Notice2022-19358
Notice of Issuance of Final Determination Concerning Certain Score®7t Tablets
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Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 8, 2022
Issuing agencies
Homeland Security DepartmentU.S. Customs and Border Protection
Abstract
This document provides notice that U.S. Customs and Border Protection (CBP) has issued a final determination concerning the country of origin of certain SCORE[supreg]7T tablets. Based upon the facts presented, CBP has concluded that the country of origin of the SCORE[supreg]7T tablets in question is Taiwan for purposes of U.S. Government procurement.
Full Text
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<title>Federal Register, Volume 87 Issue 173 (Thursday, September 8, 2022)</title>
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[Federal Register Volume 87, Number 173 (Thursday, September 8, 2022)]
[Notices]
[Pages 55013-55016]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-19358]
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DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
Notice of Issuance of Final Determination Concerning Certain
Score[supreg]7t Tablets
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 SCORE[supreg]7T tablets. Based upon the
facts presented, CBP has concluded that the country of origin of the
SCORE[supreg]7T tablets in question is Taiwan for purposes of U.S.
Government procurement.
DATES: The final determination was issued on September 1, 2022. 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 no later than October 11, 2022.
FOR FURTHER INFORMATION CONTACT: Albena Peters, Valuation and Special
Programs Branch, Regulations and Rulings, Office of Trade, at (202)
325-0321.
SUPPLEMENTARY INFORMATION: Notice is hereby given that on September 1,
2022, U.S. Customs and Border Protection (CBP) issued a final
determination concerning the country of origin of certain
SCORE[supreg]7T tablets for purposes of Title III of the Trade
Agreements Act of 1979. This final determination, HQ H325833, was
issued at the request of Advanced Technologies Group, LLC (ATG), 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 has concluded that, based
upon the facts presented, the country of origin of the tablets 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: September 1, 2022.
Alice A. Kipel,
Executive Director, Regulations and Rulings, Office of Trade.
HQ H325833
September 1, 2022
OT:RR:CTF:VS H325833 AP
Category: Origin
Charles Weiss, Partner, Bryan Cave Leighton Paisner LLP, One
Metropolitan Square, 211 North Broadway Suite 3600, St. Louis, MO
63102-2750
RE: U.S. Government Procurement; Title III, Trade Agreements Act of
1979 (19 U.S.C. 2511); Subpart B, Part 177, CBP Regulations; Country of
Origin of SCORE[supreg]7T tablets
Dear Mr. Weiss:
This is in response to your June 17, 2022 request, on behalf of
Advanced Technologies Group, LLC (``ATG''), for a final determination
\1\ concerning the country of origin of SCORE[supreg]7T tablets used in
U.S. correctional institutions. This request is being sought because
ATG wants to confirm eligibility of the merchandise for U.S. Government
procurement purposes pursuant to Title III of the Trade Agreements Act
of 1979 (``TAA''), as amended (19 U.S.C. 2511 et seq.), and subpart B
of part 177, U.S. Customs and Border Protection (``CBP'') Regulations
(19 CFR 177.21, et seq.). ATG is a party-at-interest within the meaning
of 19 CFR 177.22(d)(1) and 177.23(a), and is therefore entitled to
request this final determination. On August 24, 2022, we held a meeting
with you and your client representatives.
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\1\ ATG previously submitted a request for an advisory ruling
dated March 7, 2022. Under the facts presented in the advisory
ruling request, the imported tablets arrived with installed
manufacturer's generic Android firmware, which ATG states is no
longer the case. On April 20, 2022, we issued advisory ruling HQ
H324386 concluding that the removal of the installed manufacturer's
firmware from the imported functioning tablet and the installation
of the U.S.-designed and developed firmware did not constitute a
substantial transformation. The merchandise was a functioning tablet
upon importation and remained a functioning tablet, just with
limited and specialized functions.
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Facts
The SCORE[supreg]7T tablet at issue is a custom-designed tablet
assembled in China and shipped to the United States. The chipset
powering the tablet is manufactured in Taiwan and represents
approximately 60 percent of the cost of the tablet's hardware. The
circuit and component layout for the motherboard is also made in
Taiwan. The tablet uses a system on a chip (``SOC'') design. The SOC is
an integrated circuit that
[[Page 55014]]
includes the central processing unit, memory, input/output logic,
secondary storage, graphics processing unit, radio frequency signal
processing functions, and communication controller on a single
microchip. You explain that the chipset does all computing on the
tablet. The hardware tablet is assembled in China. The assembly process
involves combining the components manufactured in Taiwan with a screen
to make the finished tablet. You describe the assembly operations in
China as ``simple and repetitive'' and requiring ``little worker
skill.'' Upon importation into the United States, the tablet does not
have the manufacturer's generic Android firmware or other firmware
installed.
ATG designs, develops, writes, and installs the tablet's operating
system (``OS''), known as SCORE[supreg] firmware, in the United States
at ``a substantial effort and cost to ATG.'' ATG's firmware is an ATG
proprietary custom-built version of the Android system, which
``reflects over 20,000 hours of software development by ATG
personnel.'' ATG uses Google-provided (not manufacturer's) Android OS
as a starting point to design and develop its own firmware. ATG's
firmware contains security protections that control the tablet's
functionality, communication capabilities, applications allowed to be
installed or run, and enforces rules that users in correctional
institutions must follow. ATG removes all Android functions, features,
and drivers that are not needed at correctional institutions and
reprograms the remaining Android functions and applications to impose
new security rules and adds new security features.
Once ATG's firmware is installed, the tablet cannot run regular
Android applications. The firmware transforms the tablet into a highly
secure tablet specifically designed to meet Federal Bureau of Prisons
security requirements. When the tablet connects to ATG's network
implemented in correctional institutions, ATG's SCORE[supreg] servers
automatically update the firmware to the most current version. The
firmware only allows ATG-signed applications to run. You state that
only select ATG personnel can modify or remove ATG's firmware.
Issue
What is the country of origin of the subject tablet for purposes of
U.S. Government procurement?
Law and Analysis
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, pursuant
to subpart B of part 177, 19 CFR 177.21-177.31, which implements Title
III of the TAA, as amended (19 U.S.C. 2511-2518).
CBP's authority to issue advisory rulings and final determinations
is set forth in 19 U.S.C. 2515(b)(1), which states:
For the purposes of this subchapter, the Secretary of the
Treasury shall provide for the prompt issuance of advisory rulings
and final determinations on whether, under section 2518(4)(B) of
this title, an article is or would be a product of a foreign country
or instrumentality designated pursuant to section 2511(b) of this
title.
The rule of origin set forth under 19 U.S.C. 2518(4)(B) states:
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.
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 Regulation
(``FAR''). See 19 CFR 177.21. In this regard, CBP recognizes that the
FAR restricts 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 CFR 25.403(c)(1).
The FAR, 48 CFR 25.003, defines ``U.S.-made end product'' as:
. . . an 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.
Section 25.003 defines ``designated country end product'' as:
a WTO GPA [World Trade Organization Government Procurement
Agreement] country end product, an FTA [Free Trade Agreement]
country end product, a least developed country end product, or a
Caribbean Basin country end product.
Section 25.003 defines ``WTO GPA country end product'' as an
article that:
(1) Is wholly the growth, product, or manufacture of a WTO GPA
country; or
(2) In the case of an article that consists in whole or in part
of materials from another country, has been substantially
transformed in a WTO GPA country 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. The term refers
to a product offered for purchase under a supply contract, but for
purposes of calculating the value of the end product includes
services (except transportation services) incidental to the article,
provided that the value of those incidental services does not exceed
that of the article itself.
Taiwan is a WTO GPA country. China is not.
ATG asserts that the subject tablet is substantially transformed in
the United States because its firmware is entirely developed, written
and installed in the United States, and without ATG's firmware the
tablet is non-functional. ATG maintains that the use of the
SCORE[supreg]7T tablet ``is solely dictated by the firmware and it
otherwise has no use.''
The issue of substantial transformation is a ``mixed question of
technology and customs law, mostly the latter.'' Texas Instruments,
Inc. v. United States, 681 F.2d 778, 783 (CCPA 1982). The substantial
transformation test is whether an article emerges from a process with a
new name, character, or use, different from that possessed by the
article prior to processing. See Texas Instruments, 681 F.2d at 778.
CBP considers the totality of the circumstances and makes substantial
transformation determinations on a case-by-case basis. The country of
origin of the item's components, the extent of the processing that
occurs within a country, and whether such processing renders a product
with a new name, character, or use are primary considerations. See
Headquarters Ruling Letter (``HQ'') H311606, dated June 16, 2021. No
one factor is determinative.
A new and different article of commerce is an article that has
undergone a change in commercial designation or identity, fundamental
character, or commercial use. A determinative issue is the extent of
the operations performed and whether the materials lose their identity
and become an integral part of the new article. See Nat'l Hand Tool
Corp. v. United States, 16 CIT 308 (1992), aff'd, 989 F.2d 1201 (Fed.
Cir. 1993). ``For courts to find a change in character, there often
needs to be a substantial alteration in the characteristics of the
article or components.'' Energizer Battery, Inc. v. United States, 190
F. Supp. 3d 1308, 1318 (Ct. Int'l Trade 2016) (citations omitted).
Courts have looked to ``the essence'' of the completed article ``to
[[Page 55015]]
determine whether it has undergone a change in character as a result of
post-importation processing.'' Id. (citing Uniroyal, Inc. v. United
States, 542 F. Supp. 1026 (Ct. Int'l Trade 1982), aff'd, 702 F.2d 1022
(Fed. Cir. 1983)). In Uniroyal, 542 F. Supp. at 1030, the U.S. Court of
International Trade (``CIT'') held that ``it would be misleading to
allow the public to believe that a shoe is made in the United States
when the entire upper--which is the very essence of the completed
shoe--is made in Indonesia and the only step in the manufacturing
process performed in the United States is the attachment of an
outsole.''
In Data General Corp. v. United States, 4 CIT 182 (1982), the
programming in the United States of a read-only memory chip (``PROM'')
fabricated in a foreign country for use in a computer circuit board
assembly substantially transformed the PROM into a U.S. article. After
the programming, the PROM was exported for incorporation into a
finished circuit board that was then imported into the United States.
The programming bestowed upon each circuit its electronic function. The
court concluded that the programming altered the character of the PROM
and that altering the non-functioning circuitry comprising the 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. The programming established the
``essence'' of the PROM, its pattern of interconnections, or stored
memory.
CBP has issued a number of rulings and final determinations
regarding the origin of tablets and smartphones. In HQ H322417, dated
Feb. 23, 2022, CBP concluded that a smartwatch originated from Taiwan
for purposes of Section 301 trade remedies because Taiwan was the
country where the two printed circuit board assemblies (``PCBAs''),
which were the ``essence'' of the smartwatch, were manufactured by
means of surface-mount technology (``SMT''). The final assembly and
firmware upload in China did not result in another substantial
transformation in China because it was not a complex or time-intensive
process compared to the SMT operations in Taiwan and did not
substantially transform the PCBAs. The firmware for the smartwatch was
developed in third countries outside of China, including in the United
States, and in some cases the firmware uploaded in China was an
intermediate OS and the end user in the United States would need to
download the final OS after importation into the United States. CBP's
reasoning was that the PCBAs allowed the device to process information,
communicate wirelessly, utilize global positioning system (``GPS'')
functionality, play music and other audio, send, and receive text and
email messages, and gather information on a user's fitness. In sum, the
functionality of the smartwatch was dependent on the collective
capabilities of the PCBA.
In HQ H284834, dated Feb. 21, 2018, a tablet and a smartphone were
produced in South Korea and China, respectively. Both were intended for
purchase by the Veterans Health Administration for use by patients at
home. In the United States, the tablet and smartphone went through a
number of software uninstallations and installations. The generic
Android functions originally included on the devices, such as alarms,
calculators and text messaging, were removed. Other functions, such as
Bluetooth capability, were modified and additional software was added.
Mobile application software developed entirely in the United States was
installed to enable patients to provide vital sign data by connecting
to the peripheral devices via Bluetooth. When the preprogrammed tablets
and smartphones were imported, they could perform their standard
functions of an Android tablet or smartphone, and could be used for
their intended purpose, and their name, character, and use remained the
same. They were not substantially transformed in the United States by
the downloading of the proprietary software, which allowed them to
function with the Department of Veterans Affairs healthcare network.
The country of origin of the imported tablets and smartphones for
purposes of U.S. Government procurement remained the country where they
were originally manufactured. See also HQ H284617, dated Feb. 21, 2018
(concluding that the downloading of proprietary software after
importation into the United States, which allowed tablets preprogrammed
with a generic program to function within the Department of Veterans
Affairs healthcare network, did not substantially transform the
tablets; after the software was downloaded, the country of origin of
the imported tablets for purposes of U.S. Government procurement
remained the country where they were manufactured because their name,
character, and use remained the same).
In HQ H284523, dated Aug. 22, 2017, software was installed onto
tablets in the United States to limit the original capacity of the
imported tablets for the purpose of facilitating the reception,
collection and transmission of a patient's medical data to Department
of Veterans Affairs clinicians for their review. The general
functionality of the tablet was removed and replaced so that it was
easier for patients to use the device and access the system, and to
better protect the security of the patient's medical data. The loading
of specialized software onto the tablet and the disabling of the pre-
programmed general applications were insufficient to create a new and
different article of commerce, since all of the functionality of the
original computer was retained. The imported tablets were not
substantially transformed in the United States by the downloading of
the proprietary software, which allowed them to function with the
Department of Veterans Affairs healthcare network. After the software
was downloaded, the country of origin of the tablets for purposes of
U.S. Government procurement remained the country where they were
originally manufactured.
In HQ H261623, dated Nov. 22, 2016, for purposes of U.S. Government
procurement, in the first scenario, the country of origin of computer
notebook hard disk drives (``HDDs'') was the country where the majority
of the manufacturing operations occurred and where the firmware was
written and installed onto the HDDs. In the second scenario, where the
firmware was written in a different country from where it was
downloaded onto the HDDs, for purposes of U.S. Government procurement
and country of origin marking, the country of origin of the notebook
was the country where the last substantial transformation took place.
The subject tablets are distinguishable from the PROM in Data
General Corp., supra., and from the HDDs in H261623. The PROM has no
function or use until it is programmed. The programming establishes the
pattern of interconnections within the PROM, which is its ``essence.''
After the PROM is programmed, it is no longer a PROM. Furthermore, the
programming transforms the HDDs into digital storage devices that store
or retrieve data. The tablet, on the other hand, remains a completed
notebook after the OS is installed. The tablet has an integrated
circuit that includes the central processing unit, memory, input/output
logic, secondary storage, graphics processing unit, radio frequency
signal processing functions, and communication controller. The chipset
powering the tablet and the circuit and
[[Page 55016]]
component layout for the motherboard manufactured in Taiwan determine
the tablet's functionality. The chipset enables the central processing
unit to communicate with the other components of the tablet. You advise
that the operations in China are ``simple'' and involve attaching all
the parts together into the final tablet and adding a screen. Thus,
consistent with our previous rulings and decisions above, we find that
the last substantial transformation takes place in Taiwan where the
chipset and the circuit and component layout for the motherboard are
manufactured. After the final assembly in China, the tablet will
undergo a firmware upload in the United States. The imported tablet
already has the system requirements, which make it possible to install
the firmware. The installation of the U.S.-developed firmware in the
United States does not transform the Taiwan-manufactured tablet into
another product with a new name, character or use. The country of
origin of the tablet remains the country where the last substantial
transformation occurred, which is Taiwan.
Therefore, the SCORE[supreg]7T tablets programmed with ATG's U.S.-
developed firmware in the United States would be products of a foreign
country or instrumentality designated pursuant to 19 U.S.C. 2511(b)(1).
Holding
Based on the facts and analysis set forth above, the country of
origin of the instant SCORE[supreg]7T tablets will be Taiwan.
Notice of this final determination will be given in the Federal
Register, as required by 19 CFR 177.29. Any party-at-interest other
than the party which requested this final determination may request,
pursuant to 19 CFR 177.31, that CBP reexamine the matter anew and issue
a new final determination. Pursuant to 19 CFR 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 U.S. Court of International Trade.
Sincerely,
Alice A. Kipel,
Executive Director, Regulations and Rulings Office of Trade.
[FR Doc. 2022-19358 Filed 9-7-22; 8:45 am]
BILLING CODE 9111-14-P
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</html>Indexed from Federal Register on September 8, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.