Notice of Issuance of Final Determination Concerning Video Teleconferencing Server, 57648-57650 [2013-22765]

Agencies

• DEPARTMENT OF HOMELAND SECURITY
• U.S. Customs and Border Protection

[Federal Register Volume 78, Number 182 (Thursday, September 19, 2013)]
[Notices]
[Pages 57648-57650]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-22765]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning Video 
Teleconferencing Server

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 video teleconferencing server Prescient T7-FW. 
Based upon the facts presented, CBP has concluded in the final 
determination that China is the country of origin of the video 
teleconferencing server for purposes of U.S. Government procurement.

DATES: The final determination was issued on September 11, 2013. 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 October 21, 2013.

FOR FURTHER INFORMATION CONTACT: Karen S. Greene, Valuation and Special 
Programs Branch: (202) 325-0041.

SUPPLEMENTARY INFORMATION: Notice is hereby given that on September 11, 
2013, 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 video 
teleconferencing server Prescient T7-FW, which may be offered to the 
U.S. Government under an undesignated government procurement contract. 
This final determination, in HQ H218360, was issued at the request of 
CyberPoint 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, since the Chinese-
origin Video Board and the Filter Board, impart the essential character 
to the video teleconferencing server, that China is the country of 
origin of the video teleconferencing server 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 11, 2013.
Sandra L. Bell,
Executive Director, Regulations and Rulings, Office of International 
Trade.

Attachment

HQ H218360

September 11, 2013

MAR-2 OTF:CTF:VS H218360 KSG

Vanessa P. Sciarra
Holland & Knight
2099 Pennsylvania Ave. NW
Suite 100
Washington, DC 20006

RE: Final determination; country of origin of video teleconferencing 
server; substantial transformation

Dear Ms. Sciarra:

    This is in response to your letter, submitted May 2, 2012, 
supplemental submission dated October 22, 2012, and emails on July 
22, and August 14, 2013, requesting a final determination on behalf 
of CyberPoint International Inc., pursuant to subpart B of part 177 
of the U.S. Customs and Border Protection (``CBP'') Regulations (19 
CFR Part 177). Under these regulations, which implement Title III of 
the Trade Agreements Act of 1979 (``TAA''), as amended (19 U.S.C. 
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 the 
video teleconferencing server Prescient T7-FW

[[Page 57649]]

(``the Server''). As a U.S. manufacturer and wholesaler, CyberPoint 
International LLC. is a party-at-interest within the meaning of 19 
CFR 177.22(d)(1), and is entitled to request this final 
determination.

FACTS:

    This case involves the Server which is designed to communicate 
in a secure environment. The basic functionality of the product is 
to capture motion picture images and sound and send them digitally 
(via Ethernet) to a similar unit at a different location, where the 
digital data is reconstructed into motion picture and sound. In 
addition, the Server ensures that digital data (motion picture and 
sound) is sent securely between the two units, making the ability to 
infiltrate the unit via eavesdropping or malware through the network 
connection more difficult. You state that the security feature adds 
approximately 40 percent of the unit's value.
    The Server is comprised of a video processing electronic circuit 
board (``Video Board'') which includes the codec; a network filter 
electronic circuit board (``Filter Board''); a housing case; a power 
supply circuit board; minor components, which include a heat sink, 
standoff hardware and screws, network cables and wire harnesses; and 
CyberPoint's proprietary software known as the CyberPoint Linux 
Firewall (``Linux software''). The Linux software allows the Filter 
Board to inspect each Ethernet packet of information as it enters 
the LAN port of the Video Board, and to accept only those packets 
needed to perform the video teleconferencing functionality. You 
state that the Linux software is designed, developed and installed 
in the United States at great expense and with many man hours in its 
engineering, development and design by cyber-security professionals 
with years of experience in creating defensive solutions.
    The Server can be used with video cameras, microphones and video 
display; however, these are optional attachments and are not part of 
the product under consideration.
    The key hardware components are the Video Board, which converts 
image and sound into digital data, and the Filter Board, programmed 
with Linux software, which transmits the digital data via a LAN 
connector over the Ethernet and protects the connection from malware 
infiltration. The Video Board, including the codec, is manufactured 
in China, and has connections for various video input and output 
formats, two USB connections, and two Ethernet connections. One of 
the Ethernet connections interfaces with a microphone to capture 
sound, and the other interfaces with a LAN.
    Two scenarios are presented. In the first scenario, the Video 
Board lacks the LAN connection when imported, meaning that it cannot 
transmit data. In the second scenario, the Video Board is fully 
functional as imported. Once imported into the U.S., the LAN 
connection is removed, the hole for this connection in the rear 
sheet metal of the unit is covered, a modification is made to the 
rear sheet metal to provide for a new connection point, and 
CyberPoint installs another cable that connects from the Filter 
Board to the new connection point. The LAN connector hardware is 
produced in the U.S. and developed by CyberPoint at its facilities 
in the U.S. CyberPoint states that the purposes of its installation 
of the LAN connection is to wipe the device clean from any malware 
residing in the original equipment.
    The Filter Board is a circuit board that provides the necessary 
LAN connection of the Server and the secure connection that ensures 
no malware infiltrates the system during a videoconferencing session 
or during off hours. The Filter Board is made from a DreamPlug unit 
manufactured in China, a mini generic computer housed in a plug that 
contains a blank non-functional circuit board. In the U.S., the 
DreamPlug is disassembled; and the circuit board is removed, mounted 
on an aluminium heat sink, wired and programmed with Linux software, 
and configured, reinstalled and mounted on the Server's metal case. 
The programming of the Filter Board with Linux software inputs the 
connectivity functionality, so that digital data can be transmitted 
securely from one unit to another.
    The power supply and metal case for the server are produced in 
China. The heat sink is produced in the U.S.
    The assembly of the various components in the U.S. involves the 
following:
     As stated above, holes are drilled in the metal case so 
the Filter Board and LAN connector hardware can be mounted;
     The DreamPlug is disassembled and the blank circuit 
board is removed, the Linux software is downloaded, and the card is 
then re-installed. This process takes approximately 4.5 hours;
     The Video Board is removed from the case and it is 
connected to the LAN connector with a network cable. Under the 
second scenario, the existing LAN connection has to be removed as 
well;
     A wire harness is installed to route the cables, and 
the Filter Board is installed to the heat sink. The LAN network 
connector is installed through the rear of the metal case. This 
takes approximately 2.5 hours;
     The finished Server is tested, labeled and packaged.
    Counsel states that the overall assembly process in the U.S. 
takes approximately 20 hours to complete each unit.

ISSUE:

    What is the country of origin of the Server?

LAW AND ANALYSIS:

    Pursuant to subpart B of part 177, 19 CFR 177.21 et seq., which 
implements Title III of the Trade Agreements Act of 1979, as amended 
(19 U.S.C. 2511 et seq.) (``TAA''), 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. 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 CFR 
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 Acquisition 
Regulations. See 19 CFR 177.21. In this regard, CBP recognizes that 
the Federal Acquisition 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 25.403(c)(1). The 
Federal Acquisitions 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 25.003

    In Data General v. United States, 4 CIT 182 (1982), the court 
determined that for purposes of determining eligibility under item 
807.00, Tariff Schedule of the United States (predecessor to 
subheading 9802.00.80, Harmonized Tariff Schedule of the United 
States), the programming of a foreign Programmable Read Only Memory 
Chip (``PROM'') in the United States substantially transformed the 
PROM into a U.S. article.
    In programming the imported PROM's, the U.S. engineers 
systematically caused various distinct electronic interconnections 
to be formed within each integrated circuit.
    The court noted that it was undisputed that programming altered 
the character of a PROM and that in that case, the essence of the 
article, its interconnections or stored memory, was established by 
programming.
    In this case, we find that the essence of the imported good is 
its use as a video conferencing server. The Video Board and the 
Filter Board, which is a configuration of the DreamPlug unit, are 
the hardware components that impart the ability of the product to 
capture sound and image and to transmit that digital data so they 
impart the essential character to the finished good. While the 
addition of the U.S. developed software may add 40 percent to the 
unit's value, the software only adds a characteristic to the Server, 
but does not change its main function which is to send images and 
sound. Since the hardware components that impart the essential 
character to the finished product are of Chinese origin, we find 
that the country of origin of the Server for government procurement 
purposes is China.

HOLDING:

    Based on the facts provided, the Server is considered a product 
of China for government procurement purposes.
    Notice of this final determination will be given in the Federal 
Register, as required by

[[Page 57650]]

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 Court of International Trade.

Sincerely,

Sandra L. Bell
Executive Director, Regulations and Rulings
Office of International Trade

[FR Doc. 2013-22765 Filed 9-18-13; 8:45 am]
BILLING CODE 9111-14-P