[Federal Register Volume 75, Number 59 (Monday, March 29, 2010)]
[Notices]
[Pages 15448-15450]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-6832]
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DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
Notice of Issuance of Final Determination Concerning a Wood Chest
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 certain wood chest. Based upon the facts
presented, CBP has concluded in the final determination that the U.S.
is the country of origin of the wood chest for purposes of U.S.
government procurement.
DATES: The final determination was issued on March 23, 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 April 28, 2010.
FOR FURTHER INFORMATION CONTACT: Elif Eroglu, Valuation and Special
Programs Branch: (202) 325-0277.
SUPPLEMENTARY INFORMATION: Notice is hereby given that on March 23,
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 wood chest which may be offered to the U.S.
Government under an undesignated government procurement contract. This
final determination, in Headquarters Ruling Letter (``HQ'') H083693,
was issued at the request of J. Squared, Inc. d/b/a University Loft
Company 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 wood chest, assembled in the
U.S. from parts made in Malaysia and the U.S., is 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
[[Page 15449]]
177.22(d), may seek judicial review of a final determination within 30
days of publication of such determination in the Federal Register.
Dated: March 23, 2010.
Myles B. Harmon,
Acting Executive Director, Regulations and Rulings, Office of
International Trade.
Attachment
HQ H083693
March 23, 2010
OT:RR:CTF:VS H083693 EE
CATEGORY: Marking
Lisa A. Crosby
Sidley Austin, LLP
1501 K Street, NW
Washington, D.C. 20005
RE: U.S. Government Procurement; Title III, Trade Agreements Act of
1979 (19 U.S.C. Sec. 2511); Subpart B, Part 177, CBP Regulations; Wood
Chest
Dear Ms. Crosby:
This is in response to your correspondence of November 4, 2009,
requesting a final determination on behalf of J. Squared, Inc. d/b/a
University Loft Company (``ULC''), pursuant to subpart B of part 177,
Customs and Border Protection (``CBP'') Regulations (19 CFR 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 the
G10624-30 Wood Chest. We note that ULC is a party-at-interest within
the meaning of 19 CFR Sec. 177.22(d)(1) and is entitled to request
this final determination.
FACTS:
You describe the pertinent facts as follows. ULC's principal place
of business is in Greenfield, Indiana. The company manufactures the
wood chest at its facility in Greenfield, Indiana. The wood chest is a
self-centering, stackable, two-drawer chest made of environmentally
farmed hevea brasiliensis wood in a natural finish. Its dimensions are:
36\1/4\ wide, 21\13/16\ deep and 18\11/
16\ high. ULC designed this chest wholly within the U.S. ULC
makes the wood chest from U.S. and imported components at its facility
in Greenfield, Indiana.
You state that the wood chest contains over twenty components plus
screws and other hardware. All of the materials are of U.S. or
Malaysian origin. Production and packaging of the chest occurs in the
U.S.
You submitted the bill of materials for the wood chest. Of the
total cost of production, 40 percent is attributable to materials of
U.S. origin, U.S. warehouse overhead and U.S. labor costs (including
overhead). Some of the components from Malaysia include the following:
drawers, panels, drawer frame pieces, top shelf frame pieces, drawer
slides, and screws. The laminate top originates in the U.S. You
submitted a photographic illustration of the U.S. production. The
production of the wood chest takes approximately forty-one minutes. You
claim that each step is completed by skilled workers who undergo an
extensive training process.
The production of the wood chest begins by staging the left and
right side panels for assembly. These panels are moved into the slide
attachment workstation, where two drawer slides are drilled into place
on each side panel using screws. A jig is used to ensure exact
placement of the drawer slides. Next, two drawer frame assemblies and
one top frame assembly are constructed from wood pieces imported from
Malaysia. The wood pieces are hand-fitted together with glue and
measured against a jig to ensure the frames meet exact specifications.
After the various frame pieces are glued together, the frame is clamped
and bradded to maintain a tight fit until the glue dries. The three
frame assemblies (two drawer frames and one top frame) are then
attached to the left and right side panel assemblies using screws and
glue. The laminate top (U.S.-origin) and back panel are then affixed to
the frame/side panel assembly using glue and screws.
On a separate production line, drawer assemblies are staged for
production. A jig is used to align the drawer slides and attach them to
the drawer assemblies with screws. The drawer assemblies with slides
are then inserted into the chest and adjustments are made as necessary
to meet specifications and ensure a smooth operation.
After final assembly, the wood chest undergoes a quality control
review, during which the contract manufacturer and ``Friends of the
World'' labels (reflecting that the wood is sustainably harvested) are
affixed to the inside of the top drawer. The chest is then packaged
using shrink-wrap and recycled cardboard. Finally, the packaged chest
is palletized and labeled for shipment/delivery.
ISSUE:
What is the country of origin of the wood chest for the purpose 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 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
CFR 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 CFR 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 CFR Sec. 25.003.
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
[[Page 15450]]
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 Carlson Furniture Industries v. United States, 65 Cust. Ct. 474
(1970), the U.S. Customs Court ruled that U.S. operations on imported
chair parts constituted a substantial transformation, resulting in the
creation of a new article of commerce. After importation, the importer
assembled, fitted, and glued the wooden parts together, inserted steel
pins into the key joints, cut the legs to length and leveled them, and
in some instances, upholstered the chairs and fitted the legs with
glides and casters. The court determined that the importer had to
perform additional work on the imported chair parts and add materials
to create a functional article of commerce. The court found that the
operations were substantial in nature, and more than the mere assembly
of the parts together.
In HQ W563456, dated July 31, 2006, CBP held that certain office
chairs assembled in the U.S. were a product of the U.S. for purposes of
U.S. government procurement. The office chairs were assembled from
seventy U.S. and foreign components. The imported components alone were
insufficient to create the finished chairs and substantial additional
work and materials were added to the imported components in the U.S. to
produce the finished chairs. In finding that the imported parts were
substantially transformed in the U.S., CBP stated that the components
lost their individual identities when they became part of the chair as
a result of the U.S. assembly operations and combination with U.S.
components. In HQ 561258, dated April 15, 1999, CBP determined that the
assembly of numerous imported workstation components with the U.S.-
origin work surface into finished workstations constituted a
substantial transformation. CBP held that the imported components lost
their identity as leg brackets, drawer units, panels etc. when they
were assembled together to form a workstation.
This case involves twenty main components which are proposed to be
assembled in the U.S., largely by skilled workers. The laminate top, of
U.S. origin, will be assembled into the wood chest in a twenty step
process which will take approximately forty-one minutes. Under the
described assembly process, we find that the foreign components lose
their individual identities and become an integral part of a new
article, the wood chest, possessing a new name, character and use.
Based upon the information before us, we find that the components that
are used to manufacture the wood chest, when combined with a U.S.
origin laminate top, are substantially transformed as a result of the
assembly operations performed in the U.S., and that the country of
origin of the wood chest for government procurement purposes is the
U.S.
HOLDING:
The imported components that are used to manufacture the wood chest
are substantially transformed as a result of the assembly operations
performed in the U.S. Therefore, we find that the country of origin of
the wood chest for government procurement purposes is the U.S.
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 of
the Federal Register notice referenced above, seek judicial review of
this final determination before the Court of International Trade.
Sincerely,
Myles B. Harmon,
Acting Executive Director, Regulations and Rulings, Office of
International Trade.
[FR Doc. 2010-6832 Filed 3-26-10; 8:45 am]
BILLING CODE 9111-14-P