[Federal Register Volume 76, Number 104 (Tuesday, May 31, 2011)]
[Notices]
[Pages 31354-31355]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-13384]
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DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
Notice of Issuance of Final Determination Concerning the Transit
Connect Electric Vehicle
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 Transit Connect Electric Vehicle. Based upon
the facts presented, CBP has concluded in the final determination that
the United States is the country of origin of the vehicle for purposes
of U.S. Government procurement.
DATES: The final determination was issued on May 24, 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 30, 2011.
FOR FURTHER INFORMATION CONTACT: Barbara Kunzinger, Valuation and
Special Programs Branch: (202) 325-0359.
SUPPLEMENTARY INFORMATION: Notice is hereby given that on May 24, 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 Transit Connect Electric Vehicle which may be
offered to the U.S. Government under an undesignated procurement
contract. This final determination, in HQ H155115, was issued at the
request of Azure Dynamics 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 Transit Connect
Electric Vehicle, assembled in the United States from parts made in the
United States, Turkey, Switzerland, Hungary, Japan, Germany, Canada,
the United Kingdom, and various other countries is substantially
transformed in the United States, such that the United States 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, Customs 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 24, 2011.
Sandra L. Bell,
Executive Director, Regulations and Rulings, Office of International
Trade.
Attachment
HQ H155115
May 24, 2011
OT:RR:CTF:VS H155115 BGK
CATEGORY: Marking
Scott T. Harrison
Chief Executive Officer
Azure Dynamics Corporation
14925 W 11 Mile Road
Oak Park, MI 48237
RE: Government Procurement; Country of Origin of Electric Vehicles;
Substantial Transformation
Dear Mr. Harrison:
This is in response to your letter, dated March 16, 2011, as
amended April 6, 2011, and April 7, 2011, requesting a final
determination on behalf of Azure Dynamics (Azure), pursuant to
subpart B of 19 C.F.R. part 177.
Under these regulations, which implement Title III of the Trade
Agreements Act of 1979, as amended (19 U.S.C. 2511 et seq.), U.S.
Customs and Border Protection (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
Transit Connect Electric Vehicle (TCE). We note that Azure, the U.S.
importer and manufacturer, is a party-at-interest within the meaning
of 19 C.F.R. 177.22(d)(1) and is entitled to request this final
determination under 19 C.F.R. 177.23(a).
FACTS:
Azure purchases and imports a Transit Connect glider from
Turkey. A glider is a non-functional base without a powertrain or
exhaust components, and consists of a frame, body, axles, and
wheels. The TCE is then assembled in the U.S. from both imported and
U.S.-origin components.
A Bill of Materials was submitted with the request. Apart from
the glider, parts for the TCE are also imported from Switzerland,
Hungary, Japan, Germany, Canada, the United Kingdom, and various
other countries. According to the submission, the TCE vehicle is
composed of 31 components, of which 14 are of U.S.-origin. For
purposes of this decision, we assume that the components of U.S.
origin are produced in the U.S. or are substantially transformed in
the U.S. and considered products of the U.S.
The U.S. assembly occurs at various stations. The assembly
stations at AM General, the manufacturing subcontractor, are
described as follows:
Station 0: A visual quality inspection of the glider is
performed and the materials necessary for assembly are delivered to
the proper stations.
Station 1: A Vehicle Identification Number is assigned. Holes
are drilled into the glider and brackets are installed to support
the battery pack and other electric assembly components. The fuel
door of the glider is removed, assembled into a charge port, and the
charge port is installed. The cab wiring harnesses and instrument
clusters are removed and replaced with U.S. origin cab wiring
harnesses and Hungarian instrument clusters appropriate for electric
vehicles. The low-voltage battery is removed.
Station 2: A U.S.-origin battery pack, U.S. engine bay wiring
harness, German power steering pump and motor, German battery
coolant pump heater, and Turkish power steering lines are installed.
Four subassemblies, which previously are assembled at four
substations using certain U.S. and foreign components, are also
assembled and installed: Cooling pack subassembly, hoses assembly,
high voltage junction box assembly, and traction assembly.
The cooling pack subassembly involves the removal of the
condenser from the radiator included with the glider and the
replacement of the radiator included with glider with a Canadian
radiator that is compatible with electric vehicles. U.S. hoses are
then installed onto the radiator.
The hoses subassembly involves measuring and cutting U.S.-origin
coolant hoses and installing U.S.-origin hoses clips to the hoses.
The high voltage junction box subassembly involves integrating a
Canadian active discharge unit with various U.S. and foreign origin
vent plugs, mounting studs, internal harnesses, fuses and a fuse
holder, and various cables.
The traction subassembly involves the assembly of a U.S. origin
motor controller (manufactured by Azure at a different plant and
referred to as the Force Drive electric powertrain), a U.S. origin
gearbox, a German electric motor, a German origin vacuum pump, a
Swiss charger, a Japanese AC compressor, and a Japanese DC-DC
converter.
Station 3: Multiple quality control inspections are performed.
Various brackets, gaskets, nuts and bolts, and cords and wires are
installed. The original-low voltage battery
[[Page 31355]]
is re-installed, along with the U.S. origin vehicle control unit, a
German driveshaft, and a Japanese heater assembly.
Station 4: The coolant, power steering, and windshield washer
reservoirs are filled. A functional electric test, a diagnostic
test, and a complete system check are performed. Other various
parts, including a potentiometer to the heater blend door, a data
link control wiring harness, and a brake sensor to the brake petal,
are installed, and a tire inflation kit, labels, books, and manuals
are added to the vehicle.
Station 5: A tire pressure check, wheel alignment, headlight
aiming, brake test, battery charge, road test, and underbody check
are performed.
ISSUE:
What is the country of origin of the subject TCE vehicles for
purposes 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 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.
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, 48
C.F.R. Sec. 25.003, define ``U.S.-made end product'' as:
[A]n 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.
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). 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.
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. Whether an operation
is complex and meaningful depends on the nature of the 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.
You claim that the U.S. assembly operations, along with the
value of the U.S. origin contributions (labor and components),
results in a substantial transformation of the imported parts, and
warrants a determination that the U.S. is the country of origin for
purposes of U.S. Government procurement. You also note that ``the 16
foreign components used in the assembly of the TCE vehicle cannot
function alone and must be assembled with the U.S.-origin parts in
order to constitute a working TCE vehicle.'' You cite Headquarters
Ruling Letter (HRL) H022169, dated May 2, 2008, and HRL H118435;
dated October 13, 2010, in support of your argument.
In HRL H118435, the U.S. was determined to be the country of
origin for purposes of U.S. Government procurement for a line of
electric golf and recreational vehicles. In that case, the chassis,
plastic body parts, and various miscellaneous pieces of plastic trim
were imported into the U.S. from China and assembled with U.S.-
origin battery packs, motors, electronics, wiring assemblies, seats,
and chargers. The vehicles were composed of approximately 53 to 62
components, of which between 12 and 17 were of U.S. origin. HRL
H118435 held that none of the imported parts could function as an
electric vehicle on their own and needed to be assembled with other
necessary U.S. components. Additionally, it was held that given the
complexity and duration of the U.S. manufacturing process, the
operations were more than mere assembly. It was determined that a
substantial transformation occurred, and further, the critical
components to making an electric vehicle--battery pack, motor,
electronics, wiring assemblies, and charger--were of U.S.-origin.
The same conclusion was reached in HRL H133455, dated December 9,
2010, in which a chassis and various parts were imported from China
to be combined with U.S.-origin battery packs, motors, electronics,
wiring assemblies, seats, and chargers. The ratio of imported
components to U.S.-made components varied, but the assembly process
was the same.
In HRL H022169, CBP found that an imported mini-truck glider was
substantially transformed as a result of assembly operations
performed in the U.S. to produce an electric mini-truck. The
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. The glider was assembled
with approximately 87 different components, 68 of which were of U.S.
origin. The batteries, charger, and gear box were of U.S. origin,
and other major parts, including the electric motor and brakes, were
of foreign origin.
As stated in HRL H022169 (citing HRL 731076, dated November 1,
1988), CBP considers the manufacture of an automobile more than a
mere simple assembly operation. The assembly process here is complex
and time-consuming and involves a significant U.S. contribution, in
both parts and labor. The components used to power the vehicle are
assembled together in the U.S., and then incorporated into the
vehicle in the U.S. For example, the U.S.-origin battery pack, motor
controller, and wiring harnesses are all critical components for the
operation of the electric vehicle. Furthermore, in HRLs H118435,
H133455, and H022169, it was found that the assembly of the U.S. and
imported components was necessary for the vehicles to function, and
that the assembly resulted in a substantial transformation. We find
the same to be true in this case. The glider and other components
cannot function as an electric vehicle on their own. Therefore,
based on the information discussed and the rulings cited, we find
that the assembly of the glider and other components of various
origins constitutes a substantial transformation and results in an
article with a new name, character, and use, such that the country
of origin for the TCE vehicle is the U.S. for purposes of U.S.
Government procurement.
HOLDING:
Based on the facts of this case, the country of origin of the
TCE vehicle is the United States 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, lany 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
Office of Regulations and Rulings
Office of International Trade
[FR Doc. 2011-13384 Filed 5-27-11; 8:45 am]
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