[Federal Register Volume 73, Number 90 (Thursday, May 8, 2008)]
[Notices]
[Pages 26132-26134]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-10119]


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DEPARTMENT OF HOMELAND SECURITY

Bureau of Customs and Border Protection


Notice of Issuance of Final Determination Concerning Electric 
Mini-Trucks

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 electric mini-trucks 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 the electric mini-
trucks for purposes of U.S. Government procurement.

DATES: The final determination was issued on May 2, 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 June 9, 2008.

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

SUPPLEMENTARY INFORMATION: Notice is hereby given that on May 2, 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 electric mini-trucks to be offered to the 
United States Government under an undesignated government procurement 
contract. The CBP ruling number is H022169. This final determination 
was issued at the request of Global Electric Motorcars 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).
    The final determination concluded that, based upon the facts 
presented, assembly in the United States of an imported mini-truck 
glider with a substantial number of components of U.S. and foreign 
origin substantially transforms the imported mini-truck glider into a 
product of the United States. Therefore, the country of origin of the 
resulting electric mini-truck 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: May 2, 2008.
Sandra L. Bell,
Executive Director, Office of Regulations and Rulings, Office of 
International Trade.

H022169

May 2, 2008
OT:RR:CTF:VS H022169 GG
CATEGORY: Marking
Mr. Lawrence M. Friedman & Ms. Nicole A. Kehoskie
Barnes, Richardson & Colburn
1420 New York Avenue, NW.,
7th Floor
Washington, DC 20005
RE: U.S. Government Procurement; Final Determination; country of origin 
of electric mini-trucks; substantial transformation; 19 CFR part 177
Dear Mr. Friedman & Ms. Kehoskie:
    This is in response to your letter dated December 20, 2007, 
requesting a final determination on behalf of Global Electric Motorcars 
(``GEM'') pursuant to subpart B of part 177, Customs and Border 
Protection (``CBP'') Regulations (19 C.F.R. Sec.  177.21 et seq.). 
Under these regulations, which implement Title III of the Trade 
Agreements Act of 1979, as amended (codified at 19 U.S.C. Sec.  2511 et 
seq.), CBP issues country of origin advisory rulings and final 
determinations on whether an article is or would be a product of a 
designated country or instrumentality for the purpose of granting 
waivers of certain ``Buy American'' restrictions in U.S. law or 
practice for products offered for sale to the U.S. Government.

    This final determination concerns the country of origin of electric 
mini-trucks. We note that GEM is a party-at-interest within the meaning 
of 19 CFR Sec.  177.22(d)(1) and is entitled to request this final 
determination.
FACTS:
    GEMS imports a mini-truck glider from India. The glider consists of 
a frame, finished cab, axles, and wheels in one unit. The glider--so 
called because it can be rolled much like a dolly or scooter--does not 
include the normal critical components of an internal-combustion 
vehicle such as an engine, transmission, drive shaft, exhaust system, 
fuel system, or rear axle differential. It also does not have the 
critical components of an electric vehicle including the motor, battery 
pack, differential, or electronics necessary to control the electric 
vehicle. The brake assembly included with the glider will be removed 
and replaced with another after importation. The truck bed will be 
imported separate from the glider and installed after importation and 
upfitting as an electric vehicle.
    The glider is claimed to be non-functional and not intended for 
sale to retail motor vehicle purchasers in its imported state. Once in 
the United States, GEM manufactures an electric mini-truck from the 
glider and various other assemblies. GEM will fit the complete mini-
truck with an electric motor to create an energy efficient, zero 
emissions mini-truck for sale to certain U.S. government agencies.
    As noted above, the glider is imported from India. According to 
GEM's December 20, 2007 request, the glider is assembled with 
approximately 87 different component parts, 68 of which are of U.S. 
origin. In response to a request from this office of a more detailed 
breakdown of the components, GEM submitted a costed bill of materials 
with country of origin for elective drive conversion components. This 
indicates that U.S. components amount to approximately 51% of the total 
component cost. The U.S. assembly process will require eight work 
stations, details of which are as follows:
    Station 0--The glider is unloaded, the wheels and tires are removed 
and the glider is put on the conveyor for assembly.
    Station 1--The rear axle and brake assembly shipped with the glider 
are removed and replaced with one that is compatible with the electric 
function of

[[Page 26133]]

the truck. The replacement gear box and axles are of U.S. origin, while 
the replacement brakes are of Indian origin. The motor of Canadian 
origin is attached onto the rear axle/gear box/differential assembly of 
U.S. origin; the controller and charger of Canadian origin are also 
attached to the glider.
    Station 2--The wiring harnesses of U.S. origin are integrated.
    Station 3--The battery tray, batteries and cable of U.S. origin are 
assembled and incorporated.
    Station 4--The electronic driver information display of U.S. origin 
is incorporated.
    Station 5--The optional electric cab heater is installed.
    Station 6--The wheels and tires are reinstalled.
    Station 7--The fully assembled electric mini-truck is test run.
    Station 8--The electric mini-truck is unloaded and inspected for 
precision of assembly and operation.
    Quality control will occur at each of the eight work stations and 
at two more off-line stations.
    ISSUE:
    What is the country of origin of the electric mini-truck for 
purposes of U.S. Government procurement?

LAW AND ANALYSIS:
    Pursuant to Subpart B of Part 177, 19 C.F.R. Sec.  177.21 et seq., 
which implements Title III of the Trade Agreements Act of 1979, as 
amended (19 U.S.C. Sec.  2511 et seq.), CBP issues country of origin 
advisory rulings and final determinations on whether an article is or 
would be a product of a designated country or instrumentality for the 
purposes of granting waivers of certain ``Buy American'' restrictions 
in U.S. law or practice for products offered for sale to the U.S. 
Government.
    Under the rule of origin set forth 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).
    In rendering advisory rulings and final determinations for purposes 
of U.S. Government procurement, CBP applies the provisions of subpart B 
of Part 177 consistent with the Federal Procurement Regulations. See 19 
CFR Sec.  177.21. In this regard, CBP recognizes that the Federal 
Procurement Regulations restrict the U.S. Government's purchase of 
products to U.S.-made or designated country end products for 
acquisitions subject to the TAA. See 48 CFR Sec.  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 Sec.  25.003.
    Therefore, the question presented in this final determination is 
whether, as a result of the operations performed in the United States, 
the glider is substantially transformed into a product of the United 
States.
    In determining whether the combining of parts or materials 
constitutes a substantial transformation, the determinative issue is 
the extent of operations performed and whether the parts lose their 
identity and become an integral part of the new article. Belcrest 
Linens v. 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 which 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, will generally not result in a substantial 
transformation. See C.S.D. 80-111, C.S.D. 85-25, 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, or use are primary considerations in such cases. 
Additionally, facts such as resources expended on product design and 
development, extent and nature of post-assembly inspection procedures, 
and worker skill required during the actual manufacturing process will 
be considered when analyzing whether a substantial transformation has 
occurred; however, no one such factor is determinative.
    You assert that the electric motor (Canada), batteries (United 
States), charger (Canada), gear box (United States) and brakes (India) 
of the electric mini-truck form the heart of the mini-truck, and are 
all installed in the United States, changing the identity of the 
imported glider from a body into a self-propelled truck. These 
components allegedly provide the power source to the truck and enable 
it to carry out its intended use. Accordingly, it is argued, the U.S. 
components added and the assembly and testing performed in the U.S. are 
substantial.
    GEM cites to several Headquarters rulings (``HQ'') to support its 
analysis. Specifically, it refers to HQ 558919, dated March 20, 1995; 
HQ 559887, dated October 3, 1996; and HQ 562502, dated November 8, 
2002. We find HQ 558919 to be most analogous to the situation before 
us. There, CBP held that an extruder subassembly manufactured in 
England was substantially transformed in the United States when it was 
wired and combined with U.S. components (motor, electrical controls and 
extruder screw) to create a vertical extruder. In reaching that 
decision, CBP emphasized that the imported extruder subassembly and the 
U.S. components each had important attributes that were functionally 
necessary to the operation of the vertical extruder. Although HQ 558919 
may be distinguished because the components that were assembled with 
the imported extruder subassembly were exclusively of U.S. origin, the 
two cases are similar to the extent that the imported articles 
(extruder subassembly and glider) and certain of the other components 
with which the imported articles are combined are ``functionally 
necessary'' to the operation of the finished product. In GEM's 
situation, the glider could not be used as an electric mini-truck on 
its own, but requires assembly with other, crucial components.
    We also take note of HQ 731076, dated November 1, 1988, which 
addressed country of origin marking requirements for an automobile 
assembled in Taiwan with components from Japan, the United States, and 
Taiwan. The U.S. components consisted of an oxygen sensor, a catalytic 
converter and two roll over valves. The Taiwanese components included 
trim pad assemblies, head linings, front and rear seats, glass, 
instrument panels, arm rests, support rod, leaf springs, heat 
protectors, carpet, brake pipes, fuel pipes, cable harnesses, battery 
cables, axle assemblies, tension rods, battery and tires. Associated 
materials such as

[[Page 26134]]

glue, paint and coating were also procured in Taiwan. All other 
components were of Japanese origin. CBP held that the automobile 
components lost their separate identities and consequently were 
substantially transformed when they were assembled into vehicles in 
Taiwan. As a result, the country of origin of the imported automobiles 
for marking purposes was Taiwan, which precluded the various components 
from having to be separately marked with their original countries of 
origin. Customs indicated that it considered the manufacture of an 
automobile much more than a mere assembly operation and also considered 
it persuasive that the Taiwanese input to the final product contributed 
38% of its value and took 33 hours to accomplish.
    Based upon the totality of the circumstances and consistent with 
the CPB rulings cited above, we find that the imported mini-truck 
glider is substantially transformed as a result of the assembly 
operations performed in the United States to produce an electric mini-
truck. Under the described assembly process, the imported glider loses 
its individual identity and becomes an integral part of a new article 
possessing a new name, character and use. Further, we note a 
substantial number of the components added to the imported glider are 
of U.S. origin. Therefore, based upon the specific facts, the country 
of origin of the electric mini-truck for purposes of U.S. Government 
procurement is the United States.
HOLDING:
    The imported mini-truck gliders are substantially transformed when 
they are assembled in the United States with other imported and 
domestic components. As a result, the country of origin of the electric 
mini-trucks for purposes of U.S. Government procurement is the United 
States.

    Notice of this final determination will be given in the Federal 
Register as required by 19 C.F.R. Sec.  177.29. Any party-at-interest 
other than the party which requested this final determination may 
request, pursuant to 19 C.F.R. Sec.  177.31, that CBP reexamine the 
matter anew and issue a new final determination. Any party-at-interest 
may, within 30 days after publication of the Federal Register notice 
referenced above, seek judicial review of this final determination 
before the Court of International Trade.
    Sincerely,

Sandra L. Bell,
Executive Director Office of International Trade
[FR Doc. E8-10119 Filed 5-7-08; 8:45 am]
BILLING CODE 9111-14-P