[Federal Register Volume 77, Number 113 (Tuesday, June 12, 2012)]
[Notices]
[Pages 34967-34971]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-14182]
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DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
Notice of Issuance of Final Determination Concerning 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 in the final determination that the
assembly and programming operations performed in the Taiwan
substantially transform the non-TAA country components of the digital
projectors. Therefore the country of origin of the digital projectors
is Taiwan for purposes of U.S. Government procurement.
DATES: The final determination was issued on June 4, 2012. 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 July 12, 2012.
FOR FURTHER INFORMATION CONTACT: Robert Dinerstein, Valuation and
Special Programs Branch, Regulations and Rulings, Office of
International Trade (202-325-0132).
SUPPLEMENTARY INFORMATION: Notice is hereby given that on June 4, 2012,
pursuant to subpart B of part 177, Customs and Border Protection (CBP)
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 United States Government under an
undesignated government procurement contracts. This final
determination, in HQ H193929, was issued at the request of the
manufacturer of the digital projectors under the 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. Therefore, the country of
origin of the finished digital projectors is Taiwan for purposes of
U.S. Government procurement.
Section 177.29, CBP 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: June 6, 2012.
Sandra L. Bell,
Executive Director, Regulations and Rulings, Office of International
Trade.
Attachment
HQ H193929
MAR-2 OT:RR:CTF:VS H193929 RSD
CATEGORY: Marking
Munford Page Hall, Esq.
William C. Sjoberg, Esq.
Adduci, Mastriani & Schaumberg LLP
1200 Seventeenth Street, New
Washington, DC 20036
RE: Final Determination regarding the Country of Origin of Digital
Projectors, Substantial Transformation
Dear Mr. Hall and Mr. Sjoberg:
This is in response to your three letters dated November 15, 2011,
November 22, 2011, and January 18, 2012, requesting final
determinations on behalf of a foreign manufacturer of five digital
projector models, pursuant to subpart B of part 177 of the U.S. Customs
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 the U.S. law or practice for products
offered for sale to the U.S. Government.
This final determination concerns the country of origin of five
different models of digital projectors. We note that the manufacturer
of the digital projectors, a foreign manufacturer, is a party-at-
interest within the meaning the 19 C.F.R. Sec. 177.22(d)(1), and, as
such, is
[[Page 34968]]
entitled to request this final determination.
FACTS:
Five different models of digital projectors are at issue. One of
the digital projectors uses light emitting diodes (LEDs) to project
videos and images, while the other digital projectors are lamp based.
First Digital Projector Model
In your submission of November 15, 2011, you describe the subject
merchandise as a digital LED portable projector referred to as ``Model
C''. The dimensions of the LED projector are 22 cm x 4.25 cm x 17 cm,
(W x H x D), and it weighs 1.1 kg. The digital light processing
(``DLP'') projector is designed to use LEDs as the light source for
projecting images and videos from a computer or other video sources.
The LED projector can produce an image size of up to 120 inches
measured diagonally. According to your submission, the LED projector
was designed and developed in Taiwan. The LED Projector uses four
firmware files: (1) the system firmware, (2) the power control
microcontroller firmware, (3) the Extended Display Identification Data
(``EDID'') firmware, and (4) multimedia firmware. These four firmware
files are developed and coded in Taiwan and are programmed into the
corresponding integrated circuits (``ICs'') in Taiwan.
The LED projector contains components from several different
countries. Two major functional parts including the digital micro-
mirror device (DMD) and the DPP6401 data processor will originate from
Taiwan. Other non-Taiwanese components are shipped to China where they
are pre-assembled with the Taiwanese components to create modules or
sub-assemblies. You list 16 modules that are assembled together to make
the LED projectors. The modules are as follows:
1) Bottom casing module containing parts from China, Japan, Korea
and Taiwan;
2) Top cover module with mechanical parts from China;
3 4) Two fan modules with mechanical parts from China;
5) Low voltage power supply (LVPS) containing parts from China,
Japan, Korea, Malaysia, Philippines, and Taiwan;
6) Semi-finished optical engine module with parts and components
from China, Taiwan, Philippines, and Japan;
7) Photo sensor module containing parts from China, Korea, and
Taiwan;
8 9 10) Three LED modules with LED chips and circuit boards from
the USA;
11) Heat sink for blue LED with mechanical parts from China;
12) Heat pipe module for green LED with mechanical parts from
China;
13) Heat pipe module for red LED with mechanical parts from China;
14) Projection lens module with optical lens and mechanical parts
from China
15) Main board module with parts and electronic components from
China, Hong Kong, Japan, Korea, Malaysia, Philippines, Taiwan, and a
processor from Taiwan; and
16) LED driver board module with components and parts from China,
Taiwan, Japan, and Malaysia.
After the components are assembled together in China to form the 16
different modules, they are shipped from China to Taiwan for assembly
into the LED projectors. Other parts used in the assembly of the
projector in Taiwan include screws, brackets which are mounted onto the
LVPS sensor board, mylar cable ties, and an EMI gasket.
The assembly, firmware programming, testing and packing processes
in Taiwan consist of at least 225 steps taking no less than 4 hours and
54 minutes to complete of which the Taiwanese assembly process consists
of at least 71 steps taking approximately 15.6 minutes. The assembly
process in producing the projectors in Taiwan includes the following
steps:
1) The fan modules are screwed to the bottom casing modules.
2) The LVPS is screwed to the bottom casing module.
3) The semi-finished optical engine module is assembled with other
components into the completed optical engine module by screwing,
inserting and sticking the pieces together.
4) The completed optical engine module is screwed to the bottom
casing module.
5) The main board module is assembled onto the completed optical
engine module. The slot of the main board module must be aligned with
the DMD board edge connector so as to plug the main board onto the DMD
board incorporated into the optical engine module.
6) The wires from the different component and modules are connected
to the main board module, by plugging the wires from different
components and modules into the corresponding connectors, respectively,
on the main board module.
7) The light source with the main board module is assembled by
inserting the edge connector of the LED driver board module to the
corresponding slot of the main board module.
8) The light source driver is connected with the LVPS and the wire
from the LVPS is plugged into the corresponding connector on the light
source driver; or the wire is plugged from the light source driver to
the corresponding connector on the LVPS;
9) The top cover is screwed to the bottom casing module.
The light source driver in the Model C projectors is the LED driver
module. The light source (LEDs) in the Model C projector is assembled
with the semi-finished optical engine module to become the completed
optical engine module.
The system firmware programming, power control firmware
programming, and EDID programming consists of at least 42 steps taking
approximately 11.6 minutes to complete. All functions of the LED
projectors undergo testing prior to the LED projector being exported to
the United States. The normal testing process includes 12 kinds of
functions tests and consists of at least 97 steps taking approximately
137.8 minutes. After the whole projector is assembled, the next step is
to program the firmware files into the integrated circuits (ICs) before
function testing. The firmware programming process involves power
control firmware programming, multimedia firmware programming, and
system firmware programming.
Second and Third Digital Projector Models
In your submission of November 22, 2011, you provide a description
of two other versions of similar digital projectors. You refer to these
versions of the projectors as Model A. The two versions of the digital
projector are very similar to each other. The two projectors have the
same physical dimensions of 32.4 cm x 9.7 cm x 23.4 cm (W x H x D) and
weigh 2.9 kg. The two models are DLP projectors designed to use a high-
intensity discharge (``HID'') arc lamp as the light source to project
images and videos from computers or other video sources. The digital
projectors can produce an image size of up to 362 inches in diagonal.
The main difference between the two models of digital projectors are in
the resolution of the projected image and the throw ratio, which is
defined as the distance (D) measured from lens to screen that a
projector is placed from the screen, divided by the width (W) of the
image that it will project (D/W).
You state that the two digital projectors are designed and
developed in Taiwan. They will also be ultimately assembled in Taiwan.
Additionally, major functional parts, including the digital micro-
mirror device (``DMD''),
[[Page 34969]]
and the DDP2431 data processor will originate from Taiwan. The digital
projectors will also use five firmware files: (1) the system firmware,
(2) the power control firmware (i.e. 8051 microcontroller firmware),
(3) the extended display identification data (``EDID'') firmware, (4)
the network firmware, and (5) the lamp driver firmware which are
developed and coded in Taiwan. In addition, the system firmware, power
control firmware and EDID firmware are programmed into the
corresponding ICs in Taiwan.
The manufacturing of the digital projectors versions of Model A is
very similar to the process used to manufacture the digital projector
Model C described above. The components will be fabricated in China,
Taiwan, USA, Korea, Japan, Indonesia, Malaysia, Thailand, Singapore,
and the Czech Republic. In China the components are assembled into 13
different modules or sub-assemblies. The 13 modules are: 1) the bottom
casing module, 2) top cover keypad module, 3,4) two fan modules (i.e.
the blower module and system fan module), 5) lamp driver (ballast), 6)
zoom ring module, 7) lamp module, 8) lamp cover module, 9) semi-
finished optical engine module, 9) color wheel module, 10) main board
module,11) color wheel module, 12) main board module, and 13) LVPS. The
modules/subassemblies are shipped to Taiwan where they are assembled
into the digital projectors.
According to your submission, the assembly, firmware programming,
testing, and packing operations in Taiwan will consist of at least 220
steps and take no less than 11 hours and 48 minutes to complete. The
Taiwanese assembly process itself consists of at least 55 steps, taking
approximately 15.5 minutes. The assembly of the second and third
digital projectors in Taiwan consists of the same basic processing
steps as the first digital projector described previously.
The light source driver in Model A projectors is the ballast (lamp
driver). The light source (lamp) in the Model A projectors is installed
into the system (projector) after the top cover is assembled with
bottom casing module.
The system firmware programming, power control firmware programming
and EDID programming consists of at least 35 steps taking approximately
9.3 minutes to complete. All functions of the projectors also undergo
extensive testing prior to being exported to the United States. The
normal testing process includes 11 kinds of function tests and consists
of at least 97 steps which will take approximately 11 hours and 13.6
minutes to perform.
Fourth and Fifth Digital Projector Models
In your submission of January 18, 2012, you provide a description
of two other versions a digital projector, designated as Model B. The
two versions of the digital projector Model B are substantially similar
to Model C described above. The projectors have the same dimensions of
32.4 cm x 9.7 cm x 23.4 cm (W x H x D) and weigh 2.9 kg. The products
are DLP projectors designed to use a HID arc lamp as the light source
to project images and videos from computers or other video sources. One
version of Model B can produce a diagonal image up to 303 inches, while
the other version can produce a diagonal image up to 362 inches. Again,
the main differences between the two digital projectors are the
resolution of the projected image and the throw ratio which is defined
as the distance (D) measured from lens to screen that a projector is
placed from the screen, divided by the width (W) of the image that it
will project (D/W).
There are five firmware files used in digital projectors: (1) the
system firmware, (2) the power control firmware (i.e. 8051)
microcontroller firmware (3) the EDID firmware, (4) the network
firmware, and (5) the lamp driver firmware, which are developed and
coded in Taiwan. The system firmware, power control firmware and EDID
firmware are programmed into the corresponding ICs in Taiwan.
As in the scenario for the Model B projectors the same 13 modules
will be assembled in China from components made in various countries
and similarly, they will be shipped to Taiwan for final assembly into
the digital projectors. Additionally, major functional parts, including
the digital micro-mirror device (``DMD''), and DDP2431 data processor
will originate in Taiwan.
The power control firmware and system firmware will be programmed
into the ICs. The complete digital projector will be subject to five
function tests in what is designated as the ``pre-test''. In addition,
the digital projectors will be subject to a series of other tests.
After finishing the six function tests in the ``post test'', the EDID
firmware is programmed into the digital projectors to provide the
identification of the digital projectors. When the digital projectors
pass the ``post tests'', they will be sent to the packing department,
where they will be packed together with the accessory kits.
The assembly, firmware programming, testing, and packing processes
in Taiwan described consist of at least 211 steps taking no less than 2
hours and 59.6 minutes to complete, of which the assembly process
consists of at least 68 steps taking approximately 10.6 minutes to
complete. The assembly of the fourth and fifth digital projectors in
Taiwan consists of the same basic processing steps as the other three
digital projector described previously.
The light source driver in Model B projectors is the ballast (lamp
driver). The light source (lamp) in the Models B projectors is
installed into the system (projector) after the top cover is assembled
with the bottom casing module.
The system firmware programming, power control firmware programming
and EDID programming consist of at least 35 steps taking approximately
9.3 minutes to perform. All functions of the digital projectors undergo
testing prior to exportation to the United States. The normal testing
process includes 11 function tests and consists of at least 86 steps
taking approximately 2 hours and 30.7 minutes.
ISSUE:
What is the country of origin of the digital projectors 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.
[[Page 34970]]
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.
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.
In Texas Instruments v. United States, 681 F.2d 778, 782 (CCPA
1982), the court observed that the substantial transformation issue is
a ``mixed question of technology and customs law.'' In Headquarters
Ruling (HQ) 555578 dated June 11, 1990, 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 simple combining operations
and resulted in a new and different article of commerce with a new
name, character and use.
In HQ H114395, dated May 18, 2011, CBP considered the country of
origin of a DLP projector that used LEDs as its light source for
projecting photos and videos from mobile devices onto any surface. We
were asked to consider two scenarios. In the first scenario, PCBA-ICs
from Japan, Thailand, the U.S., Korea, and Malaysia; and fly eyes from
Japan were shipped to China. Some Taiwanese origin components (DMDs,
DPP 1505 chips, EPROM's, LEDs, and lenses) were also be shipped to
China for assembly with Chinese-origin components (PCBs, projecting
lenses, mirrors, and mechanical parts), the ICs, and fly eyes for
making modules for the light engine and the PCBA main board. In China,
two types of Taiwanese firmware for operating the projector were
downloaded to memory chips located on the light engine and PCBA main
board modules. The modules assembled in China were then shipped to
Taiwan for quality inspections. In the second scenario, PCBA-ICs from
Japan, Thailand, the U.S., Korea, and Malaysia; and fly eyes from Japan
were shipped to Taiwan. The assembly and programming operations that
took place in China, under the first scenario, were all performed in
Taiwan. We determined that the light engine module and the PCBA main
board were the essence of the projector, and it was at their production
where the last substantial transformation occurred. Therefore, when the
light engine module and PCBA main board module were assembled and
programmed in China, the country of origin of the projectors was China
for the purposes of U.S. government procurement. However, we also ruled
that if the light engine module and PCBAs main board modules were
assembled and programmed in Taiwan, then the country of origin of the
projectors was Taiwan for purposes of U.S. government procurement
HQ H146735, (July 29, 2011), concerned a determination of the
country of origin of two models of a digital projector, which were very
similar to the products under consideration here. In that case, Chinese
modules were assembled together into a projector in Taiwan. However,
the projectors were designed and developed in Taiwan. Many of the main
parts of the projectors, including the data processors were also
fabricated in Taiwan. CBP determined that for purposes of government
procurement the country of origin of the digital projectors assembled
in Taiwan using the Chinese modules was Taiwan. In making this
determination, CBP considered that 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, LAN module programmed
in China with Taiwanese origin firmware, and the LVPS module from China
were assembled together in Taiwan with other Chinese components to form
a completed projector. After assembly was performed, the projector was
programmed in Taiwan with three types of Taiwanese developed firmware
(power control firmware, system firmware, and EDID). We found that the
assembly and programming operations performed in Taiwan were
sufficiently complex and meaningful so as to create a new article with
a distinct name, character, and use. In support of this determination,
we further noted that some of Chinese modules were made using Taiwanese
parts. Thus, through the operations undertaken in Taiwan, we concluded
that the individual parts from various countries lost their separate
identities to become a new and different article, i.e., the projector.
In our judgment, the five versions of the different models of
digital projectors involved in this case closely resemble the digital
projectors that we considered in HQ H147365. In addition, in this case
the processing steps and programming operations performed in Taiwan are
very similar to the actions undertaken in Taiwan in HQ H147365.
Moreover, as in HQ H147365, we recognize that the most essential
components of the LED projectors, the DMD and data processors, will be
made in Taiwan.
[[Page 34971]]
Furthermore, the important firmware files, namely, the system firmware,
power control firmware, lamp driver firmware, and EDID firmware are
developed and coded in Taiwan. The programming of the ICs, to make the
digital projectors functional through the interaction of modules and
via the firmware files after the digital projectors have been
assembled, is also done in Taiwan. We also note that as in HQ H147365,
a number of the Chinese modules contain some significant Taiwanese
parts. Thus, as in HQ H147365, we find that the assembly processed
previously described and the programming operations performed in Taiwan
are sufficiently complex and meaningful so as to create new articles
with a distinct name, character, and use.
We note that there are some distinctions among the five different
versions of the digital projectors under consideration. The projector
Model A and projector Model B are the same type of digital projector
with different resolutions and some different features. These four
versions of the projectors are similar because they are lamp based
projectors. Model C is a slightly different type of projector in that
it is an LED based projector and does not require a color wheel module.
However, we do not believe that these differences in the projectors are
relevant in determining their country of origin. Consequently, in
accordance with our holding in HQ H147365, we find that the country of
origin of the specified five models of the finished digital projectors
is Taiwan.
HOLDING:
Based on the facts presented in this case, we find that the
assembly and programming operations performed in Taiwan substantially
transform the non-Taiwanese components into Taiwanese digital
projectors. Therefore, the country of origin of the five different
versions of digital projectors described above for purposes of
government procurement is Taiwan.
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 in 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. 2012-14182 Filed 6-11-12; 8:45 am]
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