Notice of Issuance of Final Determination Concerning a Wood Chest, 15448-15450 [2010-6832]

Agencies

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

[Federal Register Volume 75, Number 59 (Monday, March 29, 2010)]
[Notices]
[Pages 15448-15450]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-6832]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning a Wood Chest

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 a certain wood chest. Based upon the facts 
presented, CBP has concluded in the final determination that the U.S. 
is the country of origin of the wood chest for purposes of U.S. 
government procurement.

DATES: The final determination was issued on March 23, 2010. 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 April 28, 2010.

FOR FURTHER INFORMATION CONTACT: Elif Eroglu, Valuation and Special 
Programs Branch: (202) 325-0277.

SUPPLEMENTARY INFORMATION: Notice is hereby given that on March 23, 
2010, 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 the wood chest which may be offered to the U.S. 
Government under an undesignated government procurement contract. This 
final determination, in Headquarters Ruling Letter (``HQ'') H083693, 
was issued at the request of J. Squared, Inc. d/b/a University Loft 
Company 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 wood chest, assembled in the 
U.S. from parts made in Malaysia and the U.S., is substantially 
transformed in the U.S., such that the U.S. is the country of origin of 
the finished article 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), provides that any 
party-at-interest, as defined in 19 CFR

[[Page 15449]]

177.22(d), may seek judicial review of a final determination within 30 
days of publication of such determination in the Federal Register.

    Dated: March 23, 2010.
Myles B. Harmon,
Acting Executive Director, Regulations and Rulings, Office of 
International Trade.

Attachment

HQ H083693

March 23, 2010
OT:RR:CTF:VS H083693 EE
CATEGORY: Marking
Lisa A. Crosby
Sidley Austin, LLP
1501 K Street, NW
Washington, D.C. 20005
RE: U.S. Government Procurement; Title III, Trade Agreements Act of 
1979 (19 U.S.C. Sec.  2511); Subpart B, Part 177, CBP Regulations; Wood 
Chest
Dear Ms. Crosby:
    This is in response to your correspondence of November 4, 2009, 
requesting a final determination on behalf of J. Squared, Inc. d/b/a 
University Loft Company (``ULC''), pursuant to subpart B of part 177, 
Customs and Border Protection (``CBP'') Regulations (19 CFR Sec.  
177.21 et seq.). Under the pertinent regulations, which implement 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 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 the 
G10624-30 Wood Chest. We note that ULC 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:

    You describe the pertinent facts as follows. ULC's principal place 
of business is in Greenfield, Indiana. The company manufactures the 
wood chest at its facility in Greenfield, Indiana. The wood chest is a 
self-centering, stackable, two-drawer chest made of environmentally 
farmed hevea brasiliensis wood in a natural finish. Its dimensions are: 
36\1/4\ wide, 21\13/16\ deep and 18\11/
16\ high. ULC designed this chest wholly within the U.S. ULC 
makes the wood chest from U.S. and imported components at its facility 
in Greenfield, Indiana.
    You state that the wood chest contains over twenty components plus 
screws and other hardware. All of the materials are of U.S. or 
Malaysian origin. Production and packaging of the chest occurs in the 
U.S.
    You submitted the bill of materials for the wood chest. Of the 
total cost of production, 40 percent is attributable to materials of 
U.S. origin, U.S. warehouse overhead and U.S. labor costs (including 
overhead). Some of the components from Malaysia include the following: 
drawers, panels, drawer frame pieces, top shelf frame pieces, drawer 
slides, and screws. The laminate top originates in the U.S. You 
submitted a photographic illustration of the U.S. production. The 
production of the wood chest takes approximately forty-one minutes. You 
claim that each step is completed by skilled workers who undergo an 
extensive training process.
    The production of the wood chest begins by staging the left and 
right side panels for assembly. These panels are moved into the slide 
attachment workstation, where two drawer slides are drilled into place 
on each side panel using screws. A jig is used to ensure exact 
placement of the drawer slides. Next, two drawer frame assemblies and 
one top frame assembly are constructed from wood pieces imported from 
Malaysia. The wood pieces are hand-fitted together with glue and 
measured against a jig to ensure the frames meet exact specifications. 
After the various frame pieces are glued together, the frame is clamped 
and bradded to maintain a tight fit until the glue dries. The three 
frame assemblies (two drawer frames and one top frame) are then 
attached to the left and right side panel assemblies using screws and 
glue. The laminate top (U.S.-origin) and back panel are then affixed to 
the frame/side panel assembly using glue and screws.
    On a separate production line, drawer assemblies are staged for 
production. A jig is used to align the drawer slides and attach them to 
the drawer assemblies with screws. The drawer assemblies with slides 
are then inserted into the chest and adjustments are made as necessary 
to meet specifications and ensure a smooth operation.
    After final assembly, the wood chest undergoes a quality control 
review, during which the contract manufacturer and ``Friends of the 
World'' labels (reflecting that the wood is sustainably harvested) are 
affixed to the inside of the top drawer. The chest is then packaged 
using shrink-wrap and recycled cardboard. Finally, the packaged chest 
is palletized and labeled for shipment/delivery.

ISSUE:

    What is the country of origin of the wood chest for the purpose 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 CFR 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 Acquisition Regulations. See 19 
CFR Sec.  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 Sec.  25.403(c)(1). The 
Federal Acquisition 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.
    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

[[Page 15450]]

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, 
extent and nature of post-assembly inspection and testing procedures, 
and the degree of skill required during the actual manufacturing 
process may be relevant when determining whether a substantial 
transformation has occurred. No one factor is determinative.
    In Carlson Furniture Industries v. United States, 65 Cust. Ct. 474 
(1970), the U.S. Customs Court ruled that U.S. operations on imported 
chair parts constituted a substantial transformation, resulting in the 
creation of a new article of commerce. After importation, the importer 
assembled, fitted, and glued the wooden parts together, inserted steel 
pins into the key joints, cut the legs to length and leveled them, and 
in some instances, upholstered the chairs and fitted the legs with 
glides and casters. The court determined that the importer had to 
perform additional work on the imported chair parts and add materials 
to create a functional article of commerce. The court found that the 
operations were substantial in nature, and more than the mere assembly 
of the parts together.
    In HQ W563456, dated July 31, 2006, CBP held that certain office 
chairs assembled in the U.S. were a product of the U.S. for purposes of 
U.S. government procurement. The office chairs were assembled from 
seventy U.S. and foreign components. The imported components alone were 
insufficient to create the finished chairs and substantial additional 
work and materials were added to the imported components in the U.S. to 
produce the finished chairs. In finding that the imported parts were 
substantially transformed in the U.S., CBP stated that the components 
lost their individual identities when they became part of the chair as 
a result of the U.S. assembly operations and combination with U.S. 
components. In HQ 561258, dated April 15, 1999, CBP determined that the 
assembly of numerous imported workstation components with the U.S.-
origin work surface into finished workstations constituted a 
substantial transformation. CBP held that the imported components lost 
their identity as leg brackets, drawer units, panels etc. when they 
were assembled together to form a workstation.
    This case involves twenty main components which are proposed to be 
assembled in the U.S., largely by skilled workers. The laminate top, of 
U.S. origin, will be assembled into the wood chest in a twenty step 
process which will take approximately forty-one minutes. Under the 
described assembly process, we find that the foreign components lose 
their individual identities and become an integral part of a new 
article, the wood chest, possessing a new name, character and use. 
Based upon the information before us, we find that the components that 
are used to manufacture the wood chest, when combined with a U.S. 
origin laminate top, are substantially transformed as a result of the 
assembly operations performed in the U.S., and that the country of 
origin of the wood chest for government procurement purposes is the 
U.S.

HOLDING:

    The imported components that are used to manufacture the wood chest 
are substantially transformed as a result of the assembly operations 
performed in the U.S. Therefore, we find that the country of origin of 
the wood chest for government procurement purposes is the U.S.
    Notice of this final determination will be given in the Federal 
Register, as required by 19 CFR Sec.  177.29. Any party-at-interest 
other than the party which requested this final determination may 
request, pursuant to 19 CFR Sec.  177.31, that CBP reexamine the matter 
anew and issue a new final determination. Pursuant to 19 CFR Sec.  
177.30, 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,
Myles B. Harmon,
Acting Executive Director, Regulations and Rulings, Office of 
International Trade.
[FR Doc. 2010-6832 Filed 3-26-10; 8:45 am]
BILLING CODE 9111-14-P