Notice of Issuance of Final Determination Concerning Certain Intermodal Containers, 787-789 [2015-33244]
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Federal Register / Vol. 81, No. 4 / Thursday, January 7, 2016 / Notices
Institute of Medicine (IOM) regarding
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II. Other Issues for Consideration
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Jkt 238001
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Dated: December 31, 2015.
Leslie Kux,
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[FR Doc. 2016–00066 Filed 1–6–16; 8:45 am]
BILLING CODE 4164–01–P
DEPARTMENT OF HOMELAND
SECURITY
U.S. Customs and Border Protection
Notice of Issuance of Final
Determination Concerning Certain
Intermodal Containers
U.S. Customs and Border
Protection, Department of Homeland
Security.
ACTION: Notice of final determination.
AGENCY:
This document provides
notice that U.S. Customs and Border
Protection (‘‘CBP’’) has issued a final
determination concerning the country of
origin of certain intermodal containers.
Based upon the facts presented, CBP has
concluded that the country of origin of
the intermodal containers is the country
of origin of the imported panels for
purposes of U.S. Government
procurement.
DATES: The final determination was
issued on December 23, 2015. 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 February
8, 2016.
FOR FURTHER INFORMATION CONTACT:
Teresa M. Frazier, Valuation and
Special Programs Branch, Regulations
and Rulings, Office of International
Trade (202) 325–0139.
SUPPLEMENTARY INFORMATION: Notice is
hereby given that on December 23, 2015,
pursuant to subpart B of Part 177, U.S.
Customs and Border Protection
Regulations (19 CFR part 177, subpart
SUMMARY:
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787
B), CBP issued a final determination
concerning the country of origin of
certain intermodal containers, which
may be offered to the U.S. Government
under an undesignated government
procurement contract. This final
determination, HQ H267876, was issued
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 the processing in the
United States does not result in a
substantial transformation. Therefore,
the country of origin of the intermodal
containers is the country of origin of the
imported panels for purposes of U.S.
Government procurement 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: December 23, 2015.
Myles B. Harmon,
Acting Executive Director, Regulations and
Rulings, Office of International Trade.
H267876
OT:RR:CTF:VS H267876 TMF
CATEGORY: Country of Origin
Michael G. McManus
Duane Morris LLP
505 9th Street, N. W., Suite 1000
Washington, DC 20004–2166
Re: U.S. Government Procurement; Title III,
Trade Agreements Act of 1979 (19 U.S.C.
2511); Substantial Transformation;
Intermodal Shipping Containers
Dear Mr. McManus:
This is in response to your correspondence
of July 29, 2015, supplemented by your letter
of September 30, 2015, requesting a final
determination on behalf of Sea Box, Inc.
(‘‘Sea Box’’), pursuant to subpart B of part
177, U.S. Customs and Border Protection
(‘‘CBP’’ Regulations (19 CFR 177.21 et seq.).
Under pertinent regulations, which
implement Title II 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 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 Sea Box shipping
containers. We note that Sea Box, Inc. is a
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Federal Register / Vol. 81, No. 4 / Thursday, January 7, 2016 / Notices
party-at-interest within the meaning of 19
CFR 177.22(d)(1) and is entitled to request
this final determination. A meeting was held
November 4, 2015.
FACTS:
You state that the subject containers are
made in various sizes: 20 foot long; Bicon;
Tricon and Quadcon. The 20′ shipping
container is considered to be a standard unit
in the shipping industry.
1. Twenty Foot Shipping Containers
You state that a 20 foot ISO 1-compliant
container has the following external
measurements:
19′ 10.5″ in length with a tolerance of +0,
¥1/4 of an inch; 8.0′ in width with a
tolerance of +0, ¥3/16 of an inch; 8.0′ in
height with a tolerance of +0, ¥3/16 of an
inch. The internal dimensions are: 19′4 11/
64″ (L); 7′8 17/32″ (W); 7′4 3/16″ (H). The 20
foot container is comprised of corrugated
steel sides and roofing which gives it a
favorable strength to weight ratio; two sets of
forklift ‘‘pockets’’ that permit forklifts to lift
and move laden or unladen containers;
wooden flooring tested to withstand 16,000
lbs. per square foot (144 square inches); 24
top and bottom wall tie down steel lashing
rings each having a capacity of 4,000 lbs.;
and two vents. The twenty foot containers
weigh 5,000 lbs. each and can accommodate
a payload of 47,910 lbs.
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2. Bicons
You state that a Bicon is a shipping
container that is approximately half the size
of a 20 foot container and manufactured to
precise dimensions such that when two are
linked together by connecting couplers, they
form a 20 foot equivalent unit (‘‘TEU’’) and
may be transported as if the combination
were a single 20 foot container. The ISOcompliant Bicon container has the following
external dimensions: 9′9 3/4″ in length with
a tolerance of +0, ¥3/16 of an inch; 8.0′ in
width with a tolerance of +0, ¥3/16 of an
inch; 8.0′ in height with a tolerance of +0,
¥3/16 of an inch. The internal dimensions
are: 9′3 1/2″ (L); 7′8 17/32″ (W); 7′4 3/16″ (H).
You state that the Bicon has similar features
to the 20 foot unit, except that the Bicon only
has one set of forklift ‘‘pockets’’ and uses
several tie down steel lashings. You state that
the Bicon has a weight of 2,900 lbs. and can
accommodate a payload of 23,555 lbs., and
has a storage capacity of 527 cubic feet.
3. Tricons
You state that a Tricon is approximately
one-third the size of a 20 foot container and
that it is manufactured to precise dimensions
such that when three Tricons are linked
together by connecting couplers, a TEU is
formed and may be transported as if the
combination was a single 20 foot container.
The ISO-compliant Tricon container has the
following external dimensions: 6′5 9/16″ in
length with a tolerance of +0, ¥3/16 of an
inch; 8.0′ in width with a tolerance of +0,
¥3/16 of an inch; 8.0′ in height with a
tolerance of +0, ¥3/16 of an inch. The
1 International Organization for Standardization
set standard sizes and manufacturing specifications
for all containers.
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internal dimensions are: 6′3 25/64″ (L); 7′7
22/32″ (W); 7′5 9/64″ (H). You state that the
Tricon has similar features to the 20 foot unit
and the Bicon, except that instead of a
wooden flooring, the Tricon has heavy duty
steel flooring. You state the Tricon has a
weight of 2,600 lbs. each laden and may
accommodate a payload of 13,300 lbs., and
has a storage capacity of 356 cubic feet.
4. Quadcons
You state that a Quadcon is approximately
one-fourth the size of a twenty foot container
and that it is manufactured to precise
dimension such that when four Quadcons are
linked together by connecting couplers, a
TEU is formed and may be transported as if
the combination were a single 20 foot
container. The ISO-compliant Quadcon
container has the following external
dimensions: 4′9 7/16″ in length with a
tolerance of +0, ¥3/16 of an inch; 8.0′ in
width with a tolerance of +0, ¥3/16 of an
inch; 8.0′ in height with a tolerance of +0,
¥3/16 of an inch. The internal dimensions
are: 4′7 3/4″ (L); 7′6 9/16″ (W); 7′5″ (H). You
state that the Quadcon has similar features to
the Tricon, except that it also has swing
doors on both sides for convenient access.
You state the Quadcon has a weight of 2,300
lbs. each unladed and may accommodate a
payload of 8,900 lbs., and has a storage
capacity of 260 cubic feet.
Manufacturing Process
In your submission, you described Sea
Box’s manufacturing facilities to include a
separate, free-standing, testing center with
equipment capable of testing containers for
ISO compliance to 1.8 times the maximum
required load (which is equivalent to 846,720
lbs.). You advise that the manufacturing
process requires the manipulation of large
components to form a structurally sound
container to its precise size in accordance
with ISO specifications, allowing containers
to be capable of transport by rail, truck and
ship with uniform fitting on preexisting truck
and rail support structures. You provided a
list of the 43 components of the containers.
We note that that the front wall panel, side
wall panel, right-hand door, right-hand door
gasket, left-hand door gasket, roof panel, floor
panel, lashing rings, front corner post tie
downs, and corner blocks, all originate from
one foreign country. Connecting couplers,
hand assembly restraint bar, tie-back, rivets
nuts and bolts, hinges, amongst other
components, originate from the U.S. You
indicate that by using grinders and/or cutting
wheels, the components are ground to bare
steel where welding is required. Specifically,
the floor sections, wall section, front and
rear-end sections, and roof section are ground
to bare steel where welding is required. Next,
the components are loaded into the Jig and
once the dimensional tolerances are verified
and adjusted, the components are tacked and
stich-welded together, vertical seams are
welded, and all outside components are fully
welded. If required, roof corner plates and
floor gussets are welded, and door tieback
hooks are welded. Next, pilot holes are
drilled into the floor and steel cross-members
and doors are secured. The container is then
moved to the blast booth for painting with
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primer and a top coat. You indicate that the
particular steel that is used in the roof and
sides is not available in the U.S.
You state that the containers must be
capable of being stacked up to nine units
high, with the base of a stack strong enough
to support 470,400 static lbs. above a
container (8 containers x 58,800 lbs. per
container). You also state the container must
be able to support a dynamic load taking into
account a vessel’s motion in conformity with
the American Bureau of Shipping (ABS). You
also advise that the containers must be CSC 2
certified at a CSC certified, manufacturer’s
facility that is preapproved by the U.S. Coast
Guard.
ISSUE:
Whether the intermodal containers are
considered to be products of the United
States for U.S. Government procurement
purposes.
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.), CBP issues
country-of-origin advisory rulings and final
determinations as to whether an article is a
product of a designated country for the
purpose of granting waivers of certain ‘‘Buy
American’’ restrictions on U.S. Government
procurement.
In rendering 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 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 Trade
Agreements Act. See 48 CFR 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 name,
character, or use distinct from that of the
article or articles from which it was
transformed.’’ See 48 C.F.R 25.003.
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 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,
2 International Container Safety Convention
concerning testing, inspection, approval and
maintenance of shipping containers.
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Federal Register / Vol. 81, No. 4 / Thursday, January 7, 2016 / Notices
extent of the processing that occurs within a
country, and 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, the extent and nature of
post-assembly inspection and testing
procedures, and worker skill required during
the actual manufacturing process will be
considered when determining whether a
substantial transformation has occurred. No
one factor is determinative.
Substantial transformation occurs when an
article emerges from a process with a new
name, character or use different from that
possessed by the article prior to processing.
A substantial transformation will not result
from a minor manufacturing or combining
process that leaves the identity of the article
intact. See United States v. Gibson-Thomsen
Co., 27 C.C.P.A. 267 (1940). 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. See Belcrest Linens
v. United States, 6 Ct. Int’l Trade 204, 573 F.
Supp. 1149 (1983), aff’d, 741 F.2d 1368 (Fed.
Cir. 1984).
In Uniroyal, Inc. v. United States, the Court
of International Trade held that no
substantial transformation occurred because
the attachment of a footwear upper from
Indonesia to its outsole in the United States
was a minor manufacturing or combining
process which left the identity of the upper
intact. Uniroyal, Inc. v. United States, 3 CIT
220, 224, 542 F. Supp. 1026, 1029 (1982),
aff’d, 702 F.2d 1022 (Fed. Cir. 1983). The
court found that the upper was readily
recognizable as a distinct item apart from the
outsole to which it was attached, it did not
lose its identity in the manufacture of the
finished shoe in the United States, and the
upper did not undergo a physical change or
a change in use. Also, under Uniroyal, the
change in name from ‘‘upper’’ to ‘‘shoe’’ was
not significant. The court concluded that the
upper was the essence of the completed shoe,
and was not substantially transformed.
In National Hand Tool Corp. v. United
States, 16 CIT 308 (1992), aff’d, 989 F.2d
1201 (Fed. Cir. 1993), the court considered
sockets and flex handles which were either
cold formed or hot forged into their final
shape prior to importation, speeder handles
which were reshaped by a power press after
importation, and the grip of flex handles
which were knurled in the U.S. The imported
articles were heat treated, cleaned by
sandblasting, tumbling, and/or chemical
vibration before being electroplated. In
certain instances, various components were
assembled together which the court stated
required some skill and dexterity. The court
determined that the imported articles were
not substantially transformed and that they
remained products of Taiwan. In making its
determination, the court focused on the fact
that the components had been cold formed or
hot forged ‘‘into their final shape before
importation’’, and that ‘‘the form of the
components remained the same’’ after the
assembly and heat treatment processes
performed in the U.S.
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It is your position that the country of origin
of the intermodal containers is the U.S.
because your client’s operations are ‘‘plainly
complex and meaningful’’ in that every
component loses its identity and becomes an
integral part of the shipping container. You
state that this process is more complex than
processes found to effect a substantial
transformation in certain past rulings, and
you cite to Headquarters Ruling Letters (HQ)
H248850, dated November 7, 2014; H259326,
dated April 13, 2015; H192144, dated
October 22, 2014; and H251592, dated June
24, 2014. You also state that the large scale
industrial process that is employed to
manipulate components weighing hundreds
to thousands of pounds to manufacture a
shipping container to narrow tolerances is
surely a ‘‘complex operation requiring skilled
workers.’’ You also advise that this ‘‘large
scale industrial’’ manufacturing process
requires skilled labor, special equipment,
facilities, labor resources and in-process
quality assurance techniques and precision
subject to ISO specifications and rigorous
CSC certification. You argue that the strict
dimensional tolerances that are required for
safety and to assure compliance with ISO and
CSC standards for use in international
commerce makes the process precise,
expensive, complex and meaningful. We
reviewed your submission and note that
although the large scale assembly requires
skilled labor for safety and compliance with
certain ISO and CSC certification
requirements, this does not result in a
substantial transformation of the non-U.S.
components. Rather, the container assembly
is distinguishable from the aforementioned
cases where CBP found substantial
transformation.
In H259326, the exoskeleton assistive
walking device assembly consisted of
hundreds of parts sourced from U.S.
manufacturers, with the exception of three
parts, all of which were assembled in the
U.S. In H259326, CBP found the inclusion of
the two of the three non-U.S. parts (a heat
diffuser/shield, foot straps/binding) would be
permanently attached to the finished devices
such that they would ‘‘lose their separate
identities and be subsumed into the finished
exoskeleton,’’ thereby resulting in a
substantial transformation when used in the
manufacturer of the finished exoskeleton.
However, in this case, the foreign-origin
front, side and roof and floor panels are not
subsumed into a complex device.
Further, there is not complex assembly of
the container like in H248850, dated
November 7, 2014, in which CBP found a
substantial transformation involving U.S.
patented operations which consisted of
bending of the HEX; brazing of various
connections; and installing a control box
which contained U.S. developed software.
With the intermodal containers, although
skilled workers are required to ensure safety
and accuracy in accordance with ISO and
CSC requirements, the grinding, welding and
assembly processes essentially do not change
the predetermined use of the panels, all of
which originate from one foreign country. In
regard to H251592, CBP determined that
certain AIO cartridges assembled with toner
powder from Japan, a cleaning unit from
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Thailand, and a development unit from
China, were substantially transformed
because the toner powder was found to be
the most critical element of the AIO
cartridge. As in Uniroyal, the essential
character of the container is imparted by the
foreign-origin roof, side and bottom panels,
which, like National Handtool, are already
formed in the final shape prior to
importation. In H192144, CBP found
imported coated, optical lenses underwent a
double substantial transformation in a
beneficiary country to meet the 35 percent
value-content GSP requirement, which is not
at issue here. Therefore, we do not find a
substantial transformation in the
manufacture of the subject intermodal
containers.
HOLDING:
Based upon the specific facts of this case,
we find that the imported panels are not
substantially transformed as a result of the
described operations performed in the United
States. The country of origin of the
intermodal containers for purposes of U.S.
Government procurement is imparted by the
roof, side and floor panels, which are of nonU.S. origin.
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.
Pursuant to 19 CFR 177.30, any party-atinterest 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,
Myles B. Harmon, Acting Executive Director
Regulations & Rulings Office of
International Trade
[FR Doc. 2015–33244 Filed 1–6–16; 8:45 am]
BILLING CODE 9111–14–P
DEPARTMENT OF HOMELAND
SECURITY
[Docket No. DHS–2015–0069]
Meeting: Homeland Security Advisory
Council
The Office of Public
Engagement, DHS.
ACTION: Notice of partially closed
Federal Advisory Committee meeting.
AGENCY:
The Homeland Security
Advisory Council (‘‘Council’’) will meet
in person on January 21, 2016. Members
of the public may participate in person.
The meeting will be partially closed to
the public.
DATES: The Council will meet Thursday,
January 21, 2016, from 10:10 a.m. to
4:35 p.m. EST. The meeting will be
open to the public from 1:30 p.m. to
3:00 p.m. EST. Please note the meeting
SUMMARY:
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]]>Agencies
[Federal Register Volume 81, Number 4 (Thursday, January 7, 2016)]
[Notices]
[Pages 787-789]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-33244]
=======================================================================
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DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
Notice of Issuance of Final Determination Concerning Certain
Intermodal Containers
AGENCY: U.S. Customs and Border Protection, Department of Homeland
Security.
ACTION: Notice of final determination.
-----------------------------------------------------------------------
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 intermodal containers. Based upon the
facts presented, CBP has concluded that the country of origin of the
intermodal containers is the country of origin of the imported panels
for purposes of U.S. Government procurement.
DATES: The final determination was issued on December 23, 2015. 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 February 8, 2016.
FOR FURTHER INFORMATION CONTACT: Teresa M. Frazier, Valuation and
Special Programs Branch, Regulations and Rulings, Office of
International Trade (202) 325-0139.
SUPPLEMENTARY INFORMATION: Notice is hereby given that on December 23,
2015, pursuant to subpart B of Part 177, U.S. Customs and Border
Protection Regulations (19 CFR part 177, subpart B), CBP issued a final
determination concerning the country of origin of certain intermodal
containers, which may be offered to the U.S. Government under an
undesignated government procurement contract. This final determination,
HQ H267876, was issued 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 the processing in the United States does not result in a
substantial transformation. Therefore, the country of origin of the
intermodal containers is the country of origin of the imported panels
for purposes of U.S. Government procurement 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: December 23, 2015.
Myles B. Harmon,
Acting Executive Director, Regulations and Rulings, Office of
International Trade.
H267876
OT:RR:CTF:VS H267876 TMF
CATEGORY: Country of Origin
Michael G. McManus
Duane Morris LLP
505 9th Street, N. W., Suite 1000
Washington, DC 20004-2166
Re: U.S. Government Procurement; Title III, Trade Agreements Act of
1979 (19 U.S.C. 2511); Substantial Transformation; Intermodal
Shipping Containers
Dear Mr. McManus:
This is in response to your correspondence of July 29, 2015,
supplemented by your letter of September 30, 2015, requesting a
final determination on behalf of Sea Box, Inc. (``Sea Box''),
pursuant to subpart B of part 177, U.S. Customs and Border
Protection (``CBP'' Regulations (19 CFR 177.21 et seq.). Under
pertinent regulations, which implement Title II 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
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 Sea
Box shipping containers. We note that Sea Box, Inc. is a
[[Page 788]]
party-at-interest within the meaning of 19 CFR 177.22(d)(1) and is
entitled to request this final determination. A meeting was held
November 4, 2015.
FACTS:
You state that the subject containers are made in various sizes:
20 foot long; Bicon; Tricon and Quadcon. The 20' shipping container
is considered to be a standard unit in the shipping industry.
1. Twenty Foot Shipping Containers
You state that a 20 foot ISO \1\-compliant container has the
following external measurements:
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\1\ International Organization for Standardization set standard
sizes and manufacturing specifications for all containers.
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19' 10.5'' in length with a tolerance of +0, -1/4 of an inch;
8.0' in width with a tolerance of +0, -3/16 of an inch; 8.0' in
height with a tolerance of +0, -3/16 of an inch. The internal
dimensions are: 19'4 11/64'' (L); 7'8 17/32'' (W); 7'4 3/16'' (H).
The 20 foot container is comprised of corrugated steel sides and
roofing which gives it a favorable strength to weight ratio; two
sets of forklift ``pockets'' that permit forklifts to lift and move
laden or unladen containers; wooden flooring tested to withstand
16,000 lbs. per square foot (144 square inches); 24 top and bottom
wall tie down steel lashing rings each having a capacity of 4,000
lbs.; and two vents. The twenty foot containers weigh 5,000 lbs.
each and can accommodate a payload of 47,910 lbs.
2. Bicons
You state that a Bicon is a shipping container that is
approximately half the size of a 20 foot container and manufactured
to precise dimensions such that when two are linked together by
connecting couplers, they form a 20 foot equivalent unit (``TEU'')
and may be transported as if the combination were a single 20 foot
container. The ISO-compliant Bicon container has the following
external dimensions: 9'9 3/4'' in length with a tolerance of +0, -3/
16 of an inch; 8.0' in width with a tolerance of +0, -3/16 of an
inch; 8.0' in height with a tolerance of +0, -3/16 of an inch. The
internal dimensions are: 9'3 1/2'' (L); 7'8 17/32'' (W); 7'4 3/16''
(H). You state that the Bicon has similar features to the 20 foot
unit, except that the Bicon only has one set of forklift ``pockets''
and uses several tie down steel lashings. You state that the Bicon
has a weight of 2,900 lbs. and can accommodate a payload of 23,555
lbs., and has a storage capacity of 527 cubic feet.
3. Tricons
You state that a Tricon is approximately one-third the size of a
20 foot container and that it is manufactured to precise dimensions
such that when three Tricons are linked together by connecting
couplers, a TEU is formed and may be transported as if the
combination was a single 20 foot container. The ISO-compliant Tricon
container has the following external dimensions: 6'5 9/16'' in
length with a tolerance of +0, -3/16 of an inch; 8.0' in width with
a tolerance of +0, -3/16 of an inch; 8.0' in height with a tolerance
of +0, -3/16 of an inch. The internal dimensions are: 6'3 25/64''
(L); 7'7 22/32'' (W); 7'5 9/64'' (H). You state that the Tricon has
similar features to the 20 foot unit and the Bicon, except that
instead of a wooden flooring, the Tricon has heavy duty steel
flooring. You state the Tricon has a weight of 2,600 lbs. each laden
and may accommodate a payload of 13,300 lbs., and has a storage
capacity of 356 cubic feet.
4. Quadcons
You state that a Quadcon is approximately one-fourth the size of
a twenty foot container and that it is manufactured to precise
dimension such that when four Quadcons are linked together by
connecting couplers, a TEU is formed and may be transported as if
the combination were a single 20 foot container. The ISO-compliant
Quadcon container has the following external dimensions: 4'9 7/16''
in length with a tolerance of +0, -3/16 of an inch; 8.0' in width
with a tolerance of +0, -3/16 of an inch; 8.0' in height with a
tolerance of +0, -3/16 of an inch. The internal dimensions are: 4'7
3/4'' (L); 7'6 9/16'' (W); 7'5'' (H). You state that the Quadcon has
similar features to the Tricon, except that it also has swing doors
on both sides for convenient access. You state the Quadcon has a
weight of 2,300 lbs. each unladed and may accommodate a payload of
8,900 lbs., and has a storage capacity of 260 cubic feet.
Manufacturing Process
In your submission, you described Sea Box's manufacturing
facilities to include a separate, free-standing, testing center with
equipment capable of testing containers for ISO compliance to 1.8
times the maximum required load (which is equivalent to 846,720
lbs.). You advise that the manufacturing process requires the
manipulation of large components to form a structurally sound
container to its precise size in accordance with ISO specifications,
allowing containers to be capable of transport by rail, truck and
ship with uniform fitting on preexisting truck and rail support
structures. You provided a list of the 43 components of the
containers. We note that that the front wall panel, side wall panel,
right-hand door, right-hand door gasket, left-hand door gasket, roof
panel, floor panel, lashing rings, front corner post tie downs, and
corner blocks, all originate from one foreign country. Connecting
couplers, hand assembly restraint bar, tie-back, rivets nuts and
bolts, hinges, amongst other components, originate from the U.S. You
indicate that by using grinders and/or cutting wheels, the
components are ground to bare steel where welding is required.
Specifically, the floor sections, wall section, front and rear-end
sections, and roof section are ground to bare steel where welding is
required. Next, the components are loaded into the Jig and once the
dimensional tolerances are verified and adjusted, the components are
tacked and stich-welded together, vertical seams are welded, and all
outside components are fully welded. If required, roof corner plates
and floor gussets are welded, and door tieback hooks are welded.
Next, pilot holes are drilled into the floor and steel cross-members
and doors are secured. The container is then moved to the blast
booth for painting with primer and a top coat. You indicate that the
particular steel that is used in the roof and sides is not available
in the U.S.
You state that the containers must be capable of being stacked
up to nine units high, with the base of a stack strong enough to
support 470,400 static lbs. above a container (8 containers x 58,800
lbs. per container). You also state the container must be able to
support a dynamic load taking into account a vessel's motion in
conformity with the American Bureau of Shipping (ABS). You also
advise that the containers must be CSC \2\ certified at a CSC
certified, manufacturer's facility that is preapproved by the U.S.
Coast Guard.
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\2\ International Container Safety Convention concerning
testing, inspection, approval and maintenance of shipping
containers.
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ISSUE:
Whether the intermodal containers are considered to be products
of the United States for U.S. Government procurement purposes.
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.), CBP issues country-of-origin advisory
rulings and final determinations as to whether an article is a
product of a designated country for the purpose of granting waivers
of certain ``Buy American'' restrictions on U.S. Government
procurement.
In rendering 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
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 Trade Agreements Act. See 48 CFR
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 name, character, or use distinct from that of the
article or articles from which it was transformed.'' See 48 C.F.R
25.003.
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 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,
[[Page 789]]
extent of the processing that occurs within a country, and 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,
the extent and nature of post-assembly inspection and testing
procedures, and worker skill required during the actual
manufacturing process will be considered when determining whether a
substantial transformation has occurred. No one factor is
determinative.
Substantial transformation occurs when an article emerges from a
process with a new name, character or use different from that
possessed by the article prior to processing. A substantial
transformation will not result from a minor manufacturing or
combining process that leaves the identity of the article intact.
See United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 (1940). 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. See Belcrest Linens
v. United States, 6 Ct. Int'l Trade 204, 573 F. Supp. 1149 (1983),
aff'd, 741 F.2d 1368 (Fed. Cir. 1984).
In Uniroyal, Inc. v. United States, the Court of International
Trade held that no substantial transformation occurred because the
attachment of a footwear upper from Indonesia to its outsole in the
United States was a minor manufacturing or combining process which
left the identity of the upper intact. Uniroyal, Inc. v. United
States, 3 CIT 220, 224, 542 F. Supp. 1026, 1029 (1982), aff'd, 702
F.2d 1022 (Fed. Cir. 1983). The court found that the upper was
readily recognizable as a distinct item apart from the outsole to
which it was attached, it did not lose its identity in the
manufacture of the finished shoe in the United States, and the upper
did not undergo a physical change or a change in use. Also, under
Uniroyal, the change in name from ``upper'' to ``shoe'' was not
significant. The court concluded that the upper was the essence of
the completed shoe, and was not substantially transformed.
In National Hand Tool Corp. v. United States, 16 CIT 308 (1992),
aff'd, 989 F.2d 1201 (Fed. Cir. 1993), the court considered sockets
and flex handles which were either cold formed or hot forged into
their final shape prior to importation, speeder handles which were
reshaped by a power press after importation, and the grip of flex
handles which were knurled in the U.S. The imported articles were
heat treated, cleaned by sandblasting, tumbling, and/or chemical
vibration before being electroplated. In certain instances, various
components were assembled together which the court stated required
some skill and dexterity. The court determined that the imported
articles were not substantially transformed and that they remained
products of Taiwan. In making its determination, the court focused
on the fact that the components had been cold formed or hot forged
``into their final shape before importation'', and that ``the form
of the components remained the same'' after the assembly and heat
treatment processes performed in the U.S.
It is your position that the country of origin of the intermodal
containers is the U.S. because your client's operations are
``plainly complex and meaningful'' in that every component loses its
identity and becomes an integral part of the shipping container. You
state that this process is more complex than processes found to
effect a substantial transformation in certain past rulings, and you
cite to Headquarters Ruling Letters (HQ) H248850, dated November 7,
2014; H259326, dated April 13, 2015; H192144, dated October 22,
2014; and H251592, dated June 24, 2014. You also state that the
large scale industrial process that is employed to manipulate
components weighing hundreds to thousands of pounds to manufacture a
shipping container to narrow tolerances is surely a ``complex
operation requiring skilled workers.'' You also advise that this
``large scale industrial'' manufacturing process requires skilled
labor, special equipment, facilities, labor resources and in-process
quality assurance techniques and precision subject to ISO
specifications and rigorous CSC certification. You argue that the
strict dimensional tolerances that are required for safety and to
assure compliance with ISO and CSC standards for use in
international commerce makes the process precise, expensive, complex
and meaningful. We reviewed your submission and note that although
the large scale assembly requires skilled labor for safety and
compliance with certain ISO and CSC certification requirements, this
does not result in a substantial transformation of the non-U.S.
components. Rather, the container assembly is distinguishable from
the aforementioned cases where CBP found substantial transformation.
In H259326, the exoskeleton assistive walking device assembly
consisted of hundreds of parts sourced from U.S. manufacturers, with
the exception of three parts, all of which were assembled in the
U.S. In H259326, CBP found the inclusion of the two of the three
non-U.S. parts (a heat diffuser/shield, foot straps/binding) would
be permanently attached to the finished devices such that they would
``lose their separate identities and be subsumed into the finished
exoskeleton,'' thereby resulting in a substantial transformation
when used in the manufacturer of the finished exoskeleton. However,
in this case, the foreign-origin front, side and roof and floor
panels are not subsumed into a complex device.
Further, there is not complex assembly of the container like in
H248850, dated November 7, 2014, in which CBP found a substantial
transformation involving U.S. patented operations which consisted of
bending of the HEX; brazing of various connections; and installing a
control box which contained U.S. developed software. With the
intermodal containers, although skilled workers are required to
ensure safety and accuracy in accordance with ISO and CSC
requirements, the grinding, welding and assembly processes
essentially do not change the predetermined use of the panels, all
of which originate from one foreign country. In regard to H251592,
CBP determined that certain AIO cartridges assembled with toner
powder from Japan, a cleaning unit from Thailand, and a development
unit from China, were substantially transformed because the toner
powder was found to be the most critical element of the AIO
cartridge. As in Uniroyal, the essential character of the container
is imparted by the foreign-origin roof, side and bottom panels,
which, like National Handtool, are already formed in the final shape
prior to importation. In H192144, CBP found imported coated, optical
lenses underwent a double substantial transformation in a
beneficiary country to meet the 35 percent value-content GSP
requirement, which is not at issue here. Therefore, we do not find a
substantial transformation in the manufacture of the subject
intermodal containers.
HOLDING:
Based upon the specific facts of this case, we find that the
imported panels are not substantially transformed as a result of the
described operations performed in the United States. The country of
origin of the intermodal containers for purposes of U.S. Government
procurement is imparted by the roof, side and floor panels, which
are of non-U.S. origin.
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. 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,
Myles B. Harmon, Acting Executive Director Regulations & Rulings
Office of International Trade
[FR Doc. 2015-33244 Filed 1-6-16; 8:45 am]
BILLING CODE 9111-14-P
