[Federal Register Volume 74, Number 213 (Thursday, November 5, 2009)]
[Notices]
[Pages 57324-57325]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-26410]



[[Page 57324]]

-----------------------------------------------------------------------

DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning Lined Paper 
Notebooks and Filler Paper

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 lined paper notebooks and filler paper. Based upon 
the facts presented, CBP has concluded in the final determination that 
Mexico is the country of origin of the lined paper notebooks and filler 
paper for purposes of U.S. government procurement.

DATES: The final determination was issued on October 27, 2009. 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 through December 3, 1956.

FOR FURTHER INFORMATION CONTACT: Alison Umberger, Valuation and Special 
Programs Branch: (202) 325-0267.

SUPPLEMENTARY INFORMATION: Notice is hereby given that on October 8, 
2009, 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 lined paper notebooks and filler paper which may 
be offered to the U.S. Government under an undesignated government 
procurement contract. This final determination, in HQ H066155, was 
issued at the request of Staples, Inc. under procedures set forth at 19 
CFR part 177, subpart B, which implements Title III of the Trade 
Agreements Act of 1979, as amended (19 U.S.C. 251118). In the final 
determination, CBP has concluded that, based upon the facts presented, 
lined paper notebooks and filler paper, processed in Mexico from jumbo 
rolls of paper from Taiwan, are substantially transformed in Mexico, 
such that Mexico is the country of origin of the finished articles 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), 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: October 29, 2009.
Sandra L. Bell,
Executive Director, Office of Regulations and Rulings, Office of 
International Trade.

Attachment

HQ H066155

October 27, 2009

OT:RR:CTF:VS H066155 ARU

Category: Marking

Mr. David M. Murphy, Grunfeld, Desiderio, Lebowitz, Silverman & 
Klestadt LLP, Counselors at Law, 399 Park Avenue--25th Floor, New York, 
NY 10022-4877.

Re: U.S. Government Procurement; Title III, Trade Agreements Act of 
1979 (19 U.S.C. 2511); Subpart B, Part 177, CBP Regulations; Lined 
Paper Notebooks and Filler Paper.

    Dear Mr. Murphy: This is in response to your ruling request dated 
June 15, 2009, made on behalf of Staples, Inc. (``Staples''). You ask 
for a country of origin final determination relating to government 
procurement 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 (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 certain 
finished lined notebook paper products. We note that Staples is a 
party-at-interest within the meaning of 19 CFR 177.22(d)(1) and is 
entitled to request this final determination.
    Facts:
    Staples imports four (4) styles of finished lined paper notebook 
products into the United States from Mexico: (1) Filler paper, (2) 
composition notebooks, (3) spiral notebooks, and (4) wireless 
notebooks. Each of the items will be produced in Mexico from unlined 
paper rolls sourced from Taiwan. The paper is received by the 
manufacturer in Mexico in the form of unlined jumbo rolls of paper that 
are then unwound and processed into the final products.
    The production process for the filler paper begins with the jumbo 
rolls of paper being unwound and processed through a lining machine. 
The lining machine prints the line and margin rulings on the paper in a 
continuous manner. The lined paper is then jogged and cut into large 
sheets. The large sheets of lined paper are then cut to notebook size, 
counted and sorted into the specified number of sheets for each 
package, and are three-hole punched. The finished sheets are matched 
with a top sheet, shrink-wrapped, and placed in cartons for shipment to 
the United States.
    The production process for the composition notebooks begins with 
the jumbo rolls of paper being unwound and processed through a lining 
machine. The lining machine prints the line and margin rulings on the 
paper in a continuous manner. The lined paper is then jogged and cut 
into large sheets. The large sheets of lined paper are cut to a medium 
size, and counted and sorted into the specified number of sheets for 
each notebook. The groups of lined and cut sheets are then matched with 
a sheet of printed covers. Two cover designs are printed on one cover 
sheet. One is on the top of the sheet and the other is on the bottom of 
the sheet. The sheets and covers are sewn together to create the spine 
binding which is then folded over. Spine tape is applied to cover the 
binding. The assembled composition notebook is then cut in half and 
trimmed to its final size, and is packaged in cartons for shipment to 
the United States.
    The production process for the spiral notebooks begins with the 
jumbo rolls of paper being unwound and processed through a lining 
machine while simultaneously being perforated. The lined paper is then 
jogged and cut into large sheets. The large sheets of lined paper are 
then cut to notebook size, counted, and sorted into the specified 
number of sheets for each notebook, and are three-hold punched and 
spiral hole punched. Piles of printed notebook covers are cut into 
notebook size and three-hole punched and spiral hole punched. The final 
sized line sheets are matched with the printed cover sheets and fly 
sheets (if applicable), and are bound with wire. Depending on the 
particular style of spiral notebook, several finished notebooks are 
matched with slip-sheets and shrink wrapped. The finished spiral 
notebooks are packaged in cartons and shipped to the United States.
    The production process for the wireless notebooks beings with the 
jumbo rolls of paper being unwound and processed through a lining 
machine. The lining machine prints the line and margin rulings on the 
paper in a continuous manner while

[[Page 57325]]

simultaneously perforating the paper. The lined paper is then jogged 
and cut into large sheets. The large sheets of lined paper are then cut 
to a medium size, counted, and sorted into the specified number of 
sheets for each notebook. The groups of lined and cut sheets are then 
matched with printed covers and glued together. A spine tape is applied 
to cover the binding. The assembled wireless notebooks are then cut to 
final size and three-hole punched. The finished wireless notebooks are 
packaged in cartons for shipment to the United States.
    Issue:
    What is the country of origin of the finished lined paper notebook 
products for purposes of U.S. Government procurement?
    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 
(``TAA''; 19 U.S.C. 2511 et seq.), CBP issues country of origin 
advisory rulings and final determinations on whether an article is or 
would be a product of a designated country or instrumentality for the 
purposes of granting waivers of certain ``Buy American'' restrictions 
in U.S. law or practice for products offered for sale to the U.S. 
Government.
    Under the rule of origin set forth 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 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).

    A 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. See Texas Instruments, 
Inc. v. United States, 69 CCPA 152, 681 F.2d 778 (1982). 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). In Uniroyal, 
the court determined that a substantial transformation did not occur 
when an imported footwear upper, the essence of the finished article, 
was combined with a domestically produced outsole to form a shoe. See 
id.
    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, 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 claim that the steps involved in converting the paper rolls 
into notebook products in Mexico is complex and adds value. You also 
claim that, given the manual nature of many of the steps, the multi-
step processes of cutting, lining, perforating, punching, sorting, 
counting, binding, and final assembly take substantial time to complete 
and account for the majority of the processing time for the finished 
products.
    In Headquarters Ruling Letter (``HRL'') 557408, dated January 14, 
1994, CBP considered whether substantial transformation occurred in 
Mexico when bingo game faces were printed on U.S.-origin unprinted 
paper:

    [I]t is apparent that a substantial transformation occurs when 
unprinted paper is printed in Mexico with bingo game faces. Upon 
exportation from the U.S., the paper is a raw material of a generic 
nature with varied uses, but is dedicated to use as bingo game faces 
after the printing is completed. At this point, the sheets have a 
new identity, name, and character. Prior to this processing, the 
paper possessed nothing in its character which would indicate the 
nature of the final product.

    Similarly, in the instant case, the jumbo rolls of paper sourced 
from Taiwan utilized to produce the subject finished products undergo a 
substantial transformation in Mexico as the items are changed into 
separate and distinct articles of commerce. The jumbo rolls of paper 
are fully converted to notebooks or filler paper in Mexico through the 
multi-step processes of printing, cutting, perforating, punching, 
sorting, counting, binding, and final assembly. Through these 
processes, the jumbo rolls of paper will undergo a change in name, 
(jumbo rolls of paper to filler paper, composition notebooks, spiral 
notebooks, or wireless notebooks), character, and use (from raw 
materials with multiple potential uses to lined paper notebooks and 
filler paper, articles with a specific use). As a result, the jumbo 
rolls of paper sourced from Taiwan are substantially transformed in 
Mexico and the finished lined paper notebook products, upon importation 
to the United States, will be considered products of Mexico.
    Holding:
    Based on the facts provided, the processing operations performed in 
Mexico impart the essential character to the finished lined paper 
notebook products. As such, the finished lined paper notebook products, 
upon importation to the United States, will be considered products of 
Mexico.
    Notice of this final determination will be given in the Federal 
Register as required by 19 CFR 177.29. Any party-at-interest other than 
the party which requested this final determination may request, 
pursuant to 19 CFR 177.31, that CBP reexamine the matter anew and issue 
a new final determination. Any party-at-interest may, within 30 days 
after publication of the Federal Register notice referenced above, seek 
judicial review of this final determination before the Court of 
International Trade.

 Sincerely,

Sandra L. Bell,
Executive Director Regulations and Rulings Office of International 
Trade

[FR Doc. E9-26410 Filed 11-4-09; 8:45 am]
BILLING CODE 9111-14-P