[Federal Register Volume 75, Number 110 (Wednesday, June 9, 2010)]
[Notices]
[Pages 32803-32806]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-13845]
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DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
Notice of Issuance of Final Determination Concerning a GTX
Mobile+ Hand Held Computer
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 GTX Mobile+ hand held computer. Based upon the
facts presented, CBP has concluded in the final determination that
Canada is the country of origin of the GTX Mobile+ hand held computer
for purposes of U.S. government procurement.
DATES: The final determination was issued on June 2, 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 until July 9, 2010.
FOR FURTHER INFORMATION CONTACT: Robert Dinerstein, Valuation and
Special Programs Branch: (202) 325-0132.
SUPPLEMENTARY INFORMATION: Notice is hereby given that on June 2, 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 GTX Mobile+ hand held computer which may be
offered to the U.S. Government under an undesignated government
procurement contract. This final determination, in HQ H089762, was
issued at the request of Psion Teklogix, 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
[[Page 32804]]
(19 U.S.C. 2511-18). In the final determination, CBP has concluded
that, based upon the facts presented, the combination of the
installation of Canadian developed software on the GTX Mobile+ hand
held computer and the assembly of the device in Canada from parts made
in several different countries, resulted in a substantial
transformation in Canada, such that Canada 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: June 2, 2010.
Sandra L. Bell,
Executive Director, Regulations and Rulings, Office of International
Trade.
Attachment--HQ H089762
June 2, 2010
MAR-2-05 OT:RR:CTF:VS H089762 RSD
Category: Marking
Robert T. Stack, Esq., Tompkins & Davidson, 5 Hanover Square, New York,
NY 10004
RE: United States Government Procurement; Title III, Trade Agreements
Act of 1979 (19 U.S.C. 2511); Subpart B, Part 177, CBP Regulations; GTX
Mobile+ Hand Held Computer; substantial transformation
Dear Mr. Stack: This is in response to your letter dated July 18,
2008, requesting a final determination on behalf of Psion Teklogix,
Inc., (Psion) pursuant to subpart B of Part 177, Customs and Border
Protection (``CBP'') Regulations (19 CFR 177.21 et seq.). CBP issues
country of origin advisory rulings and final determinations on whether
an article is or would be a product of a designated country or
instrumentality for the purpose of granting waivers of certain ``Buy
American'' restrictions in U.S. law or practice for products offered
for sale to the U.S. Government. We have received a supplemental
submission from your office dated March 15, 2010.
This final determination concerns the country of origin of the GTX
Mobile+ hand held computers (GTX Mobile). We note that Psion is a
party-at-interest within the meaning of 19 CFR 177.22(d)(1) and is
entitled to request this final determination. Your request for
confidential treatment regarding all cost and price information
contained in your request is granted and such information will not be
disclosed to the public.
Facts:
The product at issue is the base model of the computer GTX Mobile.
It is used to collect mobile data in the field, conduct emulation
testing on site, and/or transmit data/test information to the user's
home facilities. The GTX Mobile is used in mobile-intensive
applications such as asset tracking, meter reading and mobile ticketing
across a variety of industries. The approximate exterior physical
dimensions of the GTX Mobile are 9 inches in length, with a width
ranging from 3 inches at the grip area to approximately 3.9 inches at
the display area, and a depth ranging from 1.2 inches at the grip to
1.7 inches at the display area. It is battery powered and the various
sub-assemblies forming the computers are housed in a metal chassis and
a plastic exterior.
You indicate that the federal government may want to purchase the
GTX Mobile for various military initiatives and emergency operations
where asset identification and inventory tracking are critical. An
example of basic military use for the GTX Mobile may include tracking
computers and peripherals that are sent overseas. Product literature
was submitted with your request.
The GTX Mobile hand held computer consists of the following
functional components:
1. A subassembly consisting of the main logic board and keyboard,
each individually assembled in China, and joined to the metal chassis
frame in China;
2. The LCD screen sub-assembly, assembled in Japan from primarily
Japanese components, including a screen and a printed circuit board;
3. A data cable and speaker connector for the LCD display screen,
of Japanese origin;
4. An imager sub-assembly assembled in Canada using two PCB boards
(one is an interface board assembled in Canada, and the other is a
decoder board that is assembled in the United States), a camera element
(imager engine) manufactured in the United States, and various
structural and connection components and plastic structural casing
components;
5. An 802.11g radio modem assembled in Taiwan using components from
Japan, Israel, and the United States;
6. An RFID scanner made in Italy (currently an optional additional
data gathering element).
In addition, construction of the unit requires a number of
components, including;
1. A display bezel made in China, with a company logo added in the
United States;
2. An end piece and battery cover from China;
3. A battery from Taiwan;
4. A stylus and stylus holder from China;
5. Optional accessories; and
6. A cover.
As noted above, the imager is assembled at a Psion subsidiary in
Canada. The final assembly for the GTX Mobile takes place at Psion's
Canadian headquarters facility. Assembly of the imager per unit
involves fifteen steps to assemble twelve components. The most
important components are two PCB's and engine.
The assembly process of the GTX Mobile in Canada involves
internally developed product software applications to allow
functionality of the main board, imager and radio. The parts are sent
to the assembly cell units where the required assembly steps are
completed. The physical assembly takes longer if alternative devices
such as the RFID scanner with connection devices or other customer add-
ons are included in the configuration.
The assembly includes attaching the keyboard bezel to the imported
sub-assembly of the keyboard and main logic board, installing the data
cable and speaker connector cable to both the LCD screen and the main
logic board PCB in the chassis, assembling the LCD display screen to
the chassis, installing the display bezel over the LCD portion of the
chassis, pressing the display bezel into the housing, securing the
bezel to the chassis with two screws, attaching the flex cable for the
scanner imager to the 2D imager and the computer chassis, attaching the
scanner console to the chassis, installing the radio card into the CF
card slot, sliding the radio antenna for the radio into the housing
slot, adding a stylus holder in the case housing, installing the end
cap component, and installing the main battery.
Personnel begin software loading using internally developed
fixtures and automated remote configuration software (variables
affecting software versions loaded to particular computers include
radio modem display version keyboard configuration, added devices such
as RFID or other customer
[[Page 32805]]
specifications), which involves the installation of: (a) The Microsoft
license for the Microsoft CE operation system; (b) Psion self-developed
upgraded version of the Microsoft operating system; (c) Psion
``Opentekterm'' proprietary software package that renders the device
operational; (d) security software for the device, (e) Fortress
Technologies Secure Client security software; and Juniper Networks
Odyssey Access Client FIPS and (f) Mobile Control Center Psion
Tekogix's proprietary device management software. The software download
takes approximately four minutes. You indicate that in Canada, Psion
has expended in excess of 150,000 hours in the development of its
proprietary software code for its line of mobile hand held computers,
at a considerable cost. It continues to expend significant sums
annually in upgrading versions of the terminal emulation software of
communication software to enhance performance of the product and to
assure compatibility with component improvements.
After the software is loaded, final functional testing is done for
functional compatibility. These tests are managed by the internally
developed Automated Remote Configuration software application. After
testing, the unit is subject to a variable lot control reporting
process which records all the configuration and software elements for
the unit with the product serial code into a company record system.
The testing and assembly line operation involves two Active Remote
Configuration (ACR) test experts, four manufacturing engineering and
sixteen assembly technicians. The four manufacturing engineering and
two ARC testing experts are responsible for the assembly guides and
software download configuration required for each individual product
line. It generally involves somewhere between 200 and 300 hours of
personnel time per product line.
Issue:
What is the country of origin of the GTX Mobile hand computer for
purposes of U.S. Government procurement?
Law and Analysis:
Pursuant to Subpart B of Part 177, 19 CFR 177.21 et seq., which
implements Title III of the Trade Agreements Act of 1979, as amended
(19 U.S.C. 2511 et seq.), CBP issues country of origin advisory rulings
and final determinations on 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. 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 177.22(a).
In rendering advisory rulings and final determinations for purposes
of U.S. Government procurement, CBP applies the provisions of subpart B
of Part 177 consistent with the Federal Procurement Regulations. See 19
CFR 177.21. In this regard, CBP recognizes that the Federal Procurement
Regulations restrict the U.S. Government's purchase of products to
U.S.-made or designated country end products for acquisitions subject
to the TAA. See 48 CFR 25.403(c)(1).
Therefore, the question presented in this final determination is
whether, as a result of the operations performed in Canada, the GTX
Mobile computer will be substantially transformed into a product of
Canada.
In determining whether the combining of parts or materials
constitutes a substantial transformation, the determinative issue is
the 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, 6 Ct. Int'l Trade 204, 573 F. Supp. 1149
(1983), aff'd, 741 F.2d 1368 (Fed. Cir. 1984). If the manufacturing or
combining process is a minor one which leaves the identity of the
imported article intact, a substantial transformation has not occurred.
Uniroyal Inc. v. United States, 3 Ct. Int'l Trade 220, 542 F. Supp.
1026 (1982). 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, and C.S.D. 90-97.
In order to determine whether a substantial transformation occurs
when components of various origins are assembled to form completed
articles, CBP considers the totality of the circumstances and makes
such decisions on a case-by-case basis. The country of origin of the
article's components, the extent of the processing that occurs within a
given country, and whether such processing renders a product with a new
name, character, or use are primary considerations in such cases.
Additionally, facts such as resources expended on product design and
development, extent and nature of post-assembly inspection procedures,
and worker skill required during the actual manufacturing process will
be considered when analyzing whether a substantial transformation has
occurred; however, no one such factor is determinative.
In several rulings, CBP has analyzed whether the assembly of
electronic equipment such as computers and related devices from various
components resulted in a substantial transformation of those
components. For example, in Headquarters Ruling Letter (HQ) 735541
dated September 15, 1994, one of the two types of assembly operations
described in the ruling involved inserting a floppy disk drive, VGA
docking station board, keyboard, DC/DC converter, as well as a CPU,
RAM, and a hard disk drive into an imported unfinished computer. In
addition, a LCD display assembly and a plastic battery cover were
attached into the computer. We noted that the assembly process involved
several components and also included the assembly of the CPU, which
allowed the computers to function. Consequently, we concluded that in
combining these components in the production of a notebook computer, a
new article of commerce was created that was separate and distinct from
the individual components of which it was composed.
HQ 735608 dated April 27, 1995, involved various scenarios
pertaining to the assembly of a desktop computer in the U.S. and the
Netherlands. In one of the scenarios, foreign components assembled in
the U.S. were the case assembly (including the computer case, system
power supply and floppy disk drive), partially completed motherboard,
CPU (which controls the interpretation and execution of instructions
and included the arithmetic-logic unit and control unit), hard disc
drive, slot board, keyboard BIOS and system BIOS (basic input and
output system). Additional components manufactured in the U.S. or the
Netherlands were assembled into the finished desktop computers
depending on the model included an additional floppy drive, CD ROM
disk, and memory boards. In that case, CBP found that the foreign case
assemblies, partially completed motherboards, hard disk drives and slot
boards underwent a change in name, character and use as a result of the
operations done in the
[[Page 32806]]
U.S. and that the components lost their separate identities in becoming
an integral part of a desktop computer. CBP noted that the finished
article, a desktop computer, was visibly different from any of the
individual foreign components, acquiring a new use, processing and
displaying information. Accordingly, CBP held that the individual
components underwent a substantial transformation as a result of the
operations performed in the U.S. See also HQ 559336 dated March 13,
1996, in which CBP also determined that foreign components, such as
clamshell base, LCD video display, hard disk drive, floppy disk drive,
AC power adapter were substantially transformed by the processing and
assembly operations performed in the United States; and HQ 560633,
dated November 17, 1997.
In this case, in addition to the components and parts being
assembled in Canada, the GTX Mobile hand computers are programmed in
Canada by the installation of Canadian developed software onto the
devices. In Data General v. United States, 4 Ct. Int'l Trade 182
(1982), the Court of International Trade found that for purposes of
determining eligibility under item 807.00, Tariff Schedules of the
United States (the predecessor provision to subheading 9802.00.80,
Harmonized Tariff Schedule of the United States), the programming of a
foreign Programmable Read-Only Memory (``PROM'') chip, substantially
transformed the PROM into a U.S. article. The court noted that it was
undisputed that programming altered the character of a PROM, effecting
a physical change. The essence of the article, its interconnections or
stored memory, was established by programming. The court concluded that
altering the non-functioning circuitry comprising a PROM through
technological expertise in order to produce a functioning read-only
memory device possessing a desired distinctive circuit pattern
constituted ``substantial transformation.'' After the Data General
decision, in a number of previous rulings, CBP has considered whether
the programming devices and electronic equipment constitutes a
substantial transformation of such devices.
In HQ 735027, dated September 7, 1993, CBP considered a
``MemoPlug,'' used to protect software from piracy. It was assembled in
Israel from Taiwanese parts (such as various connectors and an
Electronically Erasable Programmable Read Only Memory, or ``EEPROM'')
and Israeli parts (such as an internal circuit board). After assembly,
the EEPROM was programmed in the U.S. with special software. Such
processing in the United States accounted for approximately 50 percent
of the final selling price of the MemoPlugs. In finding that the
foreign-origin components were substantially transformed in the United
States, CBP noted that the U.S. processing transformed a blank media,
the EEPROM, into a device that performed functions necessary to the
prevention of software piracy.
HQ H034843, dated May 5, 2009, concerned encrypted USB flash
devices (``UFD''), used to protect data when a UF is lost or stolen.
The key hardware component of the UFD was a Japanese origin flash
memory chip. Other components were shipped to China where they were
assembled. In one scenario, the UFD's were shipped to Israel where
firmware application software developed in Israel was installed and
customized into the device. Without application software, the UFD did
not exhibit its security features. CBP held that the country origin of
the encrypted UFD was Israel.
In this instance, we note that the building of the GTX Mobile
requires the assembly of components in Canada, together with an imager
of Canadian origin using subassemblies of various origins. Taking into
account the Canadian assembly of the imager, the total assembly process
requires a number of discrete steps that permit the individual
components to function together as a single unit able to gather,
process, display and transmit information from field operations to
office locations. We, moreover, take note that a complex software
program is loaded onto the GTX Mobile which has been designed and
written entirely in Canada. This software has been designed so that the
customer may centrally manage and troubleshoot remote computer
applications, allowing for communication between computers in distant
locations. We find the creation and installation of the software to be
a crucial element that permits the functioning of the hand held
computers. Therefore, we find that the assembly processes that will
occur in Canada, coupled with the configuration operations also
performed in Canada that require the installation of Canadian-origin
software, will substantially transform the components of non-Canadian
origin into a product with a new name, character, and use. Accordingly,
we find that the country of origin of the GTX Mobile is Canada.
Holding:
The non-Canadian component parts and subassemblies are
substantially transformed in Canada, the location where the
subassemblies and components from various countries are assembled
together to make the GTX Mobile, and where the complex software is
developed and installed onto the device. Therefore, we find that the
country of origin of the GTX Mobile for government procurement purposes
is Canada.
Notice of this final determination will be given in the Federal
Register, as required by 19 CFR 177.29. Any party-at-interest other
than the party which requested this final determination may request,
pursuant to 19 CFR 177.31 that CBP reexamine the matter anew and issue
a new final determination. Pursuant to 19 CFR 177.30, any party-at-
interest may, within 30 days after publication of the Federal Register
Notice referenced above, seek judicial review of this final
determination before the Court of International Trade.
Sincerely,
Sandra L. Bell,
Executive Director, Office of Regulations and Rulings, Office of
International Trade.
[FR Doc. 2010-13845 Filed 6-8-10; 8:45 am]
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