[Federal Register Volume 75, Number 110 (Wednesday, June 9, 2010)]
[Notices]
[Pages 32806-32809]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-13847]
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DEPARTMENT OF HOMELAND SECURITY
Customs and Border Protection
Notice of Issuance of Final Determination Concerning Certain
Upright and Recumbent Exercise Bikes
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 certain upright and recumbent exercise bikes.
Based upon the facts presented, CBP has concluded in the final
determination that the U.S. is the country of origin of the upright and
recumbent exercise bikes 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: Elif Eroglu, Valuation and Special
Programs Branch: (202) 325-0277.
SUPPLEMENTARY INFORMATION: Notice is hereby given that on June 2, 2010,
[[Page 32807]]
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 upright and recumbent exercise bikes which may
be offered to the U.S. Government under an undesignated government
procurement contract. This final determination, in HQ H095239, was
issued at the request of Brunswick Corporation 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 has concluded that, based upon the facts
presented, the upright and recumbent exercise bikes, assembled in the
U.S. from parts made in Mexico, China, Taiwan, Germany, Indonesia,
Korea and the U.S., are substantially transformed in the U.S., such
that the U.S. 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
H095239
June 2, 2010
OT:RR:CTF:VS H095239 EE
CATEGORY: Marking
Ms. Shannon Fura
Mr. Jeremy Page
PageFura, P.C., 1 South Dearborn, Suite 2100, Chicago, IL
60603
RE: U.S. Government Procurement; Title III, Trade Agreements Act of
1979 (19 U.S.C. Sec. 2511); Subpart B, Part 177, CBP Regulations;
Country of Origin; Upright and Recumbent Exercise Bikes
Dear Ms. Fura and Mr. Page: This is in response to your
correspondence of September 1, 2009, resubmitted January 19, 2010,
forwarded to us by the National Import Specialist (``NIS'')
Division, in which you requested a final determination on behalf of
Brunswick Corporation (``Brunswick''), pursuant to subpart B of part
177, Customs and Border Protection (``CBP'') Regulations (19 C.F.R.
Sec. 177.21 et seq.). Under the pertinent regulations, which
implement 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 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.
This final determination concerns the country of origin of
certain upright and recumbent exercise bikes. We note that Brunswick
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:
You describe the pertinent facts as follows. The items at issue
consist of upright and recumbent exercise bikes produced in the U.S.
from U.S. and foreign components by Brunswick's Life Fitness
Division. You advise that both versions of the bikes are produced in
the U.S. from a range of components and subassemblies. The majority
of the components which comprise the bikes and the various
subassemblies are stated to be of U.S. origin, with a lesser number
sourced from Mexico, China, Taiwan, Germany, Indonesia, and Korea.
All of the subassemblies are produced in the U.S. with the exception
of the standard console assembly, which is produced in Indonesia.
The various subassemblies are ultimately assembled into the final
frame assembly to produce the final product. You state that the
final assembly, which takes place in the U.S., is the most-complex
step in the manufacturing process, requiring the incorporation of
all of the other assemblies in a precise order to ensure the proper
operation of the finished bike. The upright and recumbent exercise
bikes will be tested and packaged in the U.S.
You submitted the list of components for the upright and
recumbent exercise bikes and the origin of each component. You also
submitted illustrations of the upright and recumbent exercise bikes
and the step-by-step assembly process in the U.S.
A. Upright Exercise Bike
The upright exercise bike is produced from a number of distinct
subassemblies which, with the exception of the console assembly, are
assembled in the U.S. The primary subassemblies include the wheel
assembly; the leg leveler and nut assembly; the seat assembly; the
shieve/clutch bearing subassembly; the intermediate pulley/shaft;
the drive pulley/crank hub; the idler-arm assembly; the alternator-
pulley assembly; the rear resistor/bracket/cable assembly; the PCB/
battery assembly; the reed switch/bracket subassembly; the shroud
with decal assembly (left & right); and the handlebar assembly. The
subassemblies are produced concurrently and then joined together
during the final bike frame assembly process.
The assembly of the upright exercise bike is comprised of
approximately 352 individual operational steps and more than 175
components. The production of the subassemblies takes approximately
90 minutes, which includes 30 minutes for the final assembly.
The upright exercise bike assembly process of the principal
subassemblies involves:
1. Pressing flange bearing into wheel using arbor press; (wheel
assembly)
2. Securing insert to wheel and bearing assembly with a screw;
(wheel assembly)
3. Attaching decal seat post and seat with fasteners. Attaching
seat post guide, spring support brackets, guide base with fasteners
and pressing on seat post bumper; (seat assembly)
4. Pressing shieve and clutch bearing using mandrel; (shieve/
clutch bearing subassembly)
5. Securing magnet and standoff assembly to crankshaft assembly
with a screw; (intermediate pulley/shaft)
6. Securing crank hub to pulley with bolts; (drive pulley/crank
hub)
7. Securing pulley to idler arm bracket with nut; (idler-arm
assembly)
8. Securing pulley to alternator with nut and washer;
(alternator-pulley assembly)
9. Assembling resistor, resistor brackets, resistor rod and
covering the assembly with cardboard insulator; (rear resistor/
bracket/cable assembly)
10. Installing wire harness to the resistor terminals with bolts
and nuts; (rear resistor/bracket/cable assembly)
11. Seating stand-offs to PCB bracket with mallet; (PCB/battery
assembly)
12. Securing PCB board to seating stand-offs with screws; (PCB/
battery assembly)
13. Securing battery to PCB bracket with screws; (PCB/battery
assembly)
14. Securing reed switch to reed switch bracket with screws;
(reed switch/bracket subassembly)
15. Decal application on shrouds; (shroud with decal assembly)
16. Assembling of handlebar with electrode (heartbeat
measurement) cable assembly, poly sleeves, and caution labeling and
attaching handlebar end caps with mallet. (handlebar assembly)
B. Recumbent Exercise Bike
Similar to the upright exercise bike, the recumbent exercise
bike is produced from a number of distinct subassemblies which, with
the exception of the console assembly, are assembled in the U.S. The
subassemblies include but are not limited to the resistor-mounting
bracket assembly; the power-PCB bracket assembly; the shroud with
decal assembly (left & right); the leg leveler assembly; the wheel
assembly; the intermediate-pulley assembly; the idler-bracket pulley
assembly; the pulley-clutch assembly; the crank-pulley assembly; the
alternator-pulley assembly; the seat assembly; the lock assembly;
the roller take-up assembly; the seat extrusion assembly; the
battery mounting-bracket assembly; the extrusion endcap assembly;
and the reed-switch mounting bracket assembly. The individual
subassemblies are produced concurrently and then joined together and
sequenced for the final bike frame assembly process to produce the
finished recumbent bike.
The assembly of the recumbent exercise bike is comprised of
approximately 468 individual operational steps and more than 270
components. The production of the recumbent exercise bike takes
approximately 105 minutes, which includes 14 minutes for the final
assembly.
[[Page 32808]]
The recumbent exercise bike assembly process of the principal
subassemblies involves:
1. Securing resistor assembly into bracket with nut; (resistor-
mounting bracket assembly)
2. Seating stand-offs to PCB bracket with mallet; (power-PCB
bracket assembly)
3. Securing the PCB board to stand-offs with screws bracket;
(power-PCB bracket assembly)
4. Decal application on shrouds; (shroud with decal assembly)
5. Assembling nuts to leg levelers; (leg leveler assembly)
6. Securing insert to wheel and bearing assembly with screw;
(wheel assembly)
7. Securing magnet and standoff assembly to crankshaft assembly
with screw; (intermediate-pulley assembly)
8. Securing pulley to idler arm bracket with nut; (idler-bracket
pulley assembly)
9. Pressing shieve and clutch bearing using mandrel; (pulley-
clutch assembly)
10. Securing crank hub to pulley with bolts; (crank-pulley
assembly)
11. Securing pulley to alternator with nut and washer;
(alternator-pulley assembly)
12. Assembling handlebars with seat weldment, cable assembly,
cable sleeve, bottom seat pad, roller take-up assemblies and rollers
using screws, washers and nuts; (seat assembly)
13. Assembling locking block with housing-insert assembly,
compression spring, retainer bearing into housing, with packed
housing. Further assembling and locking in place with groove pin
(using arbor press), anti-rattle washer, knob/bracket assembly and
handle using screws; (lock assembly)
14. Pressing take-up roller shaft through take-up roller plate
with arbor press; (roller take-up assembly)
15. Assembling preload rollers to roller-place assemblies and
assembling e-rings to assemblies; (roller take-up assembly)
16. Assembling seat extrusion with threaded rivets and cable
clamp. Attaching locking rack with fasteners, stop bracket and
bumper strip with screws; (seat extrusion assembly)
17. Securing battery to bracket with screws; (battery mounting-
bracket assembly)
18. Assembling decal to endcap; (extrusion endcap assembly)
19. Securing reed switch to reed switch bracket with screws.
(reed-switch mounting bracket assembly)
ISSUE:
What is the country of origin of the upright and recumbent
exercise bikes for the purpose of U.S. government procurement?
LAW AND ANALYSIS:
Pursuant to subpart B of part 177, 19 C.F.R. 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 C.F.R. Sec. 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 Acquisition
Regulations. See 19 C.F.R. Sec. 177.21. In this regard, CBP
recognizes that the Federal Acquisition 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
C.F.R.Sec. 25.403(c)(1). The Federal Acquisition Regulations define
``U.S.-made end product'' as:
``* * * an article that is mined, produced, or manufactured in the
United States or that is substantially transformed in the United
States 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 transformed.''
48 C.F.R. Sec. 25.003.
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, 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. Factors which
may be relevant in this evaluation may include the nature of the
operation (including the number of components assembled), the number
of different operations involved, and whether a significant period
of time, skill, detail, and quality control are necessary for the
assembly operation. 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. If the manufacturing
or combining process is a minor one which leaves the identity of the
article intact, a substantial transformation has not occurred.
Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026
(1982), aff'd 702 F. 2d 1022 (Fed. Cir. 1983).
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, extent and
nature of post-assembly inspection and testing procedures, and the
degree of skill required during the actual manufacturing process may
be relevant when determining whether a substantial transformation
has occurred. No one factor is determinative.
In a number of rulings (e.g., Headquarters Ruling Letter
(``HQ'') 735608, dated April 27, 1995 and HQ 559089 dated August 24,
1995), CBP has stated: ``in our experience these inquiries are
highly fact and product specific; generalizations are troublesome
and potentially misleading.''
In HQ 735368, dated June 30, 1994, CBP held that the country of
origin of a certain finished bike assembled in Taiwan with
components made in several countries was Taiwan. CBP stated that
because the bicycle was assembled in Taiwan and one of the bicycle's
most significant components, the frame, was made in Taiwan, the
country of origin of the bicycle was Taiwan. Although the other
components came from several different countries, when they were
assembled together in Taiwan, they each lost their separate identity
and became an integral part of a new article of commerce, a bicycle.
In the instant case, the assembly of the upright exercise bike
is comprised of approximately 352 discrete steps and over 175 U.S.
and foreign components. The assembly of the recumbent exercise bike
is comprised of approximately 468 discrete steps and over 270 U.S.
and foreign components. With the exception of the standard console
subassembly, all of the subassemblies are produced in the U.S. from
U.S. and foreign components. The subassemblies are then assembled
into the final frame assembly. We find that under the described
assembly process, the foreign components lose their individual
identities and become an integral part of the articles, the upright
and recumbent exercise bikes, possessing a new name, character and
use. The assembly process that occurs in the U.S. is complex and
meaningful and requires the assembly of a large number of components
into subassemblies to be assembled into the final products. Further,
we note that a substantial number of components are of U.S. origin,
where the assembly occurs, which was an important consideration in
HQ 735368. Therefore, based upon the information before us, we find
that the imported components that are used to manufacture the
upright and recumbent exercise bikes are substantially transformed
as a result of the assembly operations performed in the U.S. and
that the country of origin of the bikes for government procurement
purposes is the U.S.
HOLDING:
The components that are used to manufacture the upright and
recumbent exercise bikes are substantially transformed as a result
of the assembly operations performed in the U.S. Therefore, the
country of origin of the upright and recumbent exercise bikes for
government procurement purposes is the U.S.
Notice of this final determination will be given in the Federal
Register, as required by
[[Page 32809]]
19 C.F.R.Sec. 177.29. Any party-at-interest other than the party
which requested this final determination may request, pursuant to 19
C.F.R.Sec. 177.31, that CBP reexamine the matter anew and issue a
new final determination. Pursuant to 19 C.F.R.Sec. 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, Regulations and Rulings Office of International
Trade.
[FR Doc. 2010-13847 Filed 6-8-10; 8:45 am]
BILLING CODE 9111-14-P