[Federal Register: May 8, 2008 (Volume 73, Number 90)]
[Notices]
[Page 26132-26134]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08my08-110]
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DEPARTMENT OF HOMELAND SECURITY
Bureau of Customs and Border Protection
Notice of Issuance of Final Determination Concerning Electric
Mini-Trucks
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 the Bureau of Customs and
Border Protection (CBP) has issued a final determination concerning the
country of origin of certain electric mini-trucks to be offered to the
United States Government under an undesignated government procurement
contract. Based on the facts presented, the final determination found
that the United States is the country of origin of the electric mini-
trucks for purposes of U.S. Government procurement.
DATES: The final determination was issued on May 2, 2008. 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 June 9, 2008.
FOR FURTHER INFORMATION CONTACT: Monika Brenner, Valuation and Special
Programs Branch, Regulations and Rulings, Office of International Trade
(202-572-8740).
SUPPLEMENTARY INFORMATION: Notice is hereby given that on May 2, 2008,
pursuant to subpart B of part 177, Customs Regulations (19 CFR part
177, subpart B), CBP issued a final determination concerning the
country of origin of certain electric mini-trucks to be offered to the
United States Government under an undesignated government procurement
contract. The CBP ruling number is H022169. This final determination
was issued at the request of Global Electric Motorcars 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).
The final determination concluded that, based upon the facts
presented, assembly in the United States of an imported mini-truck
glider with a substantial number of components of U.S. and foreign
origin substantially transforms the imported mini-truck glider into a
product of the United States. Therefore, the country of origin of the
resulting electric mini-truck is the United States for purposes of U.S.
Government procurement.
Section 177.29, Customs 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), states 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: May 2, 2008.
Sandra L. Bell,
Executive Director, Office of Regulations and Rulings, Office of
International Trade.
H022169
May 2, 2008
OT:RR:CTF:VS H022169 GG
CATEGORY: Marking
Mr. Lawrence M. Friedman & Ms. Nicole A. Kehoskie
Barnes, Richardson & Colburn
1420 New York Avenue, NW.,
7th Floor
Washington, DC 20005
RE: U.S. Government Procurement; Final Determination; country of origin
of electric mini-trucks; substantial transformation; 19 CFR part 177
Dear Mr. Friedman & Ms. Kehoskie:
This is in response to your letter dated December 20, 2007,
requesting a final determination on behalf of Global Electric Motorcars
(``GEM'') pursuant to subpart B of part 177, Customs and Border
Protection (``CBP'') Regulations (19 C.F.R. Sec. 177.21 et seq.).
Under these regulations, which implement Title III of the Trade
Agreements Act of 1979, as amended (codified at 19 U.S.C. Sec. 2511 et
seq.), CBP issues country of origin advisory rulings and final
determinations on whether an article is or would be a product of a
designated country or instrumentality for the purpose 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 electric
mini-trucks. We note that GEM is a party-at-interest within the meaning
of 19 CFR Sec. 177.22(d)(1) and is entitled to request this final
determination.
FACTS:
GEMS imports a mini-truck glider from India. The glider consists of
a frame, finished cab, axles, and wheels in one unit. The glider--so
called because it can be rolled much like a dolly or scooter--does not
include the normal critical components of an internal-combustion
vehicle such as an engine, transmission, drive shaft, exhaust system,
fuel system, or rear axle differential. It also does not have the
critical components of an electric vehicle including the motor, battery
pack, differential, or electronics necessary to control the electric
vehicle. The brake assembly included with the glider will be removed
and replaced with another after importation. The truck bed will be
imported separate from the glider and installed after importation and
upfitting as an electric vehicle.
The glider is claimed to be non-functional and not intended for
sale to retail motor vehicle purchasers in its imported state. Once in
the United States, GEM manufactures an electric mini-truck from the
glider and various other assemblies. GEM will fit the complete mini-
truck with an electric motor to create an energy efficient, zero
emissions mini-truck for sale to certain U.S. government agencies.
As noted above, the glider is imported from India. According to
GEM's December 20, 2007 request, the glider is assembled with
approximately 87 different component parts, 68 of which are of U.S.
origin. In response to a request from this office of a more detailed
breakdown of the components, GEM submitted a costed bill of materials
with country of origin for elective drive conversion components. This
indicates that U.S. components amount to approximately 51% of the total
component cost. The U.S. assembly process will require eight work
stations, details of which are as follows:
Station 0--The glider is unloaded, the wheels and tires are removed
and the glider is put on the conveyor for assembly.
Station 1--The rear axle and brake assembly shipped with the glider
are removed and replaced with one that is compatible with the electric
function of
[[Page 26133]]
the truck. The replacement gear box and axles are of U.S. origin, while
the replacement brakes are of Indian origin. The motor of Canadian
origin is attached onto the rear axle/gear box/differential assembly of
U.S. origin; the controller and charger of Canadian origin are also
attached to the glider.
Station 2--The wiring harnesses of U.S. origin are integrated.
Station 3--The battery tray, batteries and cable of U.S. origin are
assembled and incorporated.
Station 4--The electronic driver information display of U.S. origin
is incorporated.
Station 5--The optional electric cab heater is installed.
Station 6--The wheels and tires are reinstalled.
Station 7--The fully assembled electric mini-truck is test run.
Station 8--The electric mini-truck is unloaded and inspected for
precision of assembly and operation.
Quality control will occur at each of the eight work stations and
at two more off-line stations.
ISSUE:
What is the country of origin of the electric mini-truck 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 on 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
CFR 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 CFR Sec. 25.403(c)(1). The
Federal Procurement Regulations define ``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.
48 CFR Sec. 25.003.
Therefore, the question presented in this final determination is
whether, as a result of the operations performed in the United States,
the glider is substantially transformed into a product of the United
States.
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, 6 Ct. Int'l Trade 204, 573 F. Supp. 1149
(1983), aff'd, 741 F.2d 1368 (Fed. Cir. 1984). If the manufacturing or
combining process is a minor one which leaves the identity of the
imported article intact, a substantial transformation has not occurred.
Uniroyal Inc. v. United States, 3 Ct. Int'l Trade 220, 542 F. Supp.
1026 (1982). 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, and C.S.D. 90-97.
In order to determine whether a substantial transformation occurs
when components of various origins are assembled to form completed
articles, CBP considers the totality of the circumstances and makes
such decisions on a case-by-case basis. The country of origin of the
article's components, the extent of the processing that occurs within a
given country, and whether such processing renders a product with a new
name, character, or use are primary considerations in such cases.
Additionally, facts such as resources expended on product design and
development, extent and nature of post-assembly inspection procedures,
and worker skill required during the actual manufacturing process will
be considered when analyzing whether a substantial transformation has
occurred; however, no one such factor is determinative.
You assert that the electric motor (Canada), batteries (United
States), charger (Canada), gear box (United States) and brakes (India)
of the electric mini-truck form the heart of the mini-truck, and are
all installed in the United States, changing the identity of the
imported glider from a body into a self-propelled truck. These
components allegedly provide the power source to the truck and enable
it to carry out its intended use. Accordingly, it is argued, the U.S.
components added and the assembly and testing performed in the U.S. are
substantial.
GEM cites to several Headquarters rulings (``HQ'') to support its
analysis. Specifically, it refers to HQ 558919, dated March 20, 1995;
HQ 559887, dated October 3, 1996; and HQ 562502, dated November 8,
2002. We find HQ 558919 to be most analogous to the situation before
us. There, CBP held that an extruder subassembly manufactured in
England was substantially transformed in the United States when it was
wired and combined with U.S. components (motor, electrical controls and
extruder screw) to create a vertical extruder. In reaching that
decision, CBP emphasized that the imported extruder subassembly and the
U.S. components each had important attributes that were functionally
necessary to the operation of the vertical extruder. Although HQ 558919
may be distinguished because the components that were assembled with
the imported extruder subassembly were exclusively of U.S. origin, the
two cases are similar to the extent that the imported articles
(extruder subassembly and glider) and certain of the other components
with which the imported articles are combined are ``functionally
necessary'' to the operation of the finished product. In GEM's
situation, the glider could not be used as an electric mini-truck on
its own, but requires assembly with other, crucial components.
We also take note of HQ 731076, dated November 1, 1988, which
addressed country of origin marking requirements for an automobile
assembled in Taiwan with components from Japan, the United States, and
Taiwan. The U.S. components consisted of an oxygen sensor, a catalytic
converter and two roll over valves. The Taiwanese components included
trim pad assemblies, head linings, front and rear seats, glass,
instrument panels, arm rests, support rod, leaf springs, heat
protectors, carpet, brake pipes, fuel pipes, cable harnesses, battery
cables, axle assemblies, tension rods, battery and tires. Associated
materials such as
[[Page 26134]]
glue, paint and coating were also procured in Taiwan. All other
components were of Japanese origin. CBP held that the automobile
components lost their separate identities and consequently were
substantially transformed when they were assembled into vehicles in
Taiwan. As a result, the country of origin of the imported automobiles
for marking purposes was Taiwan, which precluded the various components
from having to be separately marked with their original countries of
origin. Customs indicated that it considered the manufacture of an
automobile much more than a mere assembly operation and also considered
it persuasive that the Taiwanese input to the final product contributed
38% of its value and took 33 hours to accomplish.
Based upon the totality of the circumstances and consistent with
the CPB rulings cited above, we find that the imported mini-truck
glider is substantially transformed as a result of the assembly
operations performed in the United States to produce an electric mini-
truck. Under the described assembly process, the imported glider loses
its individual identity and becomes an integral part of a new article
possessing a new name, character and use. Further, we note a
substantial number of the components added to the imported glider are
of U.S. origin. Therefore, based upon the specific facts, the country
of origin of the electric mini-truck for purposes of U.S. Government
procurement is the United States.
HOLDING:
The imported mini-truck gliders are substantially transformed when
they are assembled in the United States with other imported and
domestic components. As a result, the country of origin of the electric
mini-trucks 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. Any party-at-interest
may, within 30 days after 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 Office of International Trade
[FR Doc. E8-10119 Filed 5-7-08; 8:45 am]
BILLING CODE 9111-14-P