachable hand control and
battery charger being imported, the lift unit provides the essential
character of the Likorall System. ``The term `character' is defined
as `one of the essentials of structure, form, materials, or function
that together make up and usually distinguish the individual.' ''
Uniden America Corporation v. United States, 120 F. Supp. 2d. 1091,
1096 (citations omitted) (Ct. Int'l Trade 2000), citing National
Hand Tool Corp. v. United States, 16 Ct. Int'l Trade 308, 311
(1992). In Uniden (concerning whether the assembly of cordless
telephones and the installation of their detachable A/C (alternating
current) adapters constituted instances of substantial
transformation), the Court of International Trade applied the
``essence test'' and found that ``[t]he essence of the telephone is
housed in the base and the handset. Consumers do not buy the article
because of the specific function of the A/C adapter, but rather
because of what the completed handset and base provide:
communication over telephone wires.'' Id. at 1096.
Further, you argue that the detachable hand control and battery
charger are substantially transformed with the lift unit, in that
they have a new character, use and name because they are attached to
and form parts of the Likorall System. In support of this view, you
cite Uniden, supra, in which the court also found that the
detachable A/C adapters underwent a substantial transformation
pursuant to the Generalized System of Preferences (GSP) when
installed into the cordless telephones. The court noted that the
substantial transformation test is to be applied to the product as a
whole and not to each of its detachable components. See id.
Consequently, the court found that the A/C adapter, as part of the
cordless phone, had a new character, use and name.
Based on the findings of the court in Uniden, we agree with your
view that the detachable hand control and battery charger are
substantially transformed when attached to the lift unit.
Consequently, if they are imported from Sweden packaged together
with the lift unit, their country of origin for purposes of U.S.
government procurement will be Sweden.
HOLDING
Based on the facts of this case, we find that the manufacturing
and testing operations performed in Sweden substantially transforms
the non-TAA country components. Therefore, the country of origin of
the lift unit is Sweden for purposes of U.S. government procurement.
Moreover, because the lift unit conveys the essential character of
the Likorall System and the detachable hand control and the battery
charger are parts of that system, they are substantially transformed
when attached to the lift unit. The country of origin of the hand
control and battery charger for purposes of U.S. government
procurement, when imported from Sweden packaged with the lift unit,
is Sweden.
Notice of this final determination will be given in the Federal
Register, as required by 19 CFR Sec. 177.29. Any party-at-interest
other than the party which requested this final determination may
request, pursuant to 19 CFR Sec. 177.31, that CBP reexamine the
matter anew and issue a new final determination. Pursuant to 19 CFR
Sec. 177.30, any party-at-interest may, within 30 days after
publication in the Federal Register Notice referenced above, seek
judicial review of this final determination before the Court of
International Trade.
Sincerely,
Harold M. Singer
Acting Executive Director
Regulations and Rulings
Office of International Trade
[FR Doc. 2010-13497 Filed 6-3-10; 8:45 am]
BILLING CODE 9111-14-P