[Federal Register Volume 76, Number 155 (Thursday, August 11, 2011)]
[Notices]
[Pages 49782-49785]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-20452]
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DEPARTMENT OF HOMELAND SECURITY
CUSTOMS AND BORDER PROTECTION
Notice of Issuance of Final Determination Concerning Certain
Digital 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 certain digital projectors. Based upon the facts
presented, CBP has concluded that the assembly and programming
operations performed in Taiwan substantially transform the non-TAA
country components of the projectors. Therefore, the country of
[[Page 49783]]
origin of the projectors is Taiwan for purposes of U.S. government
procurement.
DATES: The final determination was issued on July 29, 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 September 12, 2011.
FOR FURTHER INFORMATION CONTACT: Heather K. Pinnock, Valuation and
Special Programs Branch: (202) 325-0034.
SUPPLEMENTARY INFORMATION: Notice is hereby given that on July 29,
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 digital projectors
which may be offered to the U.S. Government under an undesignated
government procurement contract. This final determination, HQ H146735,
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 assembly and programming
operations performed in Taiwan substantially transform the non-TAA
country components of the projectors. Therefore, 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: July 29, 2011.
Sandra L. Bell,
Executive Director, Regulations and Rulings, Office of International
Trade.
Attachment
HQ H146735
July 29, 2011
MAR-2 OT:RR:CTF:VS H146735 HkP
Category: Marking
Munford Page Hall, Esq.
William C. Sjoberg, Esq.
Adduci, Mastriani & Schaumberg LLP
1200 Seventeenth Street, NW
Washington, DC 20036.
RE: Final Determination; Substantial Transformation; Country of
Origin of Certain Digital Projectors
Dear Mr. Hall and Mr. Sjoberg:
This is in response to your letter dated January 21, 2011,
requesting a final determination on behalf of a foreign
manufacturer, 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 two
models of digital projectors. We note that as the manufacturer of
the digital projectors, the foreign manufacturer is a party-at-
interest within the meaning of 19 CFR 177.22(d)(1) and is entitled
to request this final determination.
Facts:
According to the submitted information, the subject merchandise
is two models of digital projectors, Model A and Model B
(collectively, the digital projector). The projector is a 9cm x 30cm
x 20cm, 2.5kg, digital light processing (DLP) projector, designed to
use a high-intensity discharge (HID) arc lamp as the light source to
project images from computers and other video sources. It can
produce an image size of up to 307 inches diagonally. The main
differences between Model A and Model B are the resolution of the
projected image and the throw ratio (basically the viewing distance
from the screen).
The projector is composed of the following components:
Components of Taiwanese origin include:
(1) System firmware, which controls the functions of the keypad,
remote controller, USB port, lamp brightness, volume, and on-screen
display main menu, as well as image processing. The fully assembled
projector is programmed in Taiwan with this firmware.
(2) Power control firmware, used to control the on/off function
of the projector and to retrieve the input/output (I/O) setting of
the projector in the latest turn-off from an electronically erasable
programmable read only memory (EEPROM). The firmware detects the
power signal and transmits the command to the low voltage power
supply (LVPS) to output the required voltage for the system and the
lamp. The firmware also controls the operation of the fans and
detects their operating status. The fully assembled projector is
programmed in Taiwan with this firmware.
(3) Extended Display Identification Data (EDID) firmware, a
Video Electronics Standard Association (VESA) data format that
contains basic information about the projector and its capabilities,
including vendor information, maximum image size, color
characteristics, factory pre-set timings, frequency range limits,
and character strings for the model name and serial number. The
information is stored in the display and uses the Display Data
Channel (DDC) to communicate between the projector and a personal
computer graphics adapter. The system uses this information for
configuration purposes. The fully assembled projector is programmed
in Taiwan with this firmware.
(4) Network firmware, which contains the network protocol, is
used to receive instructions to control the projector from a remote
user using a computer. The firmware may be updated in Taiwan during
the assembly and testing processes.
Components of Chinese origin include:
(1) Bottom cover module, comprised of parts from Korea, China,
and Taiwan.
(2) Elevator module, used to adjust the height of the projector,
comprised of parts from China and Japan.
(3) Right cover module, comprised of parts from China.
(4) Input/Output (I/O) cover module, comprised of parts from
China.
(5) Top cover module, comprised of parts from Japan, Taiwan,
China, the U.S., and Korea.
(6) Cosmetic module, comprised of parts from China.
(7) Fan modules, comprised of the system (axial) fan module and
the lamp blower module attached to the lamp housing, comprised of
parts from China.
(8) Lamp driver (ballast) module, comprised of parts from China.
(9) Lamp driver firmware, used to control lamp ignition and to
obtain the ballast waveform that controls the output current with
respect to the angle of the color wheel. White light, generated by a
high intensity discharge arc lamp, passes through the filter to
generate different colors. The firmware is programmed into an IC on
the lamp driver module (Chinese component no. 8) in China.
(10) Color wheel module, which includes the color wheel, photo
sensor board with photo sensor, and bracket. It acts as a time-
varying wavelength filter to allow certain wavelengths of light to
pass through at the appropriate times so that the filtered light may
be modulated by the light valve, DMD (digital micromirror device,
i.e., an optical semiconductor), to produce the projected image with
full color. Module parts are from Japan, China, and Taiwan.
(11) Zoom ring module, comprised of parts from China.
(12) Lamp module, comprised of parts from China.
(13) Lamp cover module, comprised of parts from China.
(14) Semi-finished optical engine module, which includes a
Taiwanese-origin DMD, a DMD board, an optical lens, a projection
lens, and rod integrator. Module parts are from Taiwan and China.
(15) Main board module, which stores the system firmware
(Taiwanese component no. 1) on a Taiwanese-origin DDP2431 processor,
comprised of parts from China, the Czech Republic, Taiwan, Japan,
Korea, and the U.S.
(16) Low voltage power supply (LVPS) module, comprised of parts
from Taiwan, Japan, Korea, China, and the U.S.
(17) Local area network (LAN) module board, comprised of parts
from the U.S. and
[[Page 49784]]
unnamed countries. It is programmed with Taiwanese-origin network
firmware (Taiwanese component no. 4) in China.
(18) Miscellaneous items: screws, EMI gaskets, tape (Mylar and
3M), 16-pin wiring, brackets, main board spacers, insulating rubber,
Mylar film, and elevator feet.
Modules 1-8 and 10-17 are assembled in China and shipped to
Taiwan. The miscellaneous Chinese components described at no. 18
above are also shipped to Taiwan to be assembled with the 16 Chinese
modules.
In Taiwan, the imported modules and components are inspected and
then assembled into a complete digital projector using the Chinese
screws, EMI gaskets, tape (Mylar and 3M), 16-pin wiring, brackets,
main board spacers, insulating rubber, Mylar film, and an elevator
foot. The projector is then programmed with the power control
firmware and system firmware developed in Taiwan, and then subjected
to various tests. During the testing stage, the projector is also
loaded with Taiwanese-origin EDID firmware, which programs the
identification of the projector into the EEPROM on the main board.
ISSUE:
What is the country of origin of the projector 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 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 Data General v. United States, 4 Ct. Int'l Trade 182 (1982),
the court determined that for purposes of determining eligibility
under item 807.00, Tariff Schedules of the United States
(predecessor to subheading 9802.00.80, Harmonized Tariff Schedule of
the United States), the programming of a foreign PROM (Programmable
Read-Only Memory chip) in the United States substantially
transformed the PROM into a U.S. article. In programming the
imported PROMs, the U.S. engineers systematically caused various
distinct electronic interconnections to be formed within each
integrated circuit. The programming bestowed upon each circuit its
electronic function, that is, its ``memory'' which could be
retrieved. A distinct physical change was effected in the PROM by
the opening or closing of the fuses, depending on the method of
programming. This physical alteration, not visible to the naked eye,
could be discerned by electronic testing of the PROM. The court
noted that the programs were designed by a U.S. project engineer
with many years of experience in ``designing and building
hardware.'' While replicating the program pattern from a ``master''
PROM may be a quick one-step process, the development of the pattern
and the production of the ``master'' PROM required much time and
expertise. The court noted that it was undisputed that programming
altered the character of a PROM. The essence of the article, its
interconnections or stored memory, was established by programming.
The court concluded that altering the non-functioning circuitry
comprising a PROM through technological expertise in order to
produce a functioning read only memory device, possessing a desired
distinctive circuit pattern, was no less a ``substantial
transformation'' than the manual interconnection of transistors,
resistors and diodes upon a circuit board creating a similar
pattern.
You argue that Taiwan is the country of origin of the projector
because it is the country in which the following actions occur:
design and development of the projector, including the main board;
addition of the majority of the value (materials and labor);
fabrication of many parts, including the data processors (the DMD
and DDP2431) that are claimed to be the major functional parts of
the projector; development of four of the five firmware files used
to operate the projector; programming of the main board with system
firmware and programming of the control panel with power control
firmware; assembly of the Chinese modules with disparate parts to
make a functional projector; and, testing and adjustment of the
projector. You point out that 60 percent of the total cost of
materials (including accessories and packing material) comes from
the United States and TAA designated countries, and that the
processing in Taiwan will require 180 steps, including assembly,
programming, testing, and packing.
Further, you claim that the Chinese modules are substantially
transformed in Taiwan when they are assembled into a projector. As a
result of the color wheel module being assembled with the semi-
finished optical engine module in Taiwan, the HID arc lamp can be
used as a light source and the DMD can be used as a light valve to
produce color images. When the lamp ballast is connected to the
LVPS, the ballast gains a power source, and when connected to the
main board, the lamp can be controlled. Connecting the Chinese main
board module to the semi-finished optical engine module, the DMD
board, fan modules, and color wheel module allows all the boards
attached to the main module to be controlled. The LVPS powers the
main board so that the modules attached to it can operate. Finally,
assembling the top cover module with the main board module allows
the projector to be controlled through the keypad.
You state that factors such as the resources expended on design
and development, extent and nature of post-assembly inspection and
testing procedure, and worker skill required during the
manufacturing process have been considered in determining whether a
substantial transformation occurred. In support of your position you
cite Headquarters Ruling Letters (HQ) H100055 (May 8, 2010), H034843
(May 5, 2009), and H015324 (April 23, 2008), 559534 (June 4, 1996),
among others.
HQ H100055 concerned a motorized lift unit, designed, developed
and engineered in Sweden, for an overhead patient lift system. The
PCBA was assembled and programmed prior to its importation in Sweden
but it was designed in Sweden and its software program was written
in Sweden. The unit was then assembled in Sweden, which included the
manufacture of the electrical motor. 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 a USB flash drive partially manufactured
in China and 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. HQ H015324 involved
stereoscopic displays assembled in the U.S. from non-U.S. parts.
U.S. assembly resulted in a substantial transformation of imported
LCD monitors and a beamsplitter mirror.
In this case, the bottom cover module, elevator module, right
cover module, I/O cover module, cosmetic module, two fan modules,
lamp driver module programmed in China with Chinese firmware, zoom
ring module, lamp module, lamp cover module, semi-finished optical
engine module, color wheel module, main board module, top cover
module, LAN module programmed in China with Taiwanese-origin
firmware, and the LVPS module, from China are assembled together in
Taiwan with other Chinese components to form a complete projector.
After assembly, the projector is programmed in Taiwan with three
types of firmware developed in Taiwan. The first, power control
firmware, is used to control on/off functions and to retrieve the
input/output setting from the last time the projector was turned
off. The second, system firmware, controls the functions of the
keypad, remote control, USB port, lamp brightness, volume, on-screen
display menu, and image processing. The third, EDID firmware,
contains basic information about the
[[Page 49785]]
projector, such as maximum image size, color characteristics,
factory pre-set timings, and frequency range limits. We find that
the assembly and programming operations performed in Taiwan are
sufficiently complex and meaningful so as to create a new article
with a new character, name and use. See, for e.g., HQ H034843 and
H100055. Moreover, we note that some of the Chinese modules were
made using Taiwanese parts. Through the operations undertaken in
Taiwan, the individual parts lose their identities and become
integral to the new and different article, i.e., the projector. See
Belcrest Linens. Accordingly, we find that the country of origin of
the projector is Taiwan.
HOLDING:
Based on the facts in this case, we find that the assembly and
programming operations performed in Taiwan substantially transform
the non-TAA country components of the projector. Therefore, the
country of origin of the Model A and Model B 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. 2011-20452 Filed 8-10-11; 8:45 am]
BILLING CODE 9111-14-P