[Federal Register Volume 73, Number 28 (Monday, February 11, 2008)]
[Notices]
[Pages 7752-7754]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-2429]


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DEPARTMENT OF HOMELAND SECURITY

Bureau of Customs and Border Protection


Notice of Issuance of Final Determination Concerning Military-
Grade Flashlight and Replacement Part

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 the Bureau of Customs and 
Border Protection (CBP) has issued a final determination concerning the 
country of origin of certain military-grade flashlights and their 
replacement parts to be offered to the United States Government under 
an undesignated government procurement contract. Based on the facts 
presented, the final determination found that the United States is the 
country of origin of both the subject flashlights and their replacement 
parts for purposes of U.S. Government procurement.

DATES: The final determination was issued on February 5, 2008. 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 February 11, 2008.

FOR FURTHER INFORMATION CONTACT: Holly Files, Valuation and Special 
Programs Branch, Regulations and Rulings, Office of International Trade 
(202-572-8740).

SUPPLEMENTARY INFORMATION: Notice is hereby given that on February 5, 
2008, 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 military-grade flashlights and their 
replacement parts to be offered to the United States Government under 
an undesignated government procurement contract. The CBP ruling number 
is H017620. This final determination was issued at the request of 
Energizer Battery, Inc. under procedures set forth at 19 CFR part 177, 
subpart B, which implements Title III of

[[Page 7753]]

the Trade Agreements Act of 1979, as amended (19 U.S.C. 2511-18).
    The final determination concluded that, based upon the facts 
presented, assembly in the United States of various foreign-origin 
components with a U.S.-origin light emitting diode (LED) substantially 
transforms both the subject flashlight and its replacement part into 
products of the United States. Therefore, the country of origin of both 
the military-grade flashlight and the replacement part is the United 
States for purposes of U.S. Government procurement.
    Section 177.29, Customs Regulations (19 CFR 177.29), provides that 
notice of final determinations shall be published in the Federal 
Register within 60 days of the date the final determination is issued. 
Section 177.30, CBP Regulations (19 CFR 177.30), states 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 5, 2008.
Myles B. Harmon,
Acting Executive Director, Office of Regulations and Rulings, Office of 
International Trade.

HQ H017620

February 5, 2008.

[MAR-02 OT:RR:CTF:VS H017620 HEF]

    Category: Marking.

Mr. Steven P. Sonnenberg, Sonnenberg & Anderson, 300 South Wacker 
Drive, 12th Floor, Chicago, Illinois 60606.

RE: U.S. Government Procurement; Final Determination; Country of origin 
of a flashlight and replacement part; 19 CFR. part 177

Dear Mr. Sonnenberg:
    This is in response to your letter dated September 13, 2007, 
requesting a final determination on behalf of Energizer Battery, Inc. 
(``Energizer''), pursuant to subpart B of part 177, Customs and Border 
Protection (``CBP'') Regulations (19 CFR 177.21 et seq.). Under these 
regulations, which implement Title III of the Trade Agreements Act of 
1979, as amended (codified at 19 U.S.C. 2511 et seq.), CBP issues 
country of origin advisory rulings and final determinations on whether 
an article is or would be a product of a designated country or 
instrumentality for the purpose of granting waivers of certain ``Buy 
American'' restrictions in U.S. law or practice for products offered 
for sale to the U.S. Government.
    This final determination concerns the country of origin of a 
military-grade flashlight and replacement part. We note that Energizer 
is a party-at-interest within the meaning of 19 CFR 177.22(d)(1) and is 
entitled to request this final determination. Confidential treatment 
for certain business information identified in your request for a final 
determination will be extended in accordance with your request. 
Photographs of the flashlight and the replacement part, at various 
stages of manufacture, were submitted with your request.

Facts

    You advise that Energizer intends to sell the subject flashlight to 
consumers and to the U.S. military. A subcomponent of the flashlight, 
the lens head subassembly, may be sold separately as a replacement part 
for the subject flashlights. You indicate that the flashlight has many 
features that render it suitable for military use. The flashlight 
provides long-lasting light emitting diode (``LED'') lighting and 
infrared lighting, the latter of which is invisible to the naked eye. 
It has a heavy-duty design and can withstand the impact of being 
dropped twenty or more feet. In addition, it can also be clipped to a 
standard issue military vest.
    Both the subject military flashlight and the replacement lens head 
subassembly are manufactured in the United States from U.S. and 
foreign-origin components. The following operations occur within the 
United States:

Assembly of Lens Head Subassembly

    1. The LED is manufactured to Energizer's specifications by a third 
party in the United States.
    2. The LED is mounted to a foreign-origin ``hex board'' by another 
third party in the United States and shipped to an Energizer facility 
in Vermont.
    3. A foreign-origin, partially assembled half lens and separate 
printed circuit board (``PCB'') are imported to Energizer's Vermont 
facility. At the facility, the LED/hex board subassembly is mounted to 
a heat sink on the half lens with the use of two small screws.
    4. Wires are spot soldered to the positive and negative terminals 
of the LED.
    5. The following foreign-origin components are assembled together: 
a lens reflector, lens, and rubber gasket.
    6. The resulting subassembly from step 5 is attached to the LED and 
half lens to form the lens head subassembly that will be used either in 
the flashlight or sold separately as a replacement part.
    7. The lens head subassembly's wiring, soldering, and physical 
connections are inspected.

Assembly of the Flashlight

    1. If the lens head subassembly described above will be 
incorporated into a finished flashlight, its wires are routed through a 
foreign-origin plastic body or case to corresponding battery contacts.
    2. Foreign-origin gaskets are attached for weatherproofing.
    3. The second half of the body or case is attached with six screws.
    4. Final testing is performed, which includes the use of devices 
capable of perceiving infrared light.
    You explain that all final products undergo testing of their white, 
red, blue and infrared lights by the use of an infrared detection 
device. Manufacturing and inspection staff at the Vermont facility will 
use troubleshooting skills to identify and, if possible, correct any 
mechanical or electronic deficiencies revealed by the testing. In 
addition, you state that Energizer has expended significant resources 
in connection with the design exploration, development, detailing, and 
modeling of this product in the United States.

Issue

    What are the countries of origin of the flashlight and the 
replacement part for purposes of U.S. Government procurement?

Law and Analysis

    Pursuant to subpart B of part 177, Customs Regulations (19 CFR 
177.21 et seq.), which implements Title III of the Trade Agreements Act 
of 1979, as amended (``TAA,'' codified at 19 U.S.C. 2511 et seq.), CBP 
issues country of origin advisory rulings and final determinations on 
whether an article is or would be a product of a designated country or 
instrumentality for the purpose of granting waivers of certain ``Buy 
American'' restrictions in U.S. law or practice for products offered 
for sale to the U.S. Government.
    Under the rule of origin set forth at 19 U.S.C. 2518(4)(B):

    An article is a product of a country or instrumentality only if 
(i) it is wholly the growth, product, or manufacture of that country 
or instrumentality, or (ii) in the case of an article which consists 
in whole or in part of materials from another country or 
instrumentality, it has been substantially transformed into a new 
and different article of commerce with a name, character, or use 
distinct from that of the article or articles from which it was so 
transformed.

See also, 19 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

[[Page 7754]]

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). The Federal Procurement 
Regulations define ``U.S.-made end product'' as:

    * * * an article that is mined, produced, or manufactured in the 
United States or that is substantially transformed in the United 
States into a new and different article of commerce with a name, 
character, or use distinct from that of the article or articles from 
which it was transformed.

48 CFR 25.003
    Therefore, the question presented in this final determination is 
whether, as a result of the operations performed in the United States, 
the flashlight and replacement part are substantially transformed into 
products of the United States.
    In determining whether the combining of parts or materials 
constitutes a substantial transformation, the determinative issue is 
the extent of the operations performed and whether the parts lose their 
identity and become an integral part of the new article. 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). If the manufacturing or 
combining process is a minor one that leaves the identity of the 
imported article intact, a substantial transformation has not occurred. 
Uniroyal, Inc. v. United States, 3 Ct. Int'l Trade 220, 542 F. Supp. 
1026 (1982). Assembly operations that are minimal or simple, as opposed 
to complex or meaningful, generally will not result in a substantial 
transformation. See C.S.D. 80-111, C.S.D. 85-25, C.S.D. 89-110, C.S.D. 
89-118, C.S.D. 90-51, and C.S.D. 90-97.
    In order to determine whether a substantial transformation occurs 
when components of various origins are assembled to form completed 
articles, CBP considers the totality of the circumstances and makes 
such decisions on a case-by-case basis. The country of origin of the 
article's components, the extent of the processing that occurs within a 
given country, and whether such processing renders a product with a new 
name, character, and use are primary considerations in such cases. 
Additionally, facts such as resources expended on product design and 
development, the extent and nature of post-assembly inspection 
procedures, and the 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.
    You assert that the U.S.-origin LED imparts the essential character 
to the flashlight and the replacement lens head subassembly. In 
addition to having a high monetary value relative to the other 
components, it generates the primary light in both products. The LED is 
manufactured to Energizer's specifications in order to provide certain 
desirable characteristics regarding the light's color, intensity, 
durability, coverage, and efficiency. You also note that the foreign-
origin reflector is engineered to maximize these particular 
characteristics.
    You claim that as a result of the manufacturing, assembly, and 
testing processes performed in the United States, the foreign-origin 
components undergo a substantial transformation such that both the 
flashlight and the replacement lens head subassembly become products of 
the United States for purposes of U.S. Government procurement.
    In Headquarters Ruling Letter (``HRL'') 563236, dated July 6, 2005, 
CBP examined whether multi-line telephone sets assembled in Mexico from 
parts of Mexican and foreign origin were products of Mexico for 
purposes of U.S. Government procurement. Among the foreign components 
imported into Mexico for the assembly of the telephone sets were 
printed circuit assemblies (``PCAs'') from Malaysia. The handsets, 
liquid crystal displays, microphone assemblies, and stands incorporated 
into the telephones were of Mexican origin. In reaching a determination 
that the telephone sets were products of Mexico, CBP noted that the 
telephone sets were comprised of certain essential parts (such as the 
handsets) that were of Mexican origin. Moreover, many of the components 
lacked any functionality prior to their assembly within the telephone 
set.
    In HRL 962528, dated February 18, 2000, CBP considered the 
eligibility of a rechargeable power failure light for duty free 
treatment under the Generalized System of Preferences. In that case, 
the power failure light was assembled in Thailand from various Thai and 
foreign origin components, including a PCB assembled in Thailand. CBP 
found that the process of assembling various components into a PCB 
resulted in a substantial transformation of the imported components. 
Moreover, CBP found that the assembly of the PCB with a bulb holder 
assembly, a plug blade assembly, and the upper and lower housing 
assemblies to make the finished power failure light substantially 
transformed the PCB.
    Based on the totality of the circumstances and consistent with the 
CBP rulings cited above, we find that the various imported components 
(individual parts and subassemblies) are substantially transformed as a 
result of the operations performed in the United States to produce both 
the replacement lens head subassembly and the finished flashlight. 
Under each manufacturing scenario, the imported components lose their 
individual identities and become an integral part of a new article 
possessing a new name, character, and use. In support of this 
conclusion, we agree that the U.S.-origin LED imparts the essential 
character to both the replacement part and the finished product, as it 
generates the primary light of both products. We also recognize that 
Energizer has expended significant resources in connection with the 
design and development of the subject flashlight in the United States. 
Moreover, the U.S.-origin LED and the labor performed in the United 
States during the assembly and testing operations represent a majority 
of the costs associated with the production of both the replacement 
lens head subassembly and the finished flashlight.

Holding

    Based upon the specific facts of this case, we find that the 
imported components of the flashlight and replacement lens head 
subassembly are substantially transformed as a result of the described 
manufacturing operations performed in the United States. The country of 
origin of the flashlight and the replacement lens head subassembly is 
the United States.
    Sincerely,

Myles B. Harmon,
Acting Executive Director, Office of Regulations and Rulings, Office of 
International Trade.
[FR Doc. E8-2429 Filed 2-8-08; 8:45 am]
BILLING CODE 9111-14-P