[Federal Register Volume 76, Number 100 (Tuesday, May 24, 2011)]
[Notices]
[Pages 30180-30182]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-12713]
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DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
Notice of Issuance of Final Determination Concerning Pocket
Projectors
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 pocket projectors. CBP was asked to consider two
manufacturing scenarios, under which certain operations would be
performed in Taiwan or in China. Based upon the facts presented, CBP
has concluded that the manufacturing and testing operations performed
in Taiwan do not substantially transform the non-TAA country
components. The light engine module and the PCBA main board are the
essence of the projectors and it is at their production where the last
substantial transformation occurs. Therefore, when the light engine
module and PCBA main board module are assembled and programmed in
China, the country of origin of the projectors is China for purposes of
U.S. government procurement. However, if the light engine module and
PCBA main board module are assembled and programmed in Taiwan, then the
country of origin of the projectors is Taiwan for purposes of U.S.
government procurement.
DATES: The final determination was issued on May 18, 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 June 23, 2011.
FOR FURTHER INFORMATION CONTACT: Heather K. Pinnock, Valuation and
Special Programs Branch: (202) 325-0034.
SUPPLEMENTARY INFORMATION: Notice is hereby given that on May 18, 2011,
pursuant to subpart B of part 177, U.S. Customs and Border Protection
Regulations (19 CFR part 177, subpart B), CBP issued a final
determination concerning the country of origin of pocket projectors
which may be offered to the U.S. Government under an undesignated
government procurement contract. This final determination, HQ H114395,
was issued 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 manufacturing and testing
operations performed in Taiwan do not substantially transform the non-
TAA country components of the projectors. The light engine module and
the PCBA main board are the essence of the projector and it is at their
production where the last substantial transformation occurs. Therefore,
when the light engine module and PCBA main board module are assembled
and programmed in China, the country of origin of the projectors is
China for purposes of U.S. government procurement. However, if the
light engine module and PCBA main board module are assembled and
programmed in Taiwan, then the country of origin of the projectors is
Taiwan for purposes of U.S. government procurement.
Section 177.29, CBP Regulations (19 CFR 177.29), provides that a
notice of final determination 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: May 18, 2011.
Sandra L. Bell,
Executive Director, Regulations and Rulings, Office of International
Trade.
Attachment.
HQ H114395
May 18, 2011
CLA-2 OT:RR:CTF:VS H114395 HkP
CATEGORY: Marking
Munford Page Hall, Esq.
William C. Sjoberg, Esq.
Adduci, Mastriani & Schaumberg LLP, 1200 Seventeenth Street, NW,
Washington, DC 20036
RE: Request for Final Determination on the Country of Origin of
Pocket Projectors
Dear Mr. Hall and Mr. Sjoberg:
This is in response to your letter dated July 6, 2010,
requesting a final determination on behalf of a U.S. importer,
pursuant to subpart B of part 177 of the U.S. Customs and Border
Protection (CBP) 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 a
pocket projector. We note that the U.S. importer 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 in account additional information submitted
to this office on September 27, 2010.
FACTS:
According to the information submitted, the pocket projector is
a 1.97'' x 0.59'' x 4.06'', four ounce, digital light processing
(DLP) projector that uses light emitting diodes (LEDs) as its light
source to project photos and videos from mobile devices onto any
surface. It can produce an image size of up to 60 inches.
The projector is partly comprised of the following components.
Components of Taiwanese origin are:
(1) A digital micromirror device (DMD) (an optical
semiconductor; an extremely precise light switch that enables light
to be modulated digitally via millions of microscopic mirrors
arranged in a rectangular array. Each mirror is spaced less than 1
micron apart);
(2) A Digital Photonic Processor (DPP) 1505 chip that drives the
DMD and stores image data;
(3) An Electrically Erasable Programmable Read-Only Memory
(EEPROM) chip (PROM 1505 chip);
(4) Light emitting Diodes (LEDs);
(5) Lenses that control light for each designated location;
(6) A printed circuit board assembly integrated circuit (PCBA-
IC);
[[Page 30181]]
(7) PCBs for the main board and DMD board; and,
(8) The battery.
In addition, two types of firmware are developed in Taiwan. The
first type of firmware is made up of four categories of data,
developed in either the U.S or Taiwan, that are programmed into the
EEPROM: (1) The startup logo image that is projected on the screen
when the projector is turned on (developed in Taiwan), (2) test
patterns that are projected on the screen to determine whether the
projector meets specifications (developed in the USA), (3) red/
green/blue (RGB) LED duty cycle settings (developed in the USA), and
(4) the Gamma table, which affects the voltage-to-light intensity of
the RGB LEDs (developed in the USA), compiled into one binary file.
The second type of firmware is designed and written in Taiwan. It is
stored in a flash memory chip mounted on the PCBA main board and is
accessed by the video display controller, also on the main board.
Once the projector is operational, the memory chip will send the
information in its file to the processor, i.e., the DPP 1505 chip
that drives the DMD chip, as well as to the thermal thermistor and
to the audio processor.
Components of Chinese origin are:
(1) The projecting lens;
(2) Mirrors;
(3) Parts related to electrical function (e.g., ICs capacitors,
resistors, inductors and transistors).
Components of Japanese origin are:
(1) The fly eyes, a lens array which provides light uniformity;
and
(2) PCBA ICs.
Components of Thai, U.S., Korean, and Malaysian origin are:
PCBA ICs.
In the first scenario we have been asked to consider, the PCBA-
ICs from Japan, Thailand, the U.S., Korea, and Malaysia, and fly
eyes from Japan will be shipped to China. Some Taiwanese origin
components (DMDs, DPP 1505 chips, EEPROMs, LEDs, and lenses) will
also be shipped to China to be assembled with Chinese-origin
components (PCBs, projecting lenses, mirrors, and mechanical parts),
the ICs, and fly eyes to make modules for the light engine and the
PCBA main board. In China, both types of Taiwanese firmware for
operating the projector will also be downloaded to memory chips
located on the light engine and PCBA main board modules. The modules
assembled in China will then be shipped to Taiwan where they will
undergo quality inspections.
In the second scenario, the PCBA-ICs from Japan, Thailand, the
U.S., Korea, and Malaysia, and fly eyes from Japan will be shipped
to Taiwan. The assembly and programming operations that take place
in China, described in the first scenario, will all be performed in
Taiwan.
The next process occurs only in Taiwan, regardless of whether
the processes described above are performed in China or Taiwan. A
top cover, high viscosity protection film, transparent LED lens, top
graphite plate, two thermal pads, a slide switch, inside and outside
lens covers, an anti-dust sponge, and a screw, will be assembled to
form the ``top cover module.'' A bottom cover, battery pull tape,
EMI mylar cover, and graphite plate will be assembled to form the
``bottom cover module.'' The engine module and the PCBA main board
subassemblies imported from China will then be assembled with the
top and bottom cover modules, as well as with components such as a
focus ring, washer, screws, audio-video connector and battery
covers, rubber feet, and a speaker, to create a complete pocket
projector. Assembly processes in Taiwan include gluing, screwing,
fitting and inserting, and adhering by electrostatic means.
The finished projector will undergo a series of tests in Taiwan:
A pre-test, a run-in test, and a function test. The pre-test
consists of: ensuring that the projector has the correct current
value; using a programmable video pattern generator to check the
projected logo, firmware version and model name while the projector
is in Service Mode; and, if necessary, updating (reprogramming) the
firmware installed in China. The run-in test ensures that the
projector displays a clear image over a set period of time, and is
conducted by manipulating the focus ring and making menu selections
on the projector while it is in Service Mode. The function test
involves: Checking resolution, flare, unbalance, gray scale, color
uniformity, projection image, and white pattern; connecting the
projector to a programmable video pattern generator to check the
master pattern for abnormal image and color lines; audio testing
using a DVD player; verifying battery charge/discharge by inserting
a fully charged battery into the projector to ensure that the
projector works; using a light meter to measure brightness, color
uniformity, contrast ratio, and color coordinate; using menu
selections while in Service Mode to double check model name,
firmware version and run-in time; and, if necessary, using menu
selections while in Service Mode to adjust the color parameter of
the firmware on the PCBA main board to optimize the projection
image.
After the projector passes the function test, it will be sent to
the packing department where it will be packaged with an accessory
kit, a user manual, a warranty and other product literature.
ISSUE:
What is the country of origin of the pocket projector 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 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.
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 argue that, regardless of where assembly and programming
operations take place, Taiwan is the country of origin of the
projector because Taiwan is the location where the following actions
occur: design and development of the projector, including the PCBA
used in the projector; addition of the majority of value of the
projector, both in terms of value and labor; fabrication of many of
the parts, including the DMD, the DPP 1505 chip, the PROM 1505 chip
and the LEDs; development of the firmware; the disparate parts are
enabled and made into a functional projector; testing and
adjustments; and, packing. In support of your argument you cite
Headquarters Ruling Letters (HQ) H100055 (May 28, 2010), HQ H034843,
(May 5, 2009), HQ H015324 (April 23, 2008), and HQ 555578 (June 11,
1990), among others.
HQ H100055 concerned the country of origin of a motorized lift
unit, designed, developed and engineered in Sweden, for an overhead
patient lift system. The unit was assembled by teams of employees in
a four segment process: manufacturing the electrical motor, drum and
motor package in a 17 step process; mounting batteries and
installing the exterior covers of the drum/motor assembly in a 5-
step process; connecting a PCBA to the motor, housed drum and
batteries in a three-step process; and, assembling the emergency
strap, cover and end caps in a 14-step process. The PCBA was
assembled and programmed prior to its importation in
[[Page 30182]]
Sweden but it was designed in Sweden and its software program was
written in Sweden. In addition the completed lift unit was tested in
Sweden by an accredited testing institute. CBP found that the
manufacturing and testing operations in Sweden were sufficiently
complex and meaningful to transform the individual components into
the lift unit, thereby making Sweden the country of origin of the
unit.
HQ H034843 concerned the country of origin of a USB flash drive
partially manufactured in China and in Israel or the United States.
Assembly took five minutes to complete and involved six
manufacturing steps: Initial quality control, component mounting;
device housing; software installation and customization; system
diagnosis and testing; and packaging. The first three steps took
place in China and the last three in Israel or the United States.
CBP concluded that there was a substantial transformation either in
Israel or in the United States, depending on the location where the
final three manufacturing operations took place. You refer to the
fact that in reaching our decision, CBP noted that the installation
of the firmware and the application software (developed in Israel)
made the flash drive functional and executed its security features,
and that their installation and customization greatly increased the
value of the flash drive.
In HQ H015324, CBP was asked to determine the country of origin
of stereoscopic displays assembled in the U.S. from non-U.S. parts.
The displays consisted of two LCD monitors, from China or Taiwan,
mounted in a custom-made stand with a special beamsplitter mirror
mounted at a bisecting angle between the two monitors. A graphics
card in the computer transmitted right eye and left eye video
separately. The importer would send one of the monitors to a third-
party in the U.S. for an optical transformation process, after which
the displays would be assembled, aligned and tested. CBP found that
the processing and assembly operations in the U.S. resulted in a
substantial transformation of the imported LCD monitors and the
beamsplitter mirror into a product with a new name, character and
use. In particular, we found that the polarization process performed
in the U.S. changed the essential character of the LCD and imparted
the stereoscopic functionality to the entire system. In addition,
the assembly, testing and alignment of the display required a
significant amount of time and precision by skilled technicians.
In HQ 555578, overhead projectors were produced in Haiti from
components of Belgian and U.S. origin, as well as from parts
fabricated in Haiti. CBP concluded that the operations performed in
Haiti constituted more than a simple combining operation and
resulted in a new and different article of commerce with a new name,
character and use.
In this case, PCBs, memory chips, the DPP chip, integrated
circuits, lenses, and LEDs from Taiwan; mirrors, the projecting
lens, and various mechanical parts, including those relating to
electrical function, from China; fly eyes and ICs from Japan; and,
ICs from Thailand, the United States, Korea, and Malaysia, are
assembled into the light engine module and the PCBA main board
module in China or Taiwan. Through these operations, the individual
parts lose their identities and become integral to the new and
different articles. See Belcrest Linens. If these operations take
place in China, the first scenario, then the country of origin would
be China. If they take place in Taiwan, the second scenario, then
the country of origin of the modules would be Taiwan. See HQ H015324
and HQ 555578.
After carefully considering the pertinent facts, we find that
the assembly of the light engine module and the PCBA main board
module, although not described to us, by their nature should include
attaching active and passive as well as other components to a bare
printed circuit board by soldering, gluing and other means, and is
technically complex. Further, the light engine module and the PCBA
main circuit board have all the major components necessary for the
pocket projector to complete its function. These components are: the
DMD, the processor chip that drives the DMD, the EEPROM chip
programmed with firmware, and other ICs; lenses; and mirrors. See
generally, How DLP Projectors Work, wwwgizmohighway.com/hifi/dlp_projector.htm (last accessed Nov. 9, 2010). Therefore, we find that
the light engine module and PCBA main board manufactured in China or
Taiwan impart the essential character of the projector.
If the light engine module and PCBA main board module are
assembled and programmed in China then, upon importation into
Taiwan, the Chinese modules are joined together with a cable and
then fitted into the top and bottom covers of the projectors made in
Taiwan, which are then screwed and/or glued together. All together,
the assembly, testing, and packaging operations in Taiwan consist of
80 steps and take approximately 2 hours and 20 minutes to complete.
Applying the principle in Belcrest Linens, we find that the fit-
together, glue and screw operations undertaken in Taiwan are not
sufficiently complex and meaningful to transform the Chinese
modules, which are the essence of the projector, into a new article
with a new name, use and identity. Moreover, the Taiwanese
subassemblies, the top and bottom covers of the projectors, are not
necessary for the projector to function. In addition, the testing
performed in Taiwan merely consists of turning on and running the
projector and adjusting its preprogrammed menu selections. Based on
these facts, we find that the last country where a substantial
transformation occurs is China. Therefore, the country of origin of
the projectors is China. If, however, the light engine module and
PCBA main board module are assembled and programmed in Taiwan, then
the country of origin would be Taiwan.
We note that HQ H034843 is distinguishable from this case. In HQ
H034843, the components of the flash drives were mounted and housed
in one country and then the completed drives were shipped to another
country for programming. Likewise, a different fact pattern also
occurs in HQ H100055. In that case, the programming of the PCB took
place in one country and the assembly of the lift unit, including
the incorporation of the programmed PCB into the unit, took place in
another. The motor and drum assembly that formed the essence of the
lift unit was made in Sweden and the PCBA, which was programmed with
software designed and written in Sweden, was incorporated into the
unit in Sweden. In the present case, however, the essential
components of the projector (the engine light module and the PCBA
main board) are fabricated in the same country in which they are
programmed, either China or Taiwan, and housed in Taiwan.
HOLDING:
Based on the facts in this case, we find that the manufacturing
and testing operations performed in Taiwan do not substantially
transform the non-TAA country components. The light engine module
and the PCBA main board are the essence of the projector and it is
at their production where the last substantial transformation
occurs. Therefore, when the light engine module and PCBA main board
module are assembled and programmed in China, the country of origin
of the projectors is China for purposes of U.S. government
procurement. However, if the light engine module and PCBA main board
module are assembled and programmed in Taiwan, then the country of
origin of the projectors is Taiwan for purposes of U.S. government
procurement.
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. 2011-12713 Filed 5-23-11; 8:45 am]
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