Notice of Issuance of Final Determination Concerning Certain Ethernet Gateway Products, 9013-9015 [2018-04278]
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Federal Register / Vol. 83, No. 42 / Friday, March 2, 2018 / Notices
amount of reimbursement is made by
the OSLTF to the state. If the
information is not collected, the Coast
Guard and the National Pollution Funds
Center will be unable to justify the
resulting expenditures, and thus be
unable to recover costs from the parties
responsible for the spill when they can
be identified.
Forms: None.
Respondents: Governor of a state or
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Frequency: On occasion.
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annual burden remains 03 hours a year.
Authority: The Paperwork Reduction Act
of 1995; 44 U.S.C. Chapter 35, as amended.
Dated: February 26, 2018.
James D. Roppel,
U.S. Coast Guard, Acting Chief, Office of
Information Management.
[FR Doc. 2018–04271 Filed 3–1–18; 8:45 am]
BILLING CODE 9110–04–P
DEPARTMENT OF HOMELAND
SECURITY
U.S. Customs and Border Protection
Notice of Issuance of Final
Determination Concerning Certain
Ethernet Gateway Products
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 ethernet gateway
products known as AirLink gateways.
Based upon the facts presented, CBP has
concluded in the final determination
that the United States is the country of
origin of the AirLink gateways for
purposes of U.S. Government
procurement.
SUMMARY:
The final determination was
issued on February 23, 2018. A copy of
the final determination is attached. Any
party-at-interest, as defined in 19 CFR
§ 177.22(d), may seek judicial review of
this final determination within April 2,
2018.
FOR FURTHER INFORMATION CONTACT: Ross
M. Cunningham, Valuation and Special
Programs Branch, Regulations and
Rulings, Office of Trade (202) 325–0034.
SUPPLEMENTARY INFORMATION: Notice is
hereby given that on February 23, 2018,
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
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DATES:
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concerning the country of origin of
certain ethernet gateway products
known as AirLink gateways, which may
be offered to the U.S. Government under
an undesignated government
procurement contract. This final
determination, HQ H250154, 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, based upon the facts
presented, the programming and
downloading operations performed in
the United States, using U.S.-origin
software, substantially transform nonTAA country AirLink gateways.
Therefore, the country of origin of the
AirLink gateways is the United States
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: February 23, 2018.
Alice A. Kipel,
Executive Director, Regulations and Rulings,
Office of Trade.
HQ H250154
February 23, 2018
OT:RR:CTF:VS H250154 GaK/RMC
CATEGORY: Origin
Mark J. Segrist
Sandler, Travis & Rosenberg, P.A.
225 West Washington Street, Suite 1640
Chicago, IL 60606
Re: U.S. Government Procurement; Country
of Origin of Gateway Products; Substantial
Transformation
Dear Mr. Segrist:
This is in response to your letter dated
October 25, 2013, and your supplemental
submissions dated February 27, 2014 and
March 21, 2014, requesting a final
determination on behalf of your client, Sierra
Wireless (‘‘Sierra’’), pursuant to subpart B of
Part 177 of the U.S. Customs and Border
Protection (‘‘CBP’’) Regulations (19 C.F.R.
Part 177). A meeting was held at our office
on October 3, 2014, where you and your
client explained the software development
process and the product. A further
submission dated April 18, 2017, was
provided.
This final determination concerns the
country of origin of Sierra’s secure Ethernet
gateway products (‘‘gateways’’). We note that
as a U.S. importer, Sierra is a party-at-interest
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9013
within the meaning of 19 C.F.R.
§ 177.22(d)(1) and is entitled to request this
final determination.
Per your letter dated September 22, 2014,
we have reviewed your request for
confidentiality pursuant to 19 C.F.R.
§ 177.2(b)(7) with respect to the information
submitted. As that information constitutes
privileged or confidential matters, it has been
bracketed and will be deleted from any
published versions.
FACTS:
Sierra produces gateways that provide
secure internet connectivity for mobile
stations allowing a variety of enterprises,
mainly law enforcement, to monitor their
infrastructure and instruments by
transmitting and receiving data from a central
location. The gateways are designed for
entities that require 24/7 unmanned
operation of remote assets and broadband
connectivity. The gateways are frequently
installed in police cars and provide a 24/7
internet connection and allow police officers
to access information stored in the central
location. The gateway also acts as a firewall
server, which ensures that the connection
between the mobile station and the main
office is secure and that unauthorized
persons cannot access information
transmitted over the internet. Sierra’s
submissions include details on four different
gateway products, branded ‘‘AirLink,’’ to be
covered by this final determination: GX400,
GX440, LS300, and ES440. The different
series of gateways are designed differently to
meet the needs of a variety of customers1, but
they have the same functions and operate
with the same software, referred to as Aleos.
The hardware components consist of a
case/kit that holds the module, a printed
circuit assembly (‘‘PCA’’) that includes a
radio module, a decorative cover placed over
the case/kit, and various nuts and screws to
close the case/kit and hold the cover in place.
All the hardware components are designed in
the United States and produced and
assembled in China. Sierra imports the
completed gateways into the United States,
where authorized retailers install the ALEOS
software. Sierra states that, at the time of
importation, the fully assembled gateway is
not functional because it does not contain the
ALEOS software. Sierra also states that the
gateway in its condition as imported has only
the basic ability to communicate with a
software installation tool to facilitate the
download of the ALEOS software. The radio
module contains firmware to control its
internal function of sending and receiving to/
from the network, which cannot take place
until the ALEOS software is loaded onto the
gateway. Sierra states that the PCA design
and the firmware in the radio module are
proprietary and are designed to work only
with the ALEOS software and that any
1 The GX series are designed for in-vehicle field
deployments, such as connecting police cars or fire
trucks to their network at headquarters. The LS
series is designed for hazardous environments and
for industrial deployments, such as surveillance of
pipelines or meters. The ES series is designed to
provide connectivity when landline connections are
unavailable and can be used to maintain kiosks and
retail operations online.
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Federal Register / Vol. 83, No. 42 / Friday, March 2, 2018 / Notices
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attempts to install other software will cause
the system to crash.
ALEOS was developed entirely in the
United States in five steps:
1. Research: A list of ideas and potential
features of the product is compiled,
product roadmap is developed, and
product requirements are defined.
2. Development of Software Specification:
The chief architects create a software
design, which is developed by the
development team to meet the defined
product requirements.
3. Programming of Source Code: The
development team receives the software
development tasks, which results in the
source code files written by the software
developers.
4. Software Integration and Build: The team
integrates the source code files by
compiling the source code into a binary
file that runs on the hardware. During
this phase, the developers work out the
incompatibilities or bugs by rewriting or
correcting source code as needed until a
build is complete and ready for testing.
5. Testing and Validation: The software
package is tested based on functional
specifications defined in the product
requirements. Once the test case pass
rate is met, the software is ready for
release.
Since 1993, approximately [3] engineer
hours were spent in the development of the
ALEOS software in the United States. Some
minor software maintenance, such as repair
and validation, is conducted in Canada and
France, which accounts for approximately [
]% of the engineer hours spent. Sierra states
that the gateways are approximately $45 at
import and after the ALEOS software is
installed, are valued at between $479 and
$899. We assume for purposes of this
decision that the figures provided are correct.
You also submitted an affidavit from the Vice
President of Marketing at Sierra describing
the software and installation process, a user
guide, an end-user warranty, and a
PowerPoint presentation that included
photographs and component lists.
LAW AND ANALYSIS:
CBP issues country of origin advisory
rulings and final determinations as to
whether an article is or would be a product
of a designated country or instrumentality for
the purposes of granting waivers of certain
‘‘Buy American’’ restrictions in U.S. law or
practice for products offered for sale to the
U.S. Government, 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 (19 U.S.C. § 2511 et
seq.).
Under the rule of origin set forth under 19
U.S.C. § 2518(4)(B):
An article is a product of a country or
instrumentality only if (i) it is wholly the
growth, product, or manufacture of that
country or instrumentality, or (ii) in the case
of an article which consists in whole or in
part of materials from another country or
instrumentality, it has been substantially
transformed into a new and different article
of commerce with a name, character, or use
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distinct from that of the article or articles
from which it was so transformed.
See also 19 C.F.R. § 177.22(a).
You argue that the country of origin of the
GX400, GX440, LS300, and ES440 gateway
products is the United States because you
believe that the last substantial
transformation occurs in the United States.
You state that the fully-assembled gateways
are not functional when they are imported
into the United States and that the gateways
gain their ability to function as intended only
after U.S.-origin software is installed in the
United States. In support, you cite, among
others, Data General v. United States, 4 C.I.T.
182 (1982), Headquarters Ruling (‘‘HQ’’)
H052325, dated February 14, 2006, and HQ
H175415, dated October 4, 2011.
In Data General, the court determined that
the programming of a foreign PROM
(Programmable Read-Only Memory chip) in
the United States substantially transformed
the PROM into a U.S. article. In the United
States, 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.
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. See also Texas Instruments v. United
States, 681 F.2d 778, 782 (CCPA 1982)
(holding that the substantial transformation
issue is a ‘‘mixed question of technology and
customs law’’). Accordingly, the
programming of a device that confers its
identity as well as defines its use generally
constitutes a substantial transformation. See
HQ 735027, dated September 7, 1993
(programming blank media (EEPROM) with
instructions that allow it to perform certain
functions that prevent piracy of software
constitutes a substantial transformation; and
HQ 733085, dated July 13, 1990.
CBP has also focused on where the
programming took place. For example, in HQ
H258960, dated May 19, 2016, CBP
considered the country of origin of network
transceivers in two different scenarios. In
Scenario One, the importer purchased
‘‘blank’’ transceivers from Asia. The
transceivers were then loaded with U.S.developed software in the United States,
which made the transceivers functional. In
Scenario Two, the importer purchased the
transceivers with a generic program
preinstalled, which was then removed so that
the U.S.-developed software could be
installed. We held that, in Scenario One,
because the transceivers could not function
as network devices without the U.S.developed software, the transceivers were
substantially transformed as a result of the
downloading of the U.S.-developed software
performed in the United States. However, in
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Scenario Two, because the transceivers were
already functional when imported, the
identity of the transceivers was not changed
by the downloading performed in the United
States, and no substantial transformation
occurred.
Similarly, in HQ H175415 dated October 4,
2011, CBP held that imported Ethernet
switches underwent a substantial
transformation after U.S.-origin software was
downloaded onto the devices’ flash memory
in the United States, which allowed the
devices to function. In China, the printed
circuit board assemblies, chassis, top cover,
power supply, and fan were assembled.
Then, in the United States, U.S.-origin
software, which gave the hardware the
capability of functioning as local area
network devices, was loaded onto the
hardware. CBP noted that the U.S.-origin
software ‘‘enables the imported switches to
interact with other network switches’’ and
that ‘‘[w]ithout this software, the imported
devices could not function as Ethernet
switches.’’ Under these circumstances, CBP
held that the country of origin of the local
area network devices was the United States.
See also HQ H052325, dated March 31, 2009
(holding that imported network devices
underwent a substantial transformation in
the United States after U.S.-origin software
was download onto the devices in the United
States, which gave the devices their
functionality); and HQ H034843, dated May
5, 2009 (holding that Chinese USB flash
drives underwent a substantial
transformation in Israel when Israeli-origin
software was loaded onto the devices, which
made the devices functional).
In each case, the nature of the article and
the effect of the processing performed must
be evaluated. Here, like the network devices
and Ethernet switches at issue in HQ
H175415, HQ H052325, and HQ H258960
(under Scenario One), the Sierra GX400,
GX440, LS300, and ES440 gateways are
imported into the United States in a nonfunctional state. It is only after the
installation of U.S.-origin software that the
devices can function as intended. Moreover,
as in HQ H175415, HQ H052325, and HQ
H258960, the gateway products at issue here
derive their core functionality as
communication devices from the installation
of the U.S.-developed software. We note that
this case is distinguishable from Scenario 2
in HQ H258960, as Sierra’s products do not
contain pre-installed software when they are
imported from China, and they are nonfunctional at the time of importation to the
United States. Therefore, we find that the
country of origin of the Sierra GX400, GX440,
LS300, and ES440 gateways is the United
States.
HOLDING:
Based on the facts provided, the country of
origin of the gateways is the United States for
purposes of U.S. 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
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Federal Register / Vol. 83, No. 42 / Friday, March 2, 2018 / Notices
determination. Pursuant to 19 C.F.R.
§ 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,
Alice A. Kipel, Executive Director
Regulations & Rulings
Office of Trade
[FR Doc. 2018–04278 Filed 3–1–18; 8:45 am]
BILLING CODE P
DEPARTMENT OF HOMELAND
SECURITY
U.S. Customs and Border Protection
Notice of Issuance of Final
Determination Concerning Country of
Origin of Aluminum Honeycomb
Panels
U.S. Customs and Border
Protection, Department of Homeland
Security.
ACTION: Notice of final determination.
AGENCY:
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Dated: February 21, 2018.
Alice A. Kipel,
Executive Director, Regulations and Rulings,
Office of Trade.
HQ H290528
February 21, 201
OT:RR:CTF:VS: H290528 JMV
This document provides
notice that U.S. Customs and Border
Protection (‘‘CBP’’) has issued a final
determination concerning the country of
origin of aluminum honeycomb panels.
CBP has concluded in the final
determination that for purposes of U.S.
Government procurement the assembly
of the parts in the United States does
not substantially transform the
aluminum panels.
DATES: The final determination was
issued on February 21, 2018. A copy of
the final determination is attached. Any
party-at-interest, as defined in 19 C.F.R.
§ 177.22(d), may seek judicial review of
this final determination within April 2,
2018.
FOR FURTHER INFORMATION CONTACT: Joy
Marie Virga, Valuation and Special
Programs Branch, Regulations and
Rulings, Office of Trade (202–325–
1511).
SUPPLEMENTARY INFORMATION: Notice is
hereby given that on 02/21/18, CBP
issued a final determination concerning
the aluminum honeycomb panels,
which may be offered to the United
States Government under an
undesignated government procurement
contract. The final determination, HQ
H290528, was issued at the request of
Aliva Chemica E Sistemi SRL, under
procedures set forth at 19 C.F.R. 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 was asked
to consider whether the cutting,
bending, and assembly of aluminum
SUMMARY:
parts constitutes a substantial
transformation. In the final
determination, CBP concluded that
these activities do not constitute a
substantial transformation and the
origin of the honeycomb panels remains
the original country of manufacturing.
Section 177.29, CBP Regulations (19
C.F.R. § 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 C.F.R. § 177.30), provides that any
party-at-interest, as defined in 19 C.F.R.
§ 177.22(d), may seek judicial review of
a final determination within 30 days of
publication of such determination in the
Federal Register.
CATEGORY: Origin
Darlene Buro
All Air Custom Brokers, Inc.
145–68 228th Street, 2nd Floor
Springfield Gardens, NY11413
RE: U.S. Government Procurement; Title
III, Trade Agreements Act of 1979 (19 U.S.C.
§ 2511); Subpart B, Part 177, CBP
Regulations; Country of Origin of Honeycomb
Panels
Dear Ms. Buro,
This is in response to your request of June
5, 2017, on behalf of Aliva Chemica E Sistemi
SRL (‘‘Aliva’’) for a final determination
concerning the country of origin of a product
that you refer to as ‘‘aluminum honeycomb
panels,’’ pursuant to subpart B of Part 177,
U.S. Customs and Border Protection (CBP)
Regulations (19 C.F.R. § 177.21, et seq.).
As a foreign producer of merchandise,
Aliva 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:
The merchandise at issue are Aliva
aluminum honeycomb panels, which will be
used as architectural finished coating panels
for wall and tunnel areas in train stations.
The panels come in two variations: straight
and curved. Each installed panel will contain
a casing, a core, and two mounting blades.
The casing
The casing is a flat sheet of pre-painted
aluminum alloy which will be supplied in
both perforated and non-perforated variations
as required for aesthetic appearance. The flat
sheet is produced in Italy in dimensions of
two feet in width and variable lengths. These
aluminum alloy sheets are painted through a
reverse coil process and will include antigraffiti characteristics as required by the
architectural specification. The sheets are
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9015
then transferred to a specialized processing
factory in Italy that cuts the sheet to the final
dimensions, and bends three of the side
edges to create the casing that will house the
honeycomb core. Along one side of the
casing, the edge is left flat and two bending
lines are engraved on the back of this edge
for reference during the production process
in the United States. The casing will then be
transported to a U.S. production facility to
receive and secure the core. Workers at the
U.S. production facility will also drill holes
at prescribed locations to attach the core.
The core
The core consists of two hard layers called
skins and a layer of aluminum honeycomb
made up of 3000 series aluminum alloy with
hexagonal cells that are 80 microns thick.
The skins can either be coated with five
microns of primer or pre-painted black with
an anti-graffiti finish. The skins are glued to
the honeycomb panel to create a singular
panel referred to as the core.
The Italian manufacturer will supply and
transport the core sheets in bulk to a U.S.
manufacturing facility. Each core sheet will
produce three to 16 cores. All cores for the
curved panels will be cut-to-size to fit the
casing in Italy but cores for the straight
panels will be cut to size at the U.S. facility.
Eight holes are drilled through the back of
the core for attachment of the mounting
blades. However, all the cores for curved
panels will be cut and drilled in Italy.
The mounting blades
The mounting blades are aluminum alloy
sheets of unknown origin extruded into Lshaped brackets. Two mounting blades will
be attached to the back of each core on either
side. The mounting blades are extruded,
machined, bent, and cut-to-size in the United
States before being secured to the core. Two
different profiles are produced for the right
and left blades, which hook the finished
panel onto Aliva’s framing system.
Assembly
In the United States, the core is inserted
into the case and then the flat edge of each
casing will be bent into place with
specialized aluminum bending equipment.
An average of 16 holes will be drilled into
each panel, and 16 stainless steel rivets will
be fastened with a specialized riveting tool to
secure the core and casing together. Finally,
each mounting blade is secured to the
finished panel with four stainless steel rivets.
According to Aliva, the processing in the
United States requires skilled labor and
increases the value of the component parts.
Aliva estimates that the work required to
incorporate the casing, core and mounting
blades into a singular panel in the United
States will take approximately 46 minutes of
labor. The importer further states that the
processes performed in the United States to
produce all of the panels will require
‘‘hundreds of thousands of dollars of labor.’’
Aliva indicates that each panel will have a
significantly increased value over the
collective value of the individual parts
(casing, core, and mounting blades) after the
processing in the United States is completed.
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]]>Agencies
[Federal Register Volume 83, Number 42 (Friday, March 2, 2018)]
[Notices]
[Pages 9013-9015]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-04278]
-----------------------------------------------------------------------
DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
Notice of Issuance of Final Determination Concerning Certain
Ethernet Gateway Products
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 ethernet gateway products known as AirLink
gateways. Based upon the facts presented, CBP has concluded in the
final determination that the United States is the country of origin of
the AirLink gateways for purposes of U.S. Government procurement.
DATES: The final determination was issued on February 23, 2018. A copy
of the final determination is attached. Any party-at-interest, as
defined in 19 CFR Sec. 177.22(d), may seek judicial review of this
final determination within April 2, 2018.
FOR FURTHER INFORMATION CONTACT: Ross M. Cunningham, Valuation and
Special Programs Branch, Regulations and Rulings, Office of Trade (202)
325-0034.
SUPPLEMENTARY INFORMATION: Notice is hereby given that on February 23,
2018, 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 ethernet
gateway products known as AirLink gateways, which may be offered to the
U.S. Government under an undesignated government procurement contract.
This final determination, HQ H250154, 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, based upon the facts
presented, the programming and downloading operations performed in the
United States, using U.S.-origin software, substantially transform non-
TAA country AirLink gateways. Therefore, the country of origin of the
AirLink gateways is the United States 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: February 23, 2018.
Alice A. Kipel,
Executive Director, Regulations and Rulings, Office of Trade.
HQ H250154
February 23, 2018
OT:RR:CTF:VS H250154 GaK/RMC
CATEGORY: Origin
Mark J. Segrist Sandler, Travis & Rosenberg, P.A. 225 West Washington
Street, Suite 1640 Chicago, IL 60606
Re: U.S. Government Procurement; Country of Origin of Gateway Products;
Substantial Transformation
Dear Mr. Segrist:
This is in response to your letter dated October 25, 2013, and
your supplemental submissions dated February 27, 2014 and March 21,
2014, requesting a final determination on behalf of your client,
Sierra Wireless (``Sierra''), pursuant to subpart B of Part 177 of
the U.S. Customs and Border Protection (``CBP'') Regulations (19
C.F.R. Part 177). A meeting was held at our office on October 3,
2014, where you and your client explained the software development
process and the product. A further submission dated April 18, 2017,
was provided.
This final determination concerns the country of origin of
Sierra's secure Ethernet gateway products (``gateways''). We note
that as a U.S. importer, Sierra 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.
Per your letter dated September 22, 2014, we have reviewed your
request for confidentiality pursuant to 19 C.F.R. Sec. 177.2(b)(7)
with respect to the information submitted. As that information
constitutes privileged or confidential matters, it has been
bracketed and will be deleted from any published versions.
FACTS:
Sierra produces gateways that provide secure internet
connectivity for mobile stations allowing a variety of enterprises,
mainly law enforcement, to monitor their infrastructure and
instruments by transmitting and receiving data from a central
location. The gateways are designed for entities that require 24/7
unmanned operation of remote assets and broadband connectivity. The
gateways are frequently installed in police cars and provide a 24/7
internet connection and allow police officers to access information
stored in the central location. The gateway also acts as a firewall
server, which ensures that the connection between the mobile station
and the main office is secure and that unauthorized persons cannot
access information transmitted over the internet. Sierra's
submissions include details on four different gateway products,
branded ``AirLink,'' to be covered by this final determination:
GX400, GX440, LS300, and ES440. The different series of gateways are
designed differently to meet the needs of a variety of customers\1\,
but they have the same functions and operate with the same software,
referred to as Aleos.
---------------------------------------------------------------------------
\1\ The GX series are designed for in-vehicle field deployments,
such as connecting police cars or fire trucks to their network at
headquarters. The LS series is designed for hazardous environments
and for industrial deployments, such as surveillance of pipelines or
meters. The ES series is designed to provide connectivity when
landline connections are unavailable and can be used to maintain
kiosks and retail operations online.
---------------------------------------------------------------------------
The hardware components consist of a case/kit that holds the
module, a printed circuit assembly (``PCA'') that includes a radio
module, a decorative cover placed over the case/kit, and various
nuts and screws to close the case/kit and hold the cover in place.
All the hardware components are designed in the United States and
produced and assembled in China. Sierra imports the completed
gateways into the United States, where authorized retailers install
the ALEOS software. Sierra states that, at the time of importation,
the fully assembled gateway is not functional because it does not
contain the ALEOS software. Sierra also states that the gateway in
its condition as imported has only the basic ability to communicate
with a software installation tool to facilitate the download of the
ALEOS software. The radio module contains firmware to control its
internal function of sending and receiving to/from the network,
which cannot take place until the ALEOS software is loaded onto the
gateway. Sierra states that the PCA design and the firmware in the
radio module are proprietary and are designed to work only with the
ALEOS software and that any
[[Page 9014]]
attempts to install other software will cause the system to crash.
ALEOS was developed entirely in the United States in five steps:
1. Research: A list of ideas and potential features of the product
is compiled, product roadmap is developed, and product requirements
are defined.
2. Development of Software Specification: The chief architects
create a software design, which is developed by the development team
to meet the defined product requirements.
3. Programming of Source Code: The development team receives the
software development tasks, which results in the source code files
written by the software developers.
4. Software Integration and Build: The team integrates the source
code files by compiling the source code into a binary file that runs
on the hardware. During this phase, the developers work out the
incompatibilities or bugs by rewriting or correcting source code as
needed until a build is complete and ready for testing.
5. Testing and Validation: The software package is tested based on
functional specifications defined in the product requirements. Once
the test case pass rate is met, the software is ready for release.
Since 1993, approximately [3] engineer hours were spent in the
development of the ALEOS software in the United States. Some minor
software maintenance, such as repair and validation, is conducted in
Canada and France, which accounts for approximately [ ]% of the
engineer hours spent. Sierra states that the gateways are
approximately $45 at import and after the ALEOS software is
installed, are valued at between $479 and $899. We assume for
purposes of this decision that the figures provided are correct. You
also submitted an affidavit from the Vice President of Marketing at
Sierra describing the software and installation process, a user
guide, an end-user warranty, and a PowerPoint presentation that
included photographs and component lists.
LAW AND ANALYSIS:
CBP issues country of origin advisory rulings and final
determinations as to whether an article is or would be a product of
a designated country or instrumentality for the purposes of granting
waivers of certain ``Buy American'' restrictions in U.S. law or
practice for products offered for sale to the U.S. Government,
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 (19 U.S.C. Sec. 2511 et seq.).
Under the rule of origin set forth under 19 U.S.C. Sec.
2518(4)(B):
An article is a product of a country or instrumentality only if (i)
it is wholly the growth, product, or manufacture of that country or
instrumentality, or (ii) in the case of an article which consists in
whole or in part of materials from another country or
instrumentality, it has been substantially transformed into a new
and different article of commerce with a name, character, or use
distinct from that of the article or articles from which it was so
transformed.
See also 19 C.F.R. Sec. 177.22(a).
You argue that the country of origin of the GX400, GX440, LS300,
and ES440 gateway products is the United States because you believe
that the last substantial transformation occurs in the United
States. You state that the fully-assembled gateways are not
functional when they are imported into the United States and that
the gateways gain their ability to function as intended only after
U.S.-origin software is installed in the United States. In support,
you cite, among others, Data General v. United States, 4 C.I.T. 182
(1982), Headquarters Ruling (``HQ'') H052325, dated February 14,
2006, and HQ H175415, dated October 4, 2011.
In Data General, the court determined that the programming of a
foreign PROM (Programmable Read-Only Memory chip) in the United
States substantially transformed the PROM into a U.S. article. In
the United States, 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. 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. See also Texas Instruments
v. United States, 681 F.2d 778, 782 (CCPA 1982) (holding that the
substantial transformation issue is a ``mixed question of technology
and customs law''). Accordingly, the programming of a device that
confers its identity as well as defines its use generally
constitutes a substantial transformation. See HQ 735027, dated
September 7, 1993 (programming blank media (EEPROM) with
instructions that allow it to perform certain functions that prevent
piracy of software constitutes a substantial transformation; and HQ
733085, dated July 13, 1990.
CBP has also focused on where the programming took place. For
example, in HQ H258960, dated May 19, 2016, CBP considered the
country of origin of network transceivers in two different
scenarios. In Scenario One, the importer purchased ``blank''
transceivers from Asia. The transceivers were then loaded with U.S.-
developed software in the United States, which made the transceivers
functional. In Scenario Two, the importer purchased the transceivers
with a generic program preinstalled, which was then removed so that
the U.S.-developed software could be installed. We held that, in
Scenario One, because the transceivers could not function as network
devices without the U.S.-developed software, the transceivers were
substantially transformed as a result of the downloading of the
U.S.-developed software performed in the United States. However, in
Scenario Two, because the transceivers were already functional when
imported, the identity of the transceivers was not changed by the
downloading performed in the United States, and no substantial
transformation occurred.
Similarly, in HQ H175415 dated October 4, 2011, CBP held that
imported Ethernet switches underwent a substantial transformation
after U.S.-origin software was downloaded onto the devices' flash
memory in the United States, which allowed the devices to function.
In China, the printed circuit board assemblies, chassis, top cover,
power supply, and fan were assembled. Then, in the United States,
U.S.-origin software, which gave the hardware the capability of
functioning as local area network devices, was loaded onto the
hardware. CBP noted that the U.S.-origin software ``enables the
imported switches to interact with other network switches'' and that
``[w]ithout this software, the imported devices could not function
as Ethernet switches.'' Under these circumstances, CBP held that the
country of origin of the local area network devices was the United
States. See also HQ H052325, dated March 31, 2009 (holding that
imported network devices underwent a substantial transformation in
the United States after U.S.-origin software was download onto the
devices in the United States, which gave the devices their
functionality); and HQ H034843, dated May 5, 2009 (holding that
Chinese USB flash drives underwent a substantial transformation in
Israel when Israeli-origin software was loaded onto the devices,
which made the devices functional).
In each case, the nature of the article and the effect of the
processing performed must be evaluated. Here, like the network
devices and Ethernet switches at issue in HQ H175415, HQ H052325,
and HQ H258960 (under Scenario One), the Sierra GX400, GX440, LS300,
and ES440 gateways are imported into the United States in a non-
functional state. It is only after the installation of U.S.-origin
software that the devices can function as intended. Moreover, as in
HQ H175415, HQ H052325, and HQ H258960, the gateway products at
issue here derive their core functionality as communication devices
from the installation of the U.S.-developed software. We note that
this case is distinguishable from Scenario 2 in HQ H258960, as
Sierra's products do not contain pre-installed software when they
are imported from China, and they are non-functional at the time of
importation to the United States. Therefore, we find that the
country of origin of the Sierra GX400, GX440, LS300, and ES440
gateways is the United States.
HOLDING:
Based on the facts provided, the country of origin of the
gateways is the United States for purposes of U.S. 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
[[Page 9015]]
determination. Pursuant to 19 C.F.R. Sec. 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,
Alice A. Kipel, Executive Director Regulations & Rulings Office of
Trade
[FR Doc. 2018-04278 Filed 3-1-18; 8:45 am]
BILLING CODE P
