Notice of Issuance of Final Determination Concerning Certain Commodity-Based Clustered Storage Units, 27798-27801 [2010-11726]
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Federal Register / Vol. 75, No. 95 / Tuesday, May 18, 2010 / Notices
Evidence-Based Recommendation of
Client Reminder/Recall for Childhood
Immunization, FOA IP10–004, initial
review.
In accordance with Section 10(a)(2) of
the Federal Advisory Committee Act
(Pub. L. 92–463), the Centers for Disease
Control and Prevention (CDC),
announces the aforementioned meeting:
Time and Date: 8 a.m.–5 p.m., June 7, 2010
(Closed).
Place: Sheraton Gateway Hotel Atlanta
Airport, 1900 Sullivan Road, Atlanta, Georgia
30337, Telephone: (770) 979–1100.
Status: The meeting will be closed to the
public in accordance with provisions set
forth in Section 552b(c) (4) and (6), Title 5
U.S.C., and the Determination of the Director,
Management Analysis and Services Office,
CDC, pursuant to Public Law 92–463.
Matters To Be Discussed: The meeting will
include the initial review, discussion, and
evaluation of applications received in
response to ‘‘Evaluation of Offering and
Documenting Influenza Vaccination for
Nursing Home Residents, FOA IP10–001;
Development, Implementation, and
Evaluation of a Multi-Component
Intervention to Vaccinate Adolescents at Risk
for Vaccine-Preventable Diseases, FOA IP10–
002; Evaluation and Impact of a State Law
Requiring Mandatory Influenza Vaccination
of Hospital Employees, FOA IP10–003; and
Improving the Translation of the EvidenceBased Recommendation of Client Reminder/
Recall for Childhood Immunization, FOA
IP10–004’’.
For More Information Contact: Gregory
Anderson, M.S., M.P.H., Scientific Review
Officer, CDC, 1600 Clifton Road, NE.,
Mailstop E60, Atlanta, Georgia 30333,
Telephone: (404) 498–2293.
The Director, Management Analysis and
Services Office, has been delegated the
authority to sign Federal Register notices
pertaining to announcements of meetings and
other committee management activities, for
both CDC and the Agency for Toxic
Substances and Disease Registry.
Dated: May 11, 2010.
Elaine L. Baker,
Director, Management Analysis and Services
Office, Centers for Disease Control and
Prevention.
[FR Doc. 2010–11886 Filed 5–17–10; 8:45 am]
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DEPARTMENT OF HOMELAND
SECURITY
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Customs and Border Protection
Notice of Issuance of Final
Determination Concerning Certain
Commodity-Based Clustered Storage
Units
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 Commodity-based
Clustered Storage Units. Based upon the
facts presented, CBP has concluded in
the final determination that the United
States is the country of origin of
Commodity-based Clustered Storage
Units for purposes of U.S. government
procurement.
Dated: May 11, 2010.
William G. Rosoff,
Acting Executive Director, Regulations and
Rulings.
The final determination was
issued on May 11, 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 30 days
from date of publication in the Federal
Register.
Mr. Joshua Holzer
Wilson, Sonsini, Goodrich & Rosati
1700 K Street, NW, Fifth Floor
Washington, DC 20006–3817
RE: U.S. Government Procurement;
Title III, Trade Agreements Act of
1979 (19 U.S.C. § 2511); Subpart B,
Part 177, CBP Regulations; ICS
Units
DATES:
FOR FURTHER INFORMATION CONTACT:
Alison Umberger, Valuation and Special
Programs Branch: (202) 325–0267.
Notice is
hereby given that on May 11, 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 Commodity-based Clustered
Storage Units which may be offered to
the U.S. Government under an
undesignated government procurement
contract. This final determination, in
HQ H082476, was issued at the request
of Scale Computing 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
Commodity-based Clustered Storage
Units, assembled in the United States
from parts made in China, Taiwan,
India, Thailand, and Malaysia, and
programmed in the United States using
software developed in the United States,
is substantially transformed in the
United States, such that the United
States is the country of origin of the
finished article for purposes of U.S.
government procurement.
SUPPLEMENTARY INFORMATION:
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
177.22(d), may seek judicial review of a
final determination within 30 days of
publication of such determination in the
Federal Register.
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Office of International Trade
Attachment
HQ H082476
May 11, 2010
OT:RR:CTF:VS H082476 ARU
CATEGORY: Marking
Dear Mr. Holzer:
This is in response to your request
dated October 15, 2009, made on behalf
of Scale Computing (‘‘Scale’’). You ask
for a country of origin marking decision
and final determination relating to
government procurement pursuant to
subpart B of Part 177, Customs and
Border Protection (‘‘CBP’’) Regulations
(19 C.F.R. § 177.21 et seq.). Under these
regulations, which implement Title III
of the Trade Agreements Act of 1979, as
amended (19 U.S.C. § 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 Scale’s SN1000,
SN2000, and SN4000 Commodity-based
Clustered Storage (‘‘ICS’’) Units. We note
that Scale is a party-at-interest within
the meaning of 19 C.F.R. § 177.22(d)(1)
and is entitled to request this final
determination.
FACTS:
Scale Computing produces storage
appliances that offer a multi-protocol,
multi-density suite of non-controllerbased, unified NAS/SAN, enterpriseclass storage solutions. Scale’s SN1000,
SN2000, and SN4000 ICS Units are mass
data storage devices similar in function
to Storage Area Network (‘‘SAN’’) or
Network Attached Storage (‘‘NAS’’)
devices (i.e., special-purpose networks
that interconnect different kinds of data
storage devices—such as tape libraries
and disk arrays—with associated data
servers on behalf of a larger network of
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Federal Register / Vol. 75, No. 95 / Tuesday, May 18, 2010 / Notices
users).1 Their software architecture uses
both proprietary and licensed
technologies to create a grid storage
system from multiple clustered ‘‘nodes’’
(small, commodity-based hardware
devices).2 The models at issue differ
only in their storage capacity; the
SN1000 holds 1 Terabyte worth of data,
the SN2000 holds 2 Terabytes, and the
SN4000 holds 4 Terabytes.
The ICS Units consist of the following
components:
A. Hardware
1. A Central Processing Unit (‘‘CPU’’),
which is used to provide the computing
power;
2. An Application Specific Integrated
Circuit (‘‘ASIC’’) that provides the
proper processing speeds;
3. A capacitor and resistors;
4. Electrically erasable programmable
read-only memory (‘‘EEPROM’’) to retain
data in the event of power loss;
5. A ‘‘motherboard’’, which is a
printed circuit board populated by
transistors, diodes, capacitors, and
communication board;
6. Additional motherboard
components that provide additional
data throughput;
7. A Western Digital brand Hard Disk
Drive (‘‘HDD’’) that stores data;
8. A memory module, which
enhances overall throughput;
9. An air shroud, which helps with
system cooling;
10. A heat sink that protects internal
components from heat;
11. Two five foot patch cables, which
connect to backplane for
communication; and
12. A chassis that encloses all of the
above listed components.
The components listed above are
manufactured in several countries
including China, India, Malaysia,
Taiwan, and Thailand. (Significantly,
the motherboard, which is the most
expensive hardware component, is
manufactured in China.) They are
assembled in the U.S. upon importation
‘‘through a build and verification
process that includes approximately 112
steps [summarized below].’’
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B. Software
The ICS Units also contain
proprietary application software and
firmware.3 Together, they enable the ICS
1 See Newton’s Telecom Dictionary (23rd Ed.,
2007).
2 Each node contains a number of physical hard
disk drives. It is the underlying software
technology, rather than the proprietary hardware
and controllers, which manages the distribution of
data across both individual drives and across nodes
in the grid. See ICS White Paper 2009, available at
www.scalecomputing.com.
3 ‘‘Firmware’’ is a category of memory chips that
hold their content without electrical power and
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Units to (1) create a cluster of nodes
which act in unison, and (2)
independently control the entire
cluster.4
The application software and the
firmware were developed in the U.S. by
Scale. You indicated that the
development process entailed: (1) a
requirements analysis; (2) product
design; (3) code writing; (4) quality
assurance testing; (5) bug fixing and
maintenance; and (5) support. By your
estimation, ‘‘at least 12,480 hours were
invested in the development of the
firmware and application software in
question’’ with ‘‘at least 10,400 more
hours invested each year in continued
development and maintenance.’’
C. Assembly
The ICS Units are made from
components manufactured in China,
India, Malaysia, Taiwan, and Thailand.
They are ultimately assembled in the
U.S., according to the following process:
1. Initial Quality Control: personnel
take component inventory and visually
inspect each component. Serial numbers
from each component are scanned into
inventory and grouped with a particular
ICS Unit. Serial numbers are verified for
compatibility with other components in
the group.
2. Preparation of the System Chassis:
after clearing the system board area, the
motherboard is secured to the chassis.
3. The Serial Advanced Technology
Attachment (‘‘SATA’’) backplane cabling
is attached: after lining up the
appropriate markings, the SATA cable is
connected to the SATA Backplane by
using a SATA cable tree.
4. The molex connector and intrusion
detectors are attached to the SATA
backplane.
5. Preparation of the system board:
The CPU, CPU Cooler, and Random
Access Memory (‘‘RAM’’) are attached to
the system board.
6. Integration of the system board: the
system board is integrated into the
chassis by aligning it with the mounting
holes and ensuring proper alignment
with the I/O shield. The system board,
main power harness, and power
connector are then secured to the
chassis. The main power harness is
attached to the system board.
7. Fan kit assembly: Fan connectors
are plugged into internal ports.
8. Routing and bundling of the front
panel connectors: Front panel
include ROM, PROM, EPROM, and EEPROM
technologies. Firmware becomes ‘‘hard software’’
when holding program code. See Alan Freedman’s
The Computer Glossary (9th Ed., 2001).
4 You claim that, without the software, the ICS
Units would behave like a standard, off-the-shelf
rack storage unit.
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connectors are appropriately routed and
connected.
9. Air shroud integration: air shroud
is positioned and attached to power
cable.
10. Signal Cables: signal cables are
connected to the system board in the
appropriate order, from SATA 0 through
SATA 3.
11. Verify and ensure the cable
routing and connections: the intrusion
detection cable is bundled and secured,
and the ‘‘Chassis Intrusion’’ is attached
next to the SATA connectors.
12. Hard drive Integration: hard drive
fillers are removed from chassis.
13. Install hard drives (parts from Bill
of Materials) and secure: the capacity of
all hard drives is verified to ensure they
are either 500 GB or 1000 GB. The hard
drives are the systematically distributed
on all order systems.
14. Verify hardware integration: the
hardware is verified to ensure that the
system boards with CPU, Heat sink, and
RAM has been properly mounted; the
heat sink has proper orientation and is
properly mounted; the cable routing and
connections are correctly implemented;
the air-duct (black shroud) is properly
attached to the system board; the hard
drives are properly assembled in carrier
and lock in place; and that the Intrusion
Detection Switch and Connector has
been properly integrated.
15. Secure chassis: the lid of chassis
is secured with screws.
16. First power on: the system is
connected to a power source. The
Network Interface Card (‘‘NIC’’) is
connected to the ‘‘Staging Services’’. The
keyboard and mouse are plugged in. The
power system is turned and checked for
any abnormalities. The boot process is
checked. The POST of system is tested
to verify that there are no acoustical
warnings.
17. BIOS Configuration: each system
is booted into BIOS and all of the BIOS
variables are reset to their defaults. The
BIOS is then customized to run Scale’s
firmware and application software by
adjusting fifteen separate settings.
18. Diagnostic Testing: after the
system is rebooted, a technician
performs a general diagnostic test and
reboots again.
19. Scale Image Loading: on this
reboot, a technician connects the ICS
Unit to power and checks that the
system’s configuration is correct. After
connecting the ICS Unit to a network,
the technician loads the Company’s
proprietary Operating System (‘‘OS’’)
application software image, which
enables the ICS Unit to act as part of a
Scale system. The technician must
observe the entire load process to ensure
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that the ICS Unit is properly configured
and accepts the OS load.
20. Verification: the technician now
runs an MD5 Check-Sum program to
confirm that the OS image on the ICS
Unit is identical to Scale’s proprietary
OS image.
21. Complete Integration and Verify:
the technician now reboots the ICS Unit
again to verify the BIOS settings are
correctly implemented. The ICS Unit is
then shut down.
It takes approximately one hour to
assemble each ICS Unit.
ISSUE:
What is the country of origin of the
ICU Units for purposes of U.S.
Government procurement?
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LAW AND ANALYSIS:
Pursuant to subpart B of Part 177, 19
C.F.R. § 177.21 et seq., which
implements Title III of the Trade
Agreements Act of 1979, as amended
(‘‘TAA’’; 19 U.S.C. § 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 at 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 C.F.R. § 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.
§ 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. § 25.403(c)(1).
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
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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, and use are primary
considerations in such cases.
Additionally, facts such as resources
expended on product design and
development, extent and nature of postassembly 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.
In Data General v. United States, 4
CIT 182 (1982), the court determined
that for purposes of determining
eligibility under item 807.00, Tariff
Schedules of the United States, the
programming of a foreign PROM
(Programmable Read-Only Memory
chip) substantially transformed the
PROM into a U.S. article. In
programming the imported PROMs, the
U.S. engineers systematically caused
various distinct electronic
interconnections to be formed within
each integrated circuit. The
programming bestowed upon each
circuit its electronic function. That is,
its ‘‘memory’’ which could be retrieved.
A distinct physical change was effected
in the PROM by the opening or closing
of the fuses, depending on the method
of programming. This physical
alteration, not visible to the naked eye,
could be discerned by electronic testing
of the PROM. The court noted that the
programs were designed by a project
engineer with many years of experience
in ‘‘designing and building hardware.’’
While replicating the program pattern
from a ‘‘master’’ PROM may be a quick
one-step process, the development of
the pattern and the production of the
‘‘master’’ PROM required much time and
expertise. The court noted that it was
undisputed that programming alters the
character of a PROM. The essence of the
article, its interconnections or stored
memory, was established by
programming. The court concluded that
altering the non-functioning circuitry
comprising a 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.
In Texas Instruments v. United States,
supra, the court observed that the
substantial transformation issue is a
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‘‘mixed question of technology and
customs law.’’
In C.S.D. 84–86, CBP stated:
We are of the opinion that the
rationale of the court in the Data
General case may be applied in the
present case to support the principle
that the essence of an integrated circuit
memory storage device is established by
programming . . . . [W]e are of the
opinion that the programming (or
reprogramming) of an EPROM results in
a new and different article of commerce
which would be considered to be a
product of the country where the
programming or reprogramming takes
place.
Accordingly, the programming of a
device that changes or defines its use
generally constitutes substantial
transformation. See also HQ 733085,
dated July 13, 1990; and HQ 558868,
dated February 23, 1995 (programming
of SecureID Card substantially
transforms the card because it gives the
card its character and use as part of a
security system and the programming is
a permanent change that cannot be
undone); HQ 735027, dated September
7, 1993 (programming blank media
(EEPROM) with instructions on it that
allows it to perform certain functions of
preventing piracy of software
constituted substantial transformation);
but see HQ 732870, dated March 19,
1990 (formatting a blank diskette did
not constitute substantial transformation
because it did not add value, did not
involve complex or highly technical
operations and did not create a new or
different product); HQ 734518, dated
June 28, 1993 (concluding that
motherboards were not substantially
transformed by the implanting of the
central processing unit on the board
because, whereas in Data General use
was being assigned to the PROM, the
use of the motherboard had already
been determined when the importer
imports it).
You claim that Scale takes several
individual components and combines
them in the United States to make
otherwise dormant electronic
components into a usable customized
data storage device. The motherboard is
imported from China with integrated
circuits, an EEPROM, transistors,
diodes, a capacitor, resistors and
communication buses. From the
information provided, the board is
solely or principally used with an ADP
storage unit. Once imported, the
motherboard will be installed in a
chassis from China, along with various
other non-originating components
including a CPU from Malaysia, HDD
from Thailand, memory module, air
shroud, cables, and heat sink from
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China, to complete a rack mounted
server. Each of these components is
made into a rack mounted storage
device, classifiable under 8471.70.40,
Harmonized Tariff Schedule (‘‘HTSUS’’).
The device does not have pairing
capability until the U.S.-made software
is downloaded to it, which enables the
device to function as a cloud computing
device similar to a network storage
RAID array (HDDs strung together to
allow redundancy in different
locations). The software completes a
network storage function instead of just
a HDD found in a rack mounted storage
device. The RAID array storage
subsystem components and HDD
canisters usually include a disk array
controller frame which effects the
interface between the subsystem’s
storage units and a CPU. In this case, the
software effects the interconnection
between the CPU and the storage units,
and the classification of the finished
item becomes 8471.80.10, HTSUS.
Thus, the imported components become
a new product with a new name and
classification.
In summary, Scale imports several
components of foreign-origin, including
a blank storage medium in the form of
a hard disk drive, combines them into
a finished product and loads propriety
software using skilled technical effort.
The customization and installation of
firmware and application software make
what would otherwise be a nonfunctioning rack storage unit, into
Scale’s proprietary clustered
technology. As a result of the U.S.
processing, we find that the imported
component parts are substantially
transformed and therefore, the country
of origin of the ICS Units is the United
States.
Please be advised, however, that
whether the ICS Units may be marked
‘‘Made in the U.S.A.’’ or with similar
words, is an issue under the authority
of the Federal Trade Commission
(‘‘FTC’’). We suggest that you contact the
FTC, Division of Enforcement, 6th and
Pennsylvania Avenue, NW.,
Washington, DC 20508, on the propriety
of markings indicating that articles are
made in the United States.
HOLDING:
Based on the facts provided, the
processing operations performed in
United States impart the essential
character to the ICS Units. As such, the
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ICS Units will be considered products of
the United States for the purpose of
government procurement.
Notice of this final determination will
be given in the Federal Register as
required by 19 C.F.R. § 177.29. Any
party-at-interest other than the party
which requested this final
determination may request, pursuant to
19 C.F.R. § 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,
William G. Rosoff
for
Sandra L. Bell, Executive Director
Regulations and Rulings
Office of International Trade
[FR Doc. 2010–11726 Filed 5–17–10; 8:45 am]
BILLING CODE 9111–14–P
DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT
[Docket No. FR–5421–FA–01]
Announcement of Funding Awards for
the Indian Community Development
Block Grant Program for Fiscal Year
2009
AGENCY: Office of Native American
Programs, Office of Public and Indian
Housing, HUD.
ACTION: Announcement of funding
awards.
27801
serving your area or Deborah M.
Lalancette, Office of Native Programs,
1670 Broadway, 23rd Floor, Denver, CO
80202, telephone (303) 675–1600.
Hearing or speech-impaired individuals
may access this number via TTY by
calling the toll-free Federal Information
Relay Service at (800) 877–8339.
This
program provides grants to Indian tribes
and Alaska Native Villages to develop
viable Indian and Alaska Native
communities, including the creation of
decent housing, suitable living
environments, and economic
opportunities primarily for persons with
low and moderate incomes as defined in
24 CFR 1003.4.
The FY 2009 awards announced in
this Notice were selected for funding in
a competition posted on HUD’s Web site
on May 29, 2009 (https://portal.hud.gov/
portal/page/portal/HUD/program_
offices/administration/grants/
fundsavail). Applications were scored
and selected for funding based on the
selection criteria in that notice and Area
ONAP geographic jurisdictional
competitions.
The amount appropriated in FY 2009
to fund the ICDBG was $65,000,000. Of
this amount $3,960,000 of this amount
was retained to fund imminent threat
grants in FY 2009. In addition, a total of
$2,076,159 in carryover funds from
prior years was also available. The
allocations for the Area ONAP
geographic jurisdictions, including
carryover, are as follows:
SUPPLEMENTARY INFORMATION:
Alaska ...................................
Eastern/Woodlands ..............
Northern Plains ....................
Northwest .............................
Southern Plains ...................
Southwest .............................
$6,859,040
6,928,622
9,194,667
3,662,163
13,734,388
22,737,279
Total ..................................
$63,116,159
SUMMARY: In accordance with Section
102(a)(4)(C) of the Department of
Housing and Urban Development
Reform Act of 1989, this announcement
notifies the public of funding decisions
made by the Department in a
competition for funding under the
Fiscal Year 2009 (FY 2009) Notice of
Funding Availability (NOFA) for the
Indian Community Development Block
Grant (ICDBG) Program. This
announcement contains the
consolidated names and addresses of
this year’s award recipients under the
ICDBG.
In accordance with section 102
(a)(4)(C) of the Department of Housing
and Urban Development Reform Act of
1989 (103 Stat.1987, 42 U.S.C. 3545),
the Department is publishing the names,
addresses, and amounts of the 83
awards made under the various regional
competitions in Appendix A to this
document.
FOR FURTHER INFORMATION CONTACT: For
questions concerning the ICDBG
Program awards, contact the Area Office
of Native American Programs (ONAP)
Dated: May 4, 2010.
Sandra B. Henriquez,
Assistant Secretary for Public and Indian
Housing.
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]]>Agencies
[Federal Register Volume 75, Number 95 (Tuesday, May 18, 2010)]
[Notices]
[Pages 27798-27801]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-11726]
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DEPARTMENT OF HOMELAND SECURITY
Customs and Border Protection
Notice of Issuance of Final Determination Concerning Certain
Commodity-Based Clustered Storage Units
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 Commodity-based Clustered Storage Units.
Based upon the facts presented, CBP has concluded in the final
determination that the United States is the country of origin of
Commodity-based Clustered Storage Units for purposes of U.S. government
procurement.
DATES: The final determination was issued on May 11, 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 30 days from date of publication in the Federal
Register.
FOR FURTHER INFORMATION CONTACT: Alison Umberger, Valuation and Special
Programs Branch: (202) 325-0267.
SUPPLEMENTARY INFORMATION: Notice is hereby given that on May 11, 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 Commodity-based Clustered Storage Units which may
be offered to the U.S. Government under an undesignated government
procurement contract. This final determination, in HQ H082476, was
issued at the request of Scale Computing 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 Commodity-based Clustered Storage Units, assembled in the United
States from parts made in China, Taiwan, India, Thailand, and Malaysia,
and programmed in the United States using software developed in the
United States, is substantially transformed in the United States, such
that the United States 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 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 11, 2010.
William G. Rosoff,
Acting Executive Director, Regulations and Rulings.
Office of International Trade
Attachment
HQ H082476
May 11, 2010
OT:RR:CTF:VS H082476 ARU
CATEGORY: Marking
Mr. Joshua Holzer
Wilson, Sonsini, Goodrich & Rosati
1700 K Street, NW, Fifth Floor
Washington, DC 20006-3817
RE: U.S. Government Procurement; Title III, Trade Agreements Act of
1979 (19 U.S.C. Sec. 2511); Subpart B, Part 177, CBP Regulations; ICS
Units
Dear Mr. Holzer:
This is in response to your request dated October 15, 2009, made on
behalf of Scale Computing (``Scale''). You ask for a country of origin
marking decision and final determination relating to government
procurement 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 (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 Scale's
SN1000, SN2000, and SN4000 Commodity-based Clustered Storage (``ICS'')
Units. We note that Scale 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:
Scale Computing produces storage appliances that offer a multi-
protocol, multi-density suite of non-controller-based, unified NAS/SAN,
enterprise-class storage solutions. Scale's SN1000, SN2000, and SN4000
ICS Units are mass data storage devices similar in function to Storage
Area Network (``SAN'') or Network Attached Storage (``NAS'') devices
(i.e., special-purpose networks that interconnect different kinds of
data storage devices--such as tape libraries and disk arrays--with
associated data servers on behalf of a larger network of
[[Page 27799]]
users).\1\ Their software architecture uses both proprietary and
licensed technologies to create a grid storage system from multiple
clustered ``nodes'' (small, commodity-based hardware devices).\2\ The
models at issue differ only in their storage capacity; the SN1000 holds
1 Terabyte worth of data, the SN2000 holds 2 Terabytes, and the SN4000
holds 4 Terabytes.
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\1\ See Newton's Telecom Dictionary (23rd Ed., 2007).
\2\ Each node contains a number of physical hard disk drives. It
is the underlying software technology, rather than the proprietary
hardware and controllers, which manages the distribution of data
across both individual drives and across nodes in the grid. See ICS
White Paper 2009, available at www.scalecomputing.com.
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The ICS Units consist of the following components:
A. Hardware
1. A Central Processing Unit (``CPU''), which is used to provide
the computing power;
2. An Application Specific Integrated Circuit (``ASIC'') that
provides the proper processing speeds;
3. A capacitor and resistors;
4. Electrically erasable programmable read-only memory (``EEPROM'')
to retain data in the event of power loss;
5. A ``motherboard'', which is a printed circuit board populated by
transistors, diodes, capacitors, and communication board;
6. Additional motherboard components that provide additional data
throughput;
7. A Western Digital brand Hard Disk Drive (``HDD'') that stores
data;
8. A memory module, which enhances overall throughput;
9. An air shroud, which helps with system cooling;
10. A heat sink that protects internal components from heat;
11. Two five foot patch cables, which connect to backplane for
communication; and
12. A chassis that encloses all of the above listed components.
The components listed above are manufactured in several countries
including China, India, Malaysia, Taiwan, and Thailand. (Significantly,
the motherboard, which is the most expensive hardware component, is
manufactured in China.) They are assembled in the U.S. upon importation
``through a build and verification process that includes approximately
112 steps [summarized below].''
B. Software
The ICS Units also contain proprietary application software and
firmware.\3\ Together, they enable the ICS Units to (1) create a
cluster of nodes which act in unison, and (2) independently control the
entire cluster.\4\
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\3\ ``Firmware'' is a category of memory chips that hold their
content without electrical power and include ROM, PROM, EPROM, and
EEPROM technologies. Firmware becomes ``hard software'' when holding
program code. See Alan Freedman's The Computer Glossary (9th Ed.,
2001).
\4\ You claim that, without the software, the ICS Units would
behave like a standard, off-the-shelf rack storage unit.
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The application software and the firmware were developed in the
U.S. by Scale. You indicated that the development process entailed: (1)
a requirements analysis; (2) product design; (3) code writing; (4)
quality assurance testing; (5) bug fixing and maintenance; and (5)
support. By your estimation, ``at least 12,480 hours were invested in
the development of the firmware and application software in question''
with ``at least 10,400 more hours invested each year in continued
development and maintenance.''
C. Assembly
The ICS Units are made from components manufactured in China,
India, Malaysia, Taiwan, and Thailand. They are ultimately assembled in
the U.S., according to the following process:
1. Initial Quality Control: personnel take component inventory and
visually inspect each component. Serial numbers from each component are
scanned into inventory and grouped with a particular ICS Unit. Serial
numbers are verified for compatibility with other components in the
group.
2. Preparation of the System Chassis: after clearing the system
board area, the motherboard is secured to the chassis.
3. The Serial Advanced Technology Attachment (``SATA'') backplane
cabling is attached: after lining up the appropriate markings, the SATA
cable is connected to the SATA Backplane by using a SATA cable tree.
4. The molex connector and intrusion detectors are attached to the
SATA backplane.
5. Preparation of the system board: The CPU, CPU Cooler, and Random
Access Memory (``RAM'') are attached to the system board.
6. Integration of the system board: the system board is integrated
into the chassis by aligning it with the mounting holes and ensuring
proper alignment with the I/O shield. The system board, main power
harness, and power connector are then secured to the chassis. The main
power harness is attached to the system board.
7. Fan kit assembly: Fan connectors are plugged into internal
ports.
8. Routing and bundling of the front panel connectors: Front panel
connectors are appropriately routed and connected.
9. Air shroud integration: air shroud is positioned and attached to
power cable.
10. Signal Cables: signal cables are connected to the system board
in the appropriate order, from SATA 0 through SATA 3.
11. Verify and ensure the cable routing and connections: the
intrusion detection cable is bundled and secured, and the ``Chassis
Intrusion'' is attached next to the SATA connectors.
12. Hard drive Integration: hard drive fillers are removed from
chassis.
13. Install hard drives (parts from Bill of Materials) and secure:
the capacity of all hard drives is verified to ensure they are either
500 GB or 1000 GB. The hard drives are the systematically distributed
on all order systems.
14. Verify hardware integration: the hardware is verified to ensure
that the system boards with CPU, Heat sink, and RAM has been properly
mounted; the heat sink has proper orientation and is properly mounted;
the cable routing and connections are correctly implemented; the air-
duct (black shroud) is properly attached to the system board; the hard
drives are properly assembled in carrier and lock in place; and that
the Intrusion Detection Switch and Connector has been properly
integrated.
15. Secure chassis: the lid of chassis is secured with screws.
16. First power on: the system is connected to a power source. The
Network Interface Card (``NIC'') is connected to the ``Staging
Services''. The keyboard and mouse are plugged in. The power system is
turned and checked for any abnormalities. The boot process is checked.
The POST of system is tested to verify that there are no acoustical
warnings.
17. BIOS Configuration: each system is booted into BIOS and all of
the BIOS variables are reset to their defaults. The BIOS is then
customized to run Scale's firmware and application software by
adjusting fifteen separate settings.
18. Diagnostic Testing: after the system is rebooted, a technician
performs a general diagnostic test and reboots again.
19. Scale Image Loading: on this reboot, a technician connects the
ICS Unit to power and checks that the system's configuration is
correct. After connecting the ICS Unit to a network, the technician
loads the Company's proprietary Operating System (``OS'') application
software image, which enables the ICS Unit to act as part of a Scale
system. The technician must observe the entire load process to ensure
[[Page 27800]]
that the ICS Unit is properly configured and accepts the OS load.
20. Verification: the technician now runs an MD5 Check-Sum program
to confirm that the OS image on the ICS Unit is identical to Scale's
proprietary OS image.
21. Complete Integration and Verify: the technician now reboots the
ICS Unit again to verify the BIOS settings are correctly implemented.
The ICS Unit is then shut down.
It takes approximately one hour to assemble each ICS Unit.
ISSUE:
What is the country of origin of the ICU Units 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 (``TAA''; 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 at 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).
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, and 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.
In Data General v. United States, 4 CIT 182 (1982), the court
determined that for purposes of determining eligibility under item
807.00, Tariff Schedules of the United States, the programming of a
foreign PROM (Programmable Read-Only Memory chip) substantially
transformed the PROM into a U.S. article. In programming the imported
PROMs, the U.S. engineers systematically caused various distinct
electronic interconnections to be formed within each integrated
circuit. The programming bestowed upon each circuit its electronic
function. That is, its ``memory'' which could be retrieved. A distinct
physical change was effected in the PROM by the opening or closing of
the fuses, depending on the method of programming. This physical
alteration, not visible to the naked eye, could be discerned by
electronic testing of the PROM. The court noted that the programs were
designed by a project engineer with many years of experience in
``designing and building hardware.'' While replicating the program
pattern from a ``master'' PROM may be a quick one-step process, the
development of the pattern and the production of the ``master'' PROM
required much time and expertise. The court noted that it was
undisputed that programming alters the character of a PROM. The essence
of the article, its interconnections or stored memory, was established
by programming. The court concluded that altering the non-functioning
circuitry comprising a 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.
In Texas Instruments v. United States, supra, the court observed
that the substantial transformation issue is a ``mixed question of
technology and customs law.''
In C.S.D. 84-86, CBP stated:
We are of the opinion that the rationale of the court in the Data
General case may be applied in the present case to support the
principle that the essence of an integrated circuit memory storage
device is established by programming . . . . [W]e are of the opinion
that the programming (or reprogramming) of an EPROM results in a new
and different article of commerce which would be considered to be a
product of the country where the programming or reprogramming takes
place.
Accordingly, the programming of a device that changes or defines
its use generally constitutes substantial transformation. See also HQ
733085, dated July 13, 1990; and HQ 558868, dated February 23, 1995
(programming of SecureID Card substantially transforms the card because
it gives the card its character and use as part of a security system
and the programming is a permanent change that cannot be undone); HQ
735027, dated September 7, 1993 (programming blank media (EEPROM) with
instructions on it that allows it to perform certain functions of
preventing piracy of software constituted substantial transformation);
but see HQ 732870, dated March 19, 1990 (formatting a blank diskette
did not constitute substantial transformation because it did not add
value, did not involve complex or highly technical operations and did
not create a new or different product); HQ 734518, dated June 28, 1993
(concluding that motherboards were not substantially transformed by the
implanting of the central processing unit on the board because, whereas
in Data General use was being assigned to the PROM, the use of the
motherboard had already been determined when the importer imports it).
You claim that Scale takes several individual components and
combines them in the United States to make otherwise dormant electronic
components into a usable customized data storage device. The
motherboard is imported from China with integrated circuits, an EEPROM,
transistors, diodes, a capacitor, resistors and communication buses.
From the information provided, the board is solely or principally used
with an ADP storage unit. Once imported, the motherboard will be
installed in a chassis from China, along with various other non-
originating components including a CPU from Malaysia, HDD from
Thailand, memory module, air shroud, cables, and heat sink from
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China, to complete a rack mounted server. Each of these components is
made into a rack mounted storage device, classifiable under 8471.70.40,
Harmonized Tariff Schedule (``HTSUS'').
The device does not have pairing capability until the U.S.-made
software is downloaded to it, which enables the device to function as a
cloud computing device similar to a network storage RAID array (HDDs
strung together to allow redundancy in different locations). The
software completes a network storage function instead of just a HDD
found in a rack mounted storage device. The RAID array storage
subsystem components and HDD canisters usually include a disk array
controller frame which effects the interface between the subsystem's
storage units and a CPU. In this case, the software effects the
interconnection between the CPU and the storage units, and the
classification of the finished item becomes 8471.80.10, HTSUS. Thus,
the imported components become a new product with a new name and
classification.
In summary, Scale imports several components of foreign-origin,
including a blank storage medium in the form of a hard disk drive,
combines them into a finished product and loads propriety software
using skilled technical effort. The customization and installation of
firmware and application software make what would otherwise be a non-
functioning rack storage unit, into Scale's proprietary clustered
technology. As a result of the U.S. processing, we find that the
imported component parts are substantially transformed and therefore,
the country of origin of the ICS Units is the United States.
Please be advised, however, that whether the ICS Units may be
marked ``Made in the U.S.A.'' or with similar words, is an issue under
the authority of the Federal Trade Commission (``FTC''). We suggest
that you contact the FTC, Division of Enforcement, 6th and Pennsylvania
Avenue, NW., Washington, DC 20508, on the propriety of markings
indicating that articles are made in the United States.
HOLDING:
Based on the facts provided, the processing operations performed in
United States impart the essential character to the ICS Units. As such,
the ICS Units will be considered products of the United States for the
purpose of government procurement.
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,
William G. Rosoff
for
Sandra L. Bell, Executive Director Regulations and Rulings
Office of International Trade
[FR Doc. 2010-11726 Filed 5-17-10; 8:45 am]
BILLING CODE 9111-14-P
