[Federal Register Volume 76, Number 74 (Monday, April 18, 2011)]
[Notices]
[Pages 21775-21778]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-9327]
-----------------------------------------------------------------------
DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
Notice of Issuance of Final Determination Concerning Certain
Office Workstations
AGENCY: U.S. Customs and Border Protection, Department of Homeland
Security.
ACTION: Notice of final determination.
-----------------------------------------------------------------------
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 office workstations. Based upon the facts
presented, CBP has concluded in the final determination that the U.S.
is the country of origin of the office workstations for purposes of
U.S. government procurement.
DATES: The final determination was issued on April 11, 2011. 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 May 18, 2011.
FOR FURTHER INFORMATION CONTACT: Elif Eroglu, Valuation and Special
Programs Branch: (202) 325-0277.
SUPPLEMENTARY INFORMATION: Notice is hereby given that on April 11,
2011, 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 Vivo and Ethospace office workstations which
may be offered to the U.S. Government under an undesignated government
procurement contract.
This final determination, Headquarters Ruling Letter (``HQ'')
H134536, was issued at the request of Herman Miller, 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 has concluded that, based
upon the facts presented, the assembly of the Vivo and Ethospace office
workstations in the U.S., from parts made in China, Mexico, and the
U.S., constitutes a substantial transformation, 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: April 11, 2011.
Sandra L. Bell,
Executive Director, Regulations and Rulings, Office of International
Trade.
Attachment
HQ H134536
April 11, 2011
OT:RR:CTF:VS H134536 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;
Office Workstations
Dear Ms. Crosby: This is in response to your correspondence of
November 15, 2010, supplemented by your letter of March 10, 2011,
requesting a final determination on behalf of Herman Miller, Inc.
(``Herman Miller''), pursuant to subpart B of part 177, U.S. 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 the
Vivo and Ethospace office workstations. We note that Herman Miller
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:
Herman Miller is a U.S. supplier of furniture products and
accessories for home, office, healthcare and learning environments.
The merchandise at issue is Herman Miller's Vivo and Ethospace
office workstations. You state that Herman Miller engineered and
designed the office workstations wholly within the U.S. The assembly
and installation of the office workstations, from U.S. and imported
components, occurs in the U.S.
You state that the Vivo and Ethospace office workstations both
feature ``frame-and-tile'' construction, which consists of a sturdy
steel frame on which a variety of components can be hung, including
shelving, storage units, drawer units, work surfaces, lighting,
decorative tiles/panels, etc. The open frame also has a large
capacity to house wiring and cable, permitting a workstation to
accommodate computers, printers and other office equipment.
You state that the Vivo and Ethospace office workstations can be
assembled in a
[[Page 21776]]
variety of configurations, depending on the needs and constraints of
a given office space. Herman Miller offers 90-, 120-, and 135-degree
connectors for its workstations which permit its customers to shape
their office environment--enclosed, open, facing in, facing out,
shared, private, etc. The height of a workstation can also vary from
30 to 118 inches, permitting different levels of privacy.
You state that Herman Miller's sales representatives, which are
often independent distributors, work directly with each customer to
design a workstation architecture best suited to the specific office
space. Once a design decision has been made, Herman Miller receives
from its sales representative a detailed order identifying each
component that will be used in the custom workstation. Herman Miller
operates on a make-to-order manufacturing schedule; therefore, when
an order is received from a sales representative, Herman Miller
orders from its supply chain the parts and components necessary to
begin the manufacturing process. Herman Miller manufactures certain
components as necessary and palletizes all of the components for
shipment to a customer site in the U.S. At the customer site, the
components are assembled together according to the custom design.
Herman Miller does not permit its customers to purchase workstations
for self-installation. Rather, trained furniture installers employed
by Herman Miller's distributors/representatives install the
workstations.
You state that depending on the specific configuration selected
by a customer, a Vivo and Ethospace office workstation can be made
up of hundreds of components, including metal frames, laminated work
surfaces, painted or fabric tiles, cabinet doors, electrical
accessories and other hardware. With respect to the two
representative configurations identified for purposes of this ruling
request, you state that the Vivo office workstation has
approximately 40 components (excluding fasteners and brackets) and
the Ethospace office workstation has approximately 14 components
(excluding fasteners and brackets). All of the materials are of
U.S., Chinese, or Mexican origin.
You submitted the costed bills of materials for the
representative Vivo office workstation and the Ethospace office
workstation. The Vivo workstation's components from China include:
connectors, connection hardware, and surface cantilevers. The
components from Mexico include: a power harness extender, power
harnesses, and receptacles. Components originating in the U.S.
include: frames, connector covers, top cap connectors, finished
ends, tiles, work surfaces, open supports, sliding door storage
units, utility task lights, v-pull freestanding pedestals, and v-
pull freestanding lateral files. The Ethospace workstation's
components from China are draw rods. The components from the U.S.
include: tiles, frames, connectors, finished ends, work surfaces, a
flipper door unit, a shelf, task lights, and a w-pull support
pedestal. The installation times for the representative Vivo and
Ethospace workstations are approximately seven and a half hours and
seven hours, respectively. Of the total cost of production for the
Vivo workstation, 83 percent is attributable to U.S. origin costs,
including materials, labor, and overhead. Of the total cost of
production for the Ethospace workstation, 98 percent is attributable
to U.S. origin costs.
You state that Herman Miller self-manufactures many of the
components used in its workstations at its Michigan facility. For
example, with respect to the work surfaces used in its workstations,
Herman Miller staff cut-to-size domestically-sourced raw particle
board and then bond to each board a high pressure laminate top, a
backer and edge bands. With respect to the frames, Herman Miller
staff roll form rolled steel (coils) from a domestic source into
rails and stiles, which are then welded together using a special
fixture to form the frames for its workstations. Staff then apply an
autophoretic coating to the frames (requiring five stages) and
attach glides to the bottoms of the frames. Herman Miller staff also
manufacture the tiles used in workstations, using U.S.-origin raw
materials.
You state that the installation procedures for the Vivo and
Ethospace office workstations are substantially similar. The first
step in installing a workstation is to mark the perimeter for the
workstation based on its layout. This is done by laying strips of
tape on the ground in the form of the layout for the walls. Next,
electrical and non-electrical wall bases are laid along the tape
lines. The electrical bases are then wired, which entails running
wires along the bases and connecting the wires to a power source and
the electrical outlets in the bases.
Once the bases are in place, the frames for the wall panels,
windows and other features of the workstation are installed. The
frames are fitted on top of the bases and secured with brackets and
hand-driven screws. As the frames are inserted, the electrical
wiring is run through the interior of the frame as needed to
accommodate the location of the power source.
The wall panels, windows and other special tiles are then
installed in the bases and frames. The bottom of a wall panel is
inserted into the slot of a base and the slots of the surrounding
frame. This step is repeated until all of the wall panels are joined
to their corresponding bases and frames. In some cases, a half-sized
wall panel is used so that a window or special tile may be installed
above it. A window/tile is attached to a half-size wall panel and
the corresponding frame using brackets, hand-driven screws and other
fasteners. This step is repeated until all wall panels and windows/
tiles are securely connected.
Next, the frame connectors of the workstation are assembled. The
connectors are slid into the frames. They are then secured with
hand-driven screws and other fasteners. This step is repeated until
all of the frames are connected.
The tops of the wall panels are then finished. This involves
fastening caps and top plates to the top of each wall panel to
eliminate rough edges. These items are then secured with hand-driven
screws and other fasteners.
With the structure of the office workstation thus in place, the
work surface is installed next. Brackets are mounted on the relevant
panels and secured with hand-driven screws and other fasteners. The
work surface is then placed on the brackets, adjusted to ensure that
it is level, and secured with hand-driven screws and other
fasteners. Open supports are added to either side of the work
surface to enhance stability. They are secured to the work surface
with hand-driven screws and other fasteners.
Shelves, flipper units, and sliding door storage units are then
added to the office workstation in a similar manner. Brackets are
first fitted and secured into place with hand-driven screws and
other fasteners. Then, the shelves, flipper units and storage units
are placed onto the brackets, leveled, and secured with hand-driven
screws and other fasteners.
The bookcase is installed next by sliding it beside the relevant
wall panels and ensuring that it is level. The leg glides are
adjusted as necessary. A drawer handle also is added to the bookcase
and installed using hand-driven screws.
You provided a copy of the product datasheets for the Vivo and
Ethospace office workstations as well as photos of the
representative configurations for a Vivo office workstation and an
Ethospace office workstation. Additionally, you provided a copy of
the design materials, the list of patents applicable to the Vivo and
Ethospace office workstations, a video which depicts the
installation procedures for the Vivo and Ethospace office
workstations, the overview of Herman Miller's installation
certification program, the installation procedures, and a breakdown
of the time typically required to install the representative Vivo
and Ethospace workstations.
ISSUES:
1) What is the country of origin of the Vivo and Ethospace
office workstations for the purpose of U.S. government procurement?
2) Whether Herman Miller is the ultimate purchaser of the
imported components and whether only their outermost container needs
to be marked.
LAW AND ANALYSIS:
Government Procurement
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
[[Page 21777]]
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 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 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 Headquarters Ruling Letter (``HQ'') 561258, dated April 15,
1999, CBP determined that the assembly of numerous imported
workstation components with the U.S.-origin work surface, the
essential and largest component of the workstation, into finished
workstations constituted a substantial transformation. CBP found
that the imported components lost their identity as leg brackets,
drawer units, panels, etc. when they were assembled together to form
a workstation.
In the instant case, the Vivo office workstation has
approximately 40 components and the Ethospace office workstation has
approximately 14 components which are proposed to be assembled in
the U.S. Regarding both types of workstations, we note that the
major components such as the work surfaces, the frames, and the
tiles are of U.S. origin. Regarding the Vivo workstation, the U.S.-
sourced frames, connector covers, top cap connectors, finished ends,
tiles, work surfaces, open supports, sliding door storage units,
utility task lights, v-pull freestanding pedestals, and v-pull
freestanding lateral files will be assembled with the imported
components which will take approximately seven and a half hours.
Regarding the Ethospace workstation, the U.S.-sourced tiles, frames,
connectors, finished ends, work surfaces, flipper door unit, shelf,
task lights, and w-pull support pedestal will be assembled with the
imported components which will take approximately seven hours. 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 Vivo or the Ethospace office workstation,
possessing a new name, character and use. Based upon the information
before us, we find that the imported components that are used to
manufacture the Vivo and the Ethospace office workstations, when
combined with the U.S. origin components, are substantially
transformed as a result of the assembly operations performed in the
U.S., and that the country of origin of the Vivo and the Ethospace
office workstations for government procurement purposes is the U.S.
Marking
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C.
Sec. 1304), provides that unless excepted, every article of foreign
origin imported into the United States shall be marked in a
conspicuous place as legibly, indelibly, and permanently as the
nature of the article (or its container) will permit, in such a
manner as to indicate to the ultimate purchaser in the United
States, the English name of the country of origin of the article.
Congressional intent in enacting 19 U.S.C. Sec. 1304 was ``that the
ultimate purchaser should be able to know by an inspection of the
marking on the imported goods the country of which the goods is the
product. The evident purpose is to mark the goods so that at the
time of purchase the ultimate purchaser may, by knowing where the
goods were produced, be able to buy or refuse to buy them, if such
marking should influence his will.'' States v. Friedlander & Co., 27
C.C.P.A. 297 at 302; C.A.D. 104 (1940). Part 134, U.S. Customs and
Border Protection (CBP) Regulations (19 C.F.R. Sec. 134) implement
the country of origin marking requirements and exceptions of 19
U.S.C. Sec. 1304. Section 134.1(b), CBP Regulations (19 C.F.R.
Sec. 134.1(b)), defines ``country of origin'' as:
[T]he country of manufacture, production, or growth of any
article of foreign origin entering the United States. Further work
or material added to an article in another country must effect a
substantial transformation in order to render such other country the
``country of origin'' within the meaning of [the marking
regulations] * * *
As previously noted, in HQ 561258, dated April 15, 1999, CBP
considered the country of origin marking requirements for certain
workstation office furniture. In that case, the importer
manufactured office workstation furniture in the U.S. using various
components that were manufactured by its subsidiary in Italy. The
Italian components were combined with the work surfaces made in the
U.S., shipped to the customer's site, and assembled by the
importer's installers into finished workstations. Additionally, some
of the Italian components were shipped to the importer and kept in
stock to replace damaged or lost material. These replacement parts
were kept in their original individual packing until they were
required to be shipped to a customer. CBP determined that the
assembly of the imported components with the U.S.-origin work
surface into the finished workstations resulted in a substantial
transformation and that provided the importer installed and
assembled the components together, the importer would be the
ultimate purchaser and it would be acceptable to only mark the outer
shipping crate in which the foreign components were imported.
Similarly in this case, we find that Herman Miller is the
ultimate purchaser since Herman Miller (or its distributor/
representative) substantially transforms the imported components as
a result of installation at the customer's site. Accordingly, it is
acceptable only to mark the outside shipping crate in which the
goods are imported and transported to Herman Miller. With regard to
the replacement parts, provided they are also installed by Herman
Miller (or its distributor/representative), only the outer original
individual packing needs to be marked. However, if the customer
itself is supplied with the replacement parts and performs the
installation, they must receive these replacement parts in properly
marked packing.
HOLDING:
The imported components that are used to manufacture the Vivo
and Ethospace office workstations 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 Vivo and Ethospace office
workstations for government procurement purposes is the U.S.
Provided Herman Miller installs and assembles the components
together, Herman Miller is the ultimate purchaser and it will be
acceptable to only mark the outer shipping crate in which the
foreign components are imported.
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 after publication of the Federal Register notice
referenced above, seek judicial review of this final determination
before the Court of International Trade.
[[Page 21778]]
Sincerely,
Sandra L. Bell
Executive Director
Regulations and Rulings
Office of International Trade
[FR Doc. 2011-9327 Filed 4-15-11; 8:45 am]
BILLING CODE P