Notice of Issuance of Final Determination Concerning Catheter Trays, 38943-38945 [2014-15978]

Agencies

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

[Federal Register Volume 79, Number 131 (Wednesday, July 9, 2014)]
[Notices]
[Pages 38943-38945]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-15978]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning Catheter 
Trays

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 Foley catheter trays to be offered to the 
U.S. Government under an undesignated government procurement contract. 
The final determination found that based upon the facts presented, the 
country of origin of the subject trays is China and U.S.A.

DATES: The final determination was issued on June 30, 2014. 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 of July 9, 2014.

FOR FURTHER INFORMATION CONTACT: Fernando Pe[ntilde]a, Esq., Valuation 
and Special Programs Branch, Office of International Trade; telephone 
(202) 325-1511.

SUPPLEMENTARY INFORMATION: Notice is hereby given that on June 30, 
2014, 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 Foley catheter trays to be offered to the 
U.S. Government under an undesignated government procurement contract. 
The final determination, Headquarters Ruling Letter H230416, was issued 
at the request of Medline Industries, 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, the processing in Mexico of several medical 
instruments and accessories to create the subject ``Foley catheter 
trays'' does not constitute a substantial transformation into a product 
of Mexico 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, Customs 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: June 30, 2014.
Sandra L. Bell,
Executive Director, Regulations and Rulings, Office of International 
Trade.

Attachment

HQ H230416

June 30, 2014

OT:RR:CTF:VS H230416 FP

CATEGORY: Marking

Mr. Michael T. Shor
Arnold & Porter, LLP
555 12th Street, NW
Washington, DC 20004

RE: U.S. Government Procurement; Final Determination; Country of 
origin of catheter system trays; substantial transformation; 19 CFR 
Part 177

Dear Mr. Shor:

    This is in response to your letter on behalf of Medline 
Industries, Inc. (hereinafter ``Medline''), in which you seek a 
final determination pursuant to subpart B of Part 177, Customs 
Regulations, 19 CFR 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.  2411 et seq.), U.S. Customs and Border Protection 
(``CBP'') issues country of origin advisory rulings and final 
determinations on whether an article is or would be a product of a 
designated foreign 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 six 
models of Foley catheter trays, which Medline is considering

[[Page 38944]]

selling to the U.S. Government in an unspecified procurement tender. 
We note that Medline is a party-at-interest within the meaning of 19 
CFR 177.22(d)(1) and is entitled to request this final 
determination.

Facts:

    According to your submission and information provided, Medline 
developed its Foley catheter trays (hereinafter ``trays'') to aid in 
the prevention of catheter-associated urinary tract infections. 
Medline designed sterilized, single-use trays containing a catheter 
and all of the equipment necessary to insert the catheter, organized 
and sequenced in a way to minimize the possibility of infection. You 
state that each tray is intended to be used only as an entirety, for 
single use, after which use the individual components, other than 
the inserted catheter that remains in the patient, are discarded.
    You state that Medline manufactures six different models of the 
tray, which differ principally in the materials used for the 
catheter. The main model sold is the silicone-elastomer coated latex 
Foley catheter tray. Medline also produces two latex-free models, 
including a 100% silicone model, and a silicone catheter with silver 
ions bound in the catheter's coating. Each of these three types 
comes in two sizes, 16Fr and 18Fr, using the industry standard 
French units (FR), where 1 Fr is equivalent to 0.33 mm of diameter. 
You state that the six tray models are otherwise similar.
    With your correspondence, you provided a representative sample 
of the latex Foley model, together with a detailed description and a 
list of medical instruments and accessories (materials and 
components) placed into the tray. These include patient drapes, hand 
sanitizer, sterile gloves, a syringe prefilled with sterile water to 
inflate the catheter balloon, lubricating jelly, iodine swabsticks, 
a syringe to draw a urine sample, securement devices, and a specimen 
jar. In the sample, these instruments are arranged in a plastic 
tray, which contains indentations to hold items or group of items.
    The medical instruments and accessories are sourced from China 
and the U.S., and imported into Mexico, where they are placed into 
trays, packaged, and boxed at Medline's facility in Nuevo Laredo, 
Mexico. Specifically for the latex Foley catheter tray, the specimen 
container, catheter Foley silver, gloves, and drainage bag are 
manufactured in China. The remaining materials are of U.S. origin.
    The catheter is sourced in varying countries depending on the 
model. The silicone and latex catheters (as in the submitted sample 
of the latex Foley catheter tray) are manufactured in China. 
Silvertouch catheters are manufactured in India or Canada. For all 
models, the catheter and drainage bag are packaged together in 
Mexico, together with all of the medical instruments and materials 
needed to insert and secure the catheter, including materials to 
create a sterile field. The accessories of the other models and 
their origin were not provided.
    You claim that all of the instruments and materials in the tray 
are intended to be used in conjunction with the insertion of the 
catheter, in a specific sequence, and only for one use, and thus 
function together as a single medical device. After their initial 
use, all of the included instruments and materials, as well as the 
instructions and plastic tray, are discarded and have no alternative 
use.
    According to Medline the tray components are delivered to a 
clean room and put together by a designated line of approximately 15 
specially trained technicians. The catheter is attached to the drain 
bag in a way that creates a closed urological system that minimizes 
contamination when the catheter is used on the patient. By 
connecting the catheter to the drain bag in Medline's sterile 
environment, instead of having a nurse connect the two in a hospital 
room environment, the risk of bacterial contamination and patient 
infection is minimized.
    You claim that attaching the drain bag is a fundamental 
characteristic of a Foley catheter system, and that the design of 
the tray transforms the components into an assembly which promotes 
proper insertion of the Foley catheter, thereby minimizing patient 
risk. After packaging, Medline performs a quality inspection prior 
to wrapping, sealing and packaging operations in Mexico, before 
sending the finished trays for medical sterilization in the United 
States.

Issue:

    Whether Medline's Foley catheter system management trays are 
considered to be products of Mexico for purposes of U.S. Government 
procurement.

Law and Analysis:

    Under subpart B of part 177, 19 CFR 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 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 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 Procurement 
Regulations. See 19 CFR 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 25.403(c)(1).
    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. Unites States, 573 F. Supp. 1149 (CIT 1983), aff'd, 741 
F.2d 1368 (Fed. Cir. 1984). 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, 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.
    In Headquarters Ruling Letter (HRL) 555268 dated March 6, 1991, 
Customs considered the eligibility for preferential tariff treatment 
under the Generalized System of Preferences to ``Code 6000 Infection 
Control Systems.'' Similar to the articles under consideration, the 
Code 6000 catherization tray contained the following items packaged 
together: Latex catheter, ``Mono-Flo'' drainage bag, lubricating 
jelly, latex gloves, fenestrated drape, underpad prefold, urine 
specimen vial, forceps, applicator rayon balls, prefilled 10 cubic 
centimeter syringe, a tamper band, and a package of povidone iodine 
solution. The tray contained sections and indentations for 
individual items. The paper cover of the tray, which was designed to 
be peeled off, listed the contents and the directions for use. 
Customs determined that the catheter of Malaysian origin imparted 
the essential character to the set and, therefore, the Code 6000 
combination package was classified in subheading 9018.39.00, HTSUS. 
As in this case, with respect to the Code 6000 combination package, 
certain items in the set were imported into Mexico from the U.S. or 
other sources and merely packaged together with items of Mexican 
origin. Customs held that merely packaging the items originating 
outside of Mexico with items of Mexican origin clearly did not 
result in a substantial transformation of the non-Mexican items into 
``products of'' that country. Therefore, because the entire imported 
entity (the set) was not the ``product of'' Mexico, as required by 
the GSP statute, neither the set nor any part thereof would be 
entitled to duty-free treatment under the GSP. As to the U.S. items 
in the set, it was determined that they were eligible for duty-free 
treatment under subheading 9801.00.10, HTSUS.
    Accordingly, it is our conclusion that the operations carried 
out by Medline in Mexico on the imported components do not result in 
a substantial transformation of the items into a product of Mexico. 
Therefore, the origin of each item in the set will be where it was 
originally manufactured. Considering the sample of the latex Foley 
catheter tray, the specimen container, catheter foley silver,

[[Page 38945]]

gloves, and drain bags will remain of Chinese origin. Therefore, the 
finished latex Foley catheter trays will be considered a product of 
China and U.S.A. for purposes of U.S. Government procurement. The 
other five tray models will follow a similar result, but as 
indicated only the origin of the particular catheter was provided 
(India or Canada for the Silvertouch model) and the origin of the 
accessories was not submitted.

Holding:

    On the basis of the information provided, we find that the 
operations in Mexico do not constitute a substantial transformation 
of the components in Medline's latex Foley catheter system 
management trays. Therefore, the country of origin of Medline's 
Foley catheter system management trays is China and the U.S. where 
the items were originally manufactured for purposes of U.S. 
Government procurement. The other five tray models will follow a 
similar result, and their country of origin will be where the items 
of those models were originally manufactured (India, Canada, or the 
U.S. as the case may be), but specific origin details were not 
provided for our consideration.
    Notice of this final determination will be given in the Federal 
Register as required by 19 CFR 177.29. Any party-at-interest other 
than the party which requested this final determination may request, 
pursuant to 19 CFR 177.31, that CBP reexamine the matter anew and 
issue a new final determination. 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, Regulations and Rulings, Office of International 
Trade.

[FR Doc. 2014-15978 Filed 7-8-14; 8:45 am]
BILLING CODE 9111-14-P