[Federal Register Volume 75, Number 201 (Tuesday, October 19, 2010)]
[Notices]
[Pages 64318-64320]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-26314]
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DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
Notice of Issuance of Final Determination Concerning Fairplay
Legacy Electric Vehicles
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 the Fairplay Legacy line of golf and recreational
electric vehicles. Based upon the facts presented, CBP has concluded in
the final determination that the United States is the country of origin
of the Fairplay Legacy line of electric vehicles for purposes of U.S.
Government procurement.
DATES: The final determination was issued on October 13, 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 on or before November 18, 2010.
FOR FURTHER INFORMATION CONTACT: Heather K. Pinnock, Valuation and
Special Programs Branch: (202) 325-0034.
SUPPLEMENTARY INFORMATION: Notice is hereby given that on October 13,
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 Fairplay Legacy line of golf and recreational
electric vehicles which may be offered to the U.S. Government under an
undesignated government procurement contract. This final determination,
in HQ H118435, was issued at the request of Fairplay Electric Cars, LLC
(``Fairplay''), 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
[[Page 64319]]
Fairplay Legacy line of electric vehicles, assembled to completion in
the United States from parts made in non-TAA countries and TAA
countries and/or the United States, are substantially transformed in
the United States, such that the United States is the country of origin
of the finished articles 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: October 13, 2010.
Sandra L. Bell,
Executive Director, Regulations and Rulings, Office of International
Trade.
Attachment
HQ H118435
October 13, 2010
CLA-2 OT:RR:CT:VS H118435 HkP
CATEGORY: Marking
Mr. Keith Andrews, President
Fairplay Electric Cars
743 Horizon Ct., Suite 333
Grand Junction, CO 81506
RE: Government Procurement; Country of Origin of Electric Vehicles;
Substantial Transformation
Dear Mr. Andrews:
This is in response to your letter dated July 20, 2010,
requesting a final determination on behalf of Fairplay Electric
Cars, LLC (``Fairplay''), 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. 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.
This final determination concerns the country of origin of the
Fairplay Legacy line of golf and recreational vehicles. We note that
as a U.S. importer and manufacturer, Fairplay 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. In reaching our decision, we
have taken into account additional information submitted to this
office on August 31, 2010.
FACTS:
The models of vehicles at issue are the following: Legacy Eco
2P, Legacy Eco 2P XR, Legacy Eco 4P, Legacy Deluxe 2P, Legacy Deluxe
XR 2P, Legacy Deluxe LTD 2P, Legacy Deluxe HP 2P, and the Legacy
Transport.
According to the information submitted, Fairplay imports parts
for these vehicles from China. These include chassis, plastic body
parts and various miscellaneous pieces of plastic trim, which are
assembled together in the United States with U.S.-made battery
packs, motors, electronics, wiring assemblies, seats, and chargers.
The bill of materials (BOM) submitted with the request indicates
that, depending on the model, a vehicle may have between
approximately 53 and 62 inputs, when items such as logos/decals,
warranty registration cards, and labor are counted along with the
parts. Of these, between 12 and 17 inputs are of U.S. origin or are
performed in the U.S. Between 44.8% and 53.5% of actual
manufacturing costs are attributed to U.S. or TAA country
manufacturing operations.
Assembly in the U.S. takes place at five different stations and
takes between 11 hours (660 minutes) and 14.25 hours (855 minutes).
The operations performed at each assembly station are described as
follows:
Station 0: The electronic controller plate is assembled and tested.
Approximate assembly time: 90-135 minutes.
Station 1: The chassis is unloaded and given a vehicle
identification number. Wheels, tires, and the steering column are
installed on the chassis using rivets, nuts, bolts, screws, and
plastic push-ins. Approximate assembly time: 180-240 minutes.
Station 2: The batteries, motor, controller, solenoid, wiring
harness and other crucial electronic parts are installed using
rivets, nuts, bolts, and screws or special Molex connectors and
plastic push-ins that must be soldered. Approximate assembly time:
90-120 minutes.
Station 3: The plastic front and rear body, bumpers and dashboard
are installed over the chassis and electronic assembly, which gives
the vehicle its finished appearance. Parts are attached with rivets,
nuts and bolts. The vehicle is then removed from the assembly rack.
Approximate assembly time: 150-180 minutes.
Station 4: The deep cycle batteries, upright canopy supports, canopy
top, seat bottom and back, seat belts, lights, reflectors, decals,
logos and final wiring are installed and tested. The parts are
installed using rivets, Molex connectors, nuts, bolts, screws, and/
or plastic push-ins, as required. Approximate assembly time: 150-180
minutes.
Testing of the fully assembled vehicle lasts between 90 and 195
minutes, depending on the vehicle. In addition, quality control
inspections are performed at each station as well as randomly.
Packing and shipping operations last between 30 and 45 minutes. The
Standard Operating Procedures to assemble the vehicles are designed
by staff engineers, who also select, approve and advise on the
appropriate parts to be used for the manufacture of the vehicles.
ISSUE:
What is the country of origin of the Fairplay Legacy line of
golf and recreational electric vehicles 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 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 Procurement
Regulations. See 19 C.F.R. Sec. 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
C.F.R. Sec. 25.403(c)(1). The Federal Procurement Regulations
define ``U.S.-made end product'' as:
[A]n article that is mined, produces, 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.
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. 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. For example, 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
[[Page 64320]]
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.
You believe that the assembly operations that take place in the
U.S. result in a substantial transformation of the imported parts.
You note that these parts, by themselves, cannot function and must
be assembled with the U.S.-made parts to constitute a working
electric self-propelled vehicle. Given these considerations, you
argue that the U.S. content along with the fact that 100% of the
assembly operations takes place in the U.S. warrants a determination
that the U.S. is the country of origin of the vehicles. In support
of your argument, you cite Headquarters Ruling Letter (``HQ'')
H022169 (May 2, 2008) and HQ 558919 (Mar. 20, 1995).
In HQ H022169, CBP found that an imported mini-truck glider was
substantially transformed as a result of assembly operations
performed in the United States to produce an electric mini-truck.
Our decision was based on the fact that, under the described
assembly process, the imported glider lost its individual identity
and became an integral part of a new article possessing a new name,
character and use. In addition, a substantial number of the
components added to the imported glider were of U.S. origin.
In HQ 558919, a country of origin marking case relied upon in HQ
H022169, U.S. Customs (now CBP) held that an extruder assembly
manufactured in England was substantially transformed in the United
States when it was wired and combined with U.S. components (motor,
electric controls and extruder screw) to create a vertical extruder.
In reaching that decision, Customs emphasized that the imported
extruder subassembly and the U.S. components each had important
attributes that were functionally necessary to the operation of the
extruder. Consequently, we found that the imported subassemblies
should be excepted from individual marking, provided that the
cartons in which the U.S. manufacturer received them were properly
marked with their country of origin.
In both HQ 558919 and HQ H022169, CBP found that assembly of the
imported parts together with the U.S. made components were
``functionally necessary'' to the operation of the finished product.
The same is true in this situation. None of the imported parts, on
their own, can function as an electric vehicle but must be assembled
with other necessary U.S. components, such as the battery pack,
motor, electronics, wiring assemblies and charger. Moreover, given
the complexity and duration of the U.S. manufacturing process, we
consider those operations to be more than mere assembly.
Based on the information before us, and consistent with the CBP
rulings cited above, we find that the Chinese-origin chassis,
plastic body parts and plastic pieces of trim are substantially
transformed by the assembly operations performed in the United
States to produce electric vehicles. Under the described assembly
process, the imported parts lose their individual identities and
become integral parts of a new article possessing a new name,
character and use. Further, components crucial to the making of an
electric vehicle (the battery pack, motor, electronics, wiring
assemblies, and charger) are of U.S. origin. We conclude, based upon
these specific facts, that the country of origin of the Fairplay
Legacy line of electric vehicles for purposes of U.S. Government
procurement is the United States.
HOLDING:
The chassis, plastic body parts and plastic pieces of trim
imported from China are substantially transformed when they are
assembled in the United States with domestic components. As a
result, the country of origin of Fairplay's line of golf and
recreational electric vehicles, specifically the Legacy Eco 2P,
Legacy Eco 2P XR, Legacy Eco 4P, Legacy Deluxe 2P, Legacy Deluxe XR
2P, Legacy Deluxe LTD 2P, Legacy Deluxe HP 2P, and the Legacy
Transport, for purposes of U.S. Government procurement is the United
States.
Notice of this final determination will be given in the Federal
Register, as required by 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 of 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. 2010-26314 Filed 10-18-10; 8:45 am]
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