[Federal Register Volume 77, Number 236 (Friday, December 7, 2012)]
[Notices]
[Pages 73039-73041]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-29633]
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DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
Notice of Issuance of Final Determination Concerning Vantage
Electric Vehicles
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 Vantage Vehicle electric trucks and vans. Based
upon the facts presented, CBP has concluded in the final determination
that the United States is the country of origin of the Vantage Vehicle
EVX1000 and EVR1000 models of electric trucks and the EVC1000 and
EVP1000 models of electric vans for purposes of U.S. Government
procurement.
DATES: The final determination was issued on November 16, 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 on or before January 7, 2013.
FOR FURTHER INFORMATION CONTACT: Heather K. Pinnock, Valuation and
Special Programs Branch: (202) 325-0034.
SUPPLEMENTARY INFORMATION: Notice is hereby given that on, November 16,
2012, pursuant to subpart B of part 177, Customs and Border Protection
Regulations (19 CFR part 177, subpart B), CBP issued a final
determination concerning the country of origin of the Vantage Vehicle
EVX1000 and EVR1000 models of electric trucks and the EVC1000 and
EVP1000 models of electric vans, which may be offered to the U.S.
Government under an undesignated government procurement contract. This
final determination, in HQ H229157, was issued at the request of
Vantage Vehicle International, 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 concluded that, based upon the facts presented, the
Vantage Vehicle EVX1000 and EVR1000 models of electric trucks and the
EVC1000 and EVP1000 models of electric vans, assembled to completion in
the United States from parts made in a non-TAA country, a TAA country
and the United States, are substantially transformed in the United
States, such that the United States is the country of origin of the
finished electric vehicles 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: November 16, 2012.
Sandra L. Bell,
Executive Director, Regulations and Rulings, Office of International
Trade.
Attachment
HQ H229157
November 16, 2012
MAR-2 OT:RR:CTF:VS H229157 HkP
CATEGORY: Marking
Mr. Michael Pak
CEO/President
Vantage Vehicle International, Inc.
1740 N. Delilah Street
[[Page 73040]]
Corona, CA 92879
RE: Government Procurement; Country of Origin of Vantage Vehicle
Electric Trucks and Vans; Substantial Transformation
Dear Mr. Pak:
This is in response to your letter dated May 23, 2012, requesting a
final determination on behalf of Vantage Vehicle International, Inc.
(``VVI''), 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 VVI low
speed electric trucks (models EVX1000 and EVR1000) and electric vans
(models EVC1000 and EVP1000). We note that as a U.S. importer and
manufacturer, VVI 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:
According to the information submitted, VVI imports gliders (or
``rolling chassis'') (bare chassis with bodies, axles, and wheels only)
from China into the United States and converts them into low speed
electric trucks and vans. VVI assembles the gliders with other
components including motors, controllers, chargers, batteries,
instrument clusters, converters, wire harnesses, battery boxes, heater
cores, and miscellaneous items such as fasteners and wires, and
modifies components of the gliders as necessary. Each vehicle assembled
in the United States has approximately 67 components and assemblies and
146 miscellaneous items such as bolts, nuts, screws, fasteners and
wires. All of the components and miscellaneous items are of U.S.-
origin, except for the charger which is from Canada. Over 71 percent of
the manufacturing cost of the vehicles is attributed to U.S. components
and labor, approximately 26 percent to the Chinese glider, and
approximately two percent to the Canadian charger. Information
regarding the components, their cost and countries of origin as well as
a detailed description of the manufacturing process was submitted.
The U.S. manufacturing operations are described as follows:
Stage 1--Prepping Stage
The truck bed is removed from the glider (this initial step is not
applicable to gliders used to make vans). Tires and braking components
are removed from the rear axle, which is then removed from the chassis
and unnecessary brackets and clutch pedals are cut. The vehicle is
painted. The battery housings are removed, holes are drilled into the
vehicle frame, battery housings are fastened to the frame with bolts
and washers, the batteries are installed, and cables are attached to
the batteries. A relay box is bolted to the frame. Necessary
adjustments are made to the rear axle, which is then reinstalled into
the vehicle. The parking brakes are rerouted and vacuum lines are cut
in the front of the vehicle.
The prepping stage takes approximately five hours.
Stage 2--Building
The transducer is installed along the brake line. The main wire
harness is installed inside the cab and fastened below the vehicle. The
heater box with new heater core and a new cluster wire harness are
installed and the heater box is connected to the main wire harness.
Forward and reverse switches are cut and installed into the dashboard,
connected and covered. The accelerator pedal is installed. The grill
with logo is attached to the back of the vehicle. The main aluminum
electronics plate and all electronic components are attached to the
vehicle frame and fuses and the auxiliary battery are installed. The
main drive motor is attached to the rear axle and the vehicle's main
electronics are installed. After the cab is cleaned of metal chips and
dust, the middle console and back seats are installed. Air is removed
from the brake lines. Backup alarms are installed and the electronic
components are tested.
The building stage takes approximately 16 hours.
Stage 3--Finishing
Rust-proof undercoating and spray bed liner coating are applied to
the vehicle, as appropriate, by a California company.
Stage 4--Pre-Delivery Inspection
The vehicle is washed and dried, the vehicle identification number
(VIN) is recorded, stickers are added to the vehicle and paper tags,
plastic and tape are removed, the windows and interior are cleaned, the
seat covers installed, and the steering boot is greased. The vehicle is
inspected in accordance with a quality control checklist and
deficiencies addressed as required.
The inspection stage takes approximately 3 hours.
ISSUE:
What is the country of origin of the Vantage Vehicle low speed
electric trucks (models EVX1000 and EVR1000) and electric vans (models
EVC1000 and EVP1000) 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 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 define ``U.S.-made end product'' as:
[A]n article that is mined, produces, 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.
[[Page 73041]]
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. 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. If the manufacturing or
combining process is a minor one which leaves the identity of the
article intact, a substantial transformation has not occurred.
Uniroyal, Inc. v. United States, 3 Ct. Int'l Trade 220, 542 F. Supp.
1026 (1982), aff'd 702 F. 2d 1022 (Fed. Cir. 1983).
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 Headquarters Ruling Letter (``HQ'') H118435 (Oct. 13, 2010), CBP
found that Chinese-origin chassis, plastic body parts and plastic
pieces of trim were substantially transformed by assembly operations
performed in the United States to produce electric vehicles. Under the
described assembly process, the imported parts lost their individual
identities and became integral parts of a new article possessing a new
name, character and use. Further, components crucial to the making of
an electric vehicle (the battery pack, motor, electronics, wiring
assemblies, and charger) were of U.S. origin. Based upon these facts,
we found that the country of origin of the electric vehicles was the
United States.
In HQ H022169 (May 2, 2008), CBP found that an imported mini-truck
glider was substantially transformed as a result of assembly operations
performed in the United States to produce an electric mini-truck. Our
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.
In HQ 558919 (Mar. 20, 1995), a country of origin marking case
relied upon in HQ H022169, U.S. Customs (now CBP) held that an extruder
assembly manufactured in England was substantially transformed in the
United States when it was wired and combined with U.S. components
(motor, electric controls and extruder screw) to create a vertical
extruder. In reaching that decision, Customs emphasized that the
imported extruder subassembly and the U.S. components each had
important attributes that were necessary to the operation of the
extruder. Consequently, we found that the imported subassemblies should
be excepted from individual marking, provided that the cartons in which
the U.S. manufacturer received them were properly marked with their
country of origin.
In the rulings cited above, CBP found that assembly of the imported
parts together with the U.S.-made components was necessary to the
operation of the finished product. The same is true in this situation.
None of the imported parts, on their own, can operate as an electric
vehicle but must be assembled with other necessary components, such as
batteries, motors, instrument clusters, and wiring assemblies, which
are all of U.S. origin. Moreover, given the complexity and duration of
the U.S. manufacturing process, we consider those operations to be more
than mere assembly.
Based on the information before us, and consistent with the CBP
rulings cited above, we find that the Chinese-origin glider and
Canadian charger are substantially transformed by the assembly
operations performed in the United States to produce electric vehicles.
Under the described assembly process, the imported articles lose their
individual identities and become integral parts of new articles
possessing new names, characters and uses. Further, components crucial
to the making of an electric vehicle (the batteries, motor, instrument
cluster, wiring assemblies, and heater core) are of U.S. origin. We
conclude, based upon these specific facts, that the country of origin
of the VVI electric trucks and vans for purposes of U.S. Government
procurement is the United States.
HOLDING:
The Chinese glider and Canadian charger are substantially
transformed when they are assembled in the United States with domestic
components. As a result, the country of origin of VVI's line of
electric vehicles, specifically the EVX1000 and EVR1000 Green Trucks
and the EVC1000 and EVP1000 Green Vans, for purposes of U.S. Government
procurement is the United States.
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. 2012-29633 Filed 12-6-12; 8:45 am]
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