[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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