[Federal Register Volume 75, Number 110 (Wednesday, June 9, 2010)]
[Notices]
[Pages 32803-32806]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-13845]


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

DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning a GTX 
Mobile+ Hand Held Computer

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 a GTX Mobile+ hand held computer. Based upon the 
facts presented, CBP has concluded in the final determination that 
Canada is the country of origin of the GTX Mobile+ hand held computer 
for purposes of U.S. government procurement.

DATES: The final determination was issued on June 2, 2010. 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 until July 9, 2010.

FOR FURTHER INFORMATION CONTACT: Robert Dinerstein, Valuation and 
Special Programs Branch: (202) 325-0132.

SUPPLEMENTARY INFORMATION: Notice is hereby given that on June 2, 2010, 
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 the GTX Mobile+ hand held computer which may be 
offered to the U.S. Government under an undesignated government 
procurement contract. This final determination, in HQ H089762, was 
issued at the request of Psion Teklogix, 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

[[Page 32804]]

(19 U.S.C. 2511-18). In the final determination, CBP has concluded 
that, based upon the facts presented, the combination of the 
installation of Canadian developed software on the GTX Mobile+ hand 
held computer and the assembly of the device in Canada from parts made 
in several different countries, resulted in a substantial 
transformation in Canada, such that Canada is the country of origin of 
the finished article 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: June 2, 2010.
Sandra L. Bell,
Executive Director, Regulations and Rulings, Office of International 
Trade.

Attachment--HQ H089762

June 2, 2010

MAR-2-05 OT:RR:CTF:VS H089762 RSD

Category: Marking

Robert T. Stack, Esq., Tompkins & Davidson, 5 Hanover Square, New York, 
NY 10004

RE: United States Government Procurement; Title III, Trade Agreements 
Act of 1979 (19 U.S.C. 2511); Subpart B, Part 177, CBP Regulations; GTX 
Mobile+ Hand Held Computer; substantial transformation

    Dear Mr. Stack: This is in response to your letter dated July 18, 
2008, requesting a final determination on behalf of Psion Teklogix, 
Inc., (Psion) pursuant to subpart B of Part 177, Customs and Border 
Protection (``CBP'') Regulations (19 CFR 177.21 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. We have received a supplemental 
submission from your office dated March 15, 2010.
    This final determination concerns the country of origin of the GTX 
Mobile+ hand held computers (GTX Mobile). We note that Psion is a 
party-at-interest within the meaning of 19 CFR 177.22(d)(1) and is 
entitled to request this final determination. Your request for 
confidential treatment regarding all cost and price information 
contained in your request is granted and such information will not be 
disclosed to the public.
    Facts:
    The product at issue is the base model of the computer GTX Mobile. 
It is used to collect mobile data in the field, conduct emulation 
testing on site, and/or transmit data/test information to the user's 
home facilities. The GTX Mobile is used in mobile-intensive 
applications such as asset tracking, meter reading and mobile ticketing 
across a variety of industries. The approximate exterior physical 
dimensions of the GTX Mobile are 9 inches in length, with a width 
ranging from 3 inches at the grip area to approximately 3.9 inches at 
the display area, and a depth ranging from 1.2 inches at the grip to 
1.7 inches at the display area. It is battery powered and the various 
sub-assemblies forming the computers are housed in a metal chassis and 
a plastic exterior.
    You indicate that the federal government may want to purchase the 
GTX Mobile for various military initiatives and emergency operations 
where asset identification and inventory tracking are critical. An 
example of basic military use for the GTX Mobile may include tracking 
computers and peripherals that are sent overseas. Product literature 
was submitted with your request.
    The GTX Mobile hand held computer consists of the following 
functional components:
    1. A subassembly consisting of the main logic board and keyboard, 
each individually assembled in China, and joined to the metal chassis 
frame in China;
    2. The LCD screen sub-assembly, assembled in Japan from primarily 
Japanese components, including a screen and a printed circuit board;
    3. A data cable and speaker connector for the LCD display screen, 
of Japanese origin;
    4. An imager sub-assembly assembled in Canada using two PCB boards 
(one is an interface board assembled in Canada, and the other is a 
decoder board that is assembled in the United States), a camera element 
(imager engine) manufactured in the United States, and various 
structural and connection components and plastic structural casing 
components;
    5. An 802.11g radio modem assembled in Taiwan using components from 
Japan, Israel, and the United States;
    6. An RFID scanner made in Italy (currently an optional additional 
data gathering element).
    In addition, construction of the unit requires a number of 
components, including;
    1. A display bezel made in China, with a company logo added in the 
United States;
    2. An end piece and battery cover from China;
    3. A battery from Taiwan;
    4. A stylus and stylus holder from China;
    5. Optional accessories; and
    6. A cover.
    As noted above, the imager is assembled at a Psion subsidiary in 
Canada. The final assembly for the GTX Mobile takes place at Psion's 
Canadian headquarters facility. Assembly of the imager per unit 
involves fifteen steps to assemble twelve components. The most 
important components are two PCB's and engine.
    The assembly process of the GTX Mobile in Canada involves 
internally developed product software applications to allow 
functionality of the main board, imager and radio. The parts are sent 
to the assembly cell units where the required assembly steps are 
completed. The physical assembly takes longer if alternative devices 
such as the RFID scanner with connection devices or other customer add-
ons are included in the configuration.
    The assembly includes attaching the keyboard bezel to the imported 
sub-assembly of the keyboard and main logic board, installing the data 
cable and speaker connector cable to both the LCD screen and the main 
logic board PCB in the chassis, assembling the LCD display screen to 
the chassis, installing the display bezel over the LCD portion of the 
chassis, pressing the display bezel into the housing, securing the 
bezel to the chassis with two screws, attaching the flex cable for the 
scanner imager to the 2D imager and the computer chassis, attaching the 
scanner console to the chassis, installing the radio card into the CF 
card slot, sliding the radio antenna for the radio into the housing 
slot, adding a stylus holder in the case housing, installing the end 
cap component, and installing the main battery.
    Personnel begin software loading using internally developed 
fixtures and automated remote configuration software (variables 
affecting software versions loaded to particular computers include 
radio modem display version keyboard configuration, added devices such 
as RFID or other customer

[[Page 32805]]

specifications), which involves the installation of: (a) The Microsoft 
license for the Microsoft CE operation system; (b) Psion self-developed 
upgraded version of the Microsoft operating system; (c) Psion 
``Opentekterm'' proprietary software package that renders the device 
operational; (d) security software for the device, (e) Fortress 
Technologies Secure Client security software; and Juniper Networks 
Odyssey Access Client FIPS and (f) Mobile Control Center Psion 
Tekogix's proprietary device management software. The software download 
takes approximately four minutes. You indicate that in Canada, Psion 
has expended in excess of 150,000 hours in the development of its 
proprietary software code for its line of mobile hand held computers, 
at a considerable cost. It continues to expend significant sums 
annually in upgrading versions of the terminal emulation software of 
communication software to enhance performance of the product and to 
assure compatibility with component improvements.
    After the software is loaded, final functional testing is done for 
functional compatibility. These tests are managed by the internally 
developed Automated Remote Configuration software application. After 
testing, the unit is subject to a variable lot control reporting 
process which records all the configuration and software elements for 
the unit with the product serial code into a company record system.
    The testing and assembly line operation involves two Active Remote 
Configuration (ACR) test experts, four manufacturing engineering and 
sixteen assembly technicians. The four manufacturing engineering and 
two ARC testing experts are responsible for the assembly guides and 
software download configuration required for each individual product 
line. It generally involves somewhere between 200 and 300 hours of 
personnel time per product line.
    Issue:
    What is the country of origin of the GTX Mobile hand computer 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 
(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 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 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).
    Therefore, the question presented in this final determination is 
whether, as a result of the operations performed in Canada, the GTX 
Mobile computer will be substantially transformed into a product of 
Canada.
    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.
    In several rulings, CBP has analyzed whether the assembly of 
electronic equipment such as computers and related devices from various 
components resulted in a substantial transformation of those 
components. For example, in Headquarters Ruling Letter (HQ) 735541 
dated September 15, 1994, one of the two types of assembly operations 
described in the ruling involved inserting a floppy disk drive, VGA 
docking station board, keyboard, DC/DC converter, as well as a CPU, 
RAM, and a hard disk drive into an imported unfinished computer. In 
addition, a LCD display assembly and a plastic battery cover were 
attached into the computer. We noted that the assembly process involved 
several components and also included the assembly of the CPU, which 
allowed the computers to function. Consequently, we concluded that in 
combining these components in the production of a notebook computer, a 
new article of commerce was created that was separate and distinct from 
the individual components of which it was composed.
    HQ 735608 dated April 27, 1995, involved various scenarios 
pertaining to the assembly of a desktop computer in the U.S. and the 
Netherlands. In one of the scenarios, foreign components assembled in 
the U.S. were the case assembly (including the computer case, system 
power supply and floppy disk drive), partially completed motherboard, 
CPU (which controls the interpretation and execution of instructions 
and included the arithmetic-logic unit and control unit), hard disc 
drive, slot board, keyboard BIOS and system BIOS (basic input and 
output system). Additional components manufactured in the U.S. or the 
Netherlands were assembled into the finished desktop computers 
depending on the model included an additional floppy drive, CD ROM 
disk, and memory boards. In that case, CBP found that the foreign case 
assemblies, partially completed motherboards, hard disk drives and slot 
boards underwent a change in name, character and use as a result of the 
operations done in the

[[Page 32806]]

U.S. and that the components lost their separate identities in becoming 
an integral part of a desktop computer. CBP noted that the finished 
article, a desktop computer, was visibly different from any of the 
individual foreign components, acquiring a new use, processing and 
displaying information. Accordingly, CBP held that the individual 
components underwent a substantial transformation as a result of the 
operations performed in the U.S. See also HQ 559336 dated March 13, 
1996, in which CBP also determined that foreign components, such as 
clamshell base, LCD video display, hard disk drive, floppy disk drive, 
AC power adapter were substantially transformed by the processing and 
assembly operations performed in the United States; and HQ 560633, 
dated November 17, 1997.
    In this case, in addition to the components and parts being 
assembled in Canada, the GTX Mobile hand computers are programmed in 
Canada by the installation of Canadian developed software onto the 
devices. In Data General v. United States, 4 Ct. Int'l Trade 182 
(1982), the Court of International Trade found that for purposes of 
determining eligibility under item 807.00, Tariff Schedules of the 
United States (the predecessor provision to subheading 9802.00.80, 
Harmonized Tariff Schedule of the United States), the programming of a 
foreign Programmable Read-Only Memory (``PROM'') chip, substantially 
transformed the PROM into a U.S. article. The court noted that it was 
undisputed that programming altered the character of a PROM, effecting 
a physical change. 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 
constituted ``substantial transformation.'' After the Data General 
decision, in a number of previous rulings, CBP has considered whether 
the programming devices and electronic equipment constitutes a 
substantial transformation of such devices.
    In HQ 735027, dated September 7, 1993, CBP considered a 
``MemoPlug,'' used to protect software from piracy. It was assembled in 
Israel from Taiwanese parts (such as various connectors and an 
Electronically Erasable Programmable Read Only Memory, or ``EEPROM'') 
and Israeli parts (such as an internal circuit board). After assembly, 
the EEPROM was programmed in the U.S. with special software. Such 
processing in the United States accounted for approximately 50 percent 
of the final selling price of the MemoPlugs. In finding that the 
foreign-origin components were substantially transformed in the United 
States, CBP noted that the U.S. processing transformed a blank media, 
the EEPROM, into a device that performed functions necessary to the 
prevention of software piracy.
    HQ H034843, dated May 5, 2009, concerned encrypted USB flash 
devices (``UFD''), used to protect data when a UF is lost or stolen. 
The key hardware component of the UFD was a Japanese origin flash 
memory chip. Other components were shipped to China where they were 
assembled. In one scenario, the UFD's were shipped to Israel where 
firmware application software developed in Israel was installed and 
customized into the device. Without application software, the UFD did 
not exhibit its security features. CBP held that the country origin of 
the encrypted UFD was Israel.
    In this instance, we note that the building of the GTX Mobile 
requires the assembly of components in Canada, together with an imager 
of Canadian origin using subassemblies of various origins. Taking into 
account the Canadian assembly of the imager, the total assembly process 
requires a number of discrete steps that permit the individual 
components to function together as a single unit able to gather, 
process, display and transmit information from field operations to 
office locations. We, moreover, take note that a complex software 
program is loaded onto the GTX Mobile which has been designed and 
written entirely in Canada. This software has been designed so that the 
customer may centrally manage and troubleshoot remote computer 
applications, allowing for communication between computers in distant 
locations. We find the creation and installation of the software to be 
a crucial element that permits the functioning of the hand held 
computers. Therefore, we find that the assembly processes that will 
occur in Canada, coupled with the configuration operations also 
performed in Canada that require the installation of Canadian-origin 
software, will substantially transform the components of non-Canadian 
origin into a product with a new name, character, and use. Accordingly, 
we find that the country of origin of the GTX Mobile is Canada.
    Holding:
    The non-Canadian component parts and subassemblies are 
substantially transformed in Canada, the location where the 
subassemblies and components from various countries are assembled 
together to make the GTX Mobile, and where the complex software is 
developed and installed onto the device. Therefore, we find that the 
country of origin of the GTX Mobile for government procurement purposes 
is Canada.
    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 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 Regulations and Rulings, Office of 
International Trade.

[FR Doc. 2010-13845 Filed 6-8-10; 8:45 am]
BILLING CODE 9111-14-P