[Federal Register Volume 75, Number 203 (Thursday, October 21, 2010)]
[Notices]
[Pages 65023-65025]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-26649]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning Certain 
Heating Boilers

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 U.S. Customs and Border 
Protection (``CBP'') has issued a final determination concerning the 
country of origin of certain heating boilers. Based upon the facts 
presented, CBP has concluded in the final determination that Canada is 
the country of origin of the heating boilers for purposes of U.S. 
Government procurement.

DATES: The final determination was issued on October 13, 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 on or before November 22, 2010.

FOR FURTHER INFORMATION CONTACT: Barbara Kunzinger, Valuation and 
Special Programs Branch: (202) 325-0359.

SUPPLEMENTARY INFORMATION: Notice is hereby given that on October 13, 
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 heating boilers which may be offered to the U.S. 
Government under an undesignated procurement contract. This final 
determination, in HQ H119218, was issued at the request of Camus 
Hydronics Ltd. 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 heating boilers, assembled in 
Canada from parts made in the United States, Canada, and France, are 
substantially transformed 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, Customs 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 13, 2010.
Sandra L. Bell,
Executive Director, Regulations and Rulings, Office of International 
Trade.

Attachment

 HQ H119218
October 13, 2010
OT:RR:CTF:VS H119218
Ms. Regina Vargo
Greenberg Traurig, LLP
2101 L Street NW, Suite 1000
Washington, D.C. 20037
Re: U.S. Government Procurement; Heating Boilers
Dear Ms. Vargo:
    This is in response to your letter, dated August 3, 2010, 
requesting a final determination on behalf of Camus Hydronics Ltd. 
(Camus) of Ontario, Canada, pursuant to subpart B of 19 C.F.R. part 
177.
    Under these regulations, which implement Title III of the Trade 
Agreements Act of 1979, as amended (19 U.S.C. 2511 et seq.), U.S. 
Customs and Border Protection (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 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 heating boilers. We note that Camus 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 as the manufacturer of these 
boilers under 19 C.F.R. 177.23(a).

FACTS:

    This case involves the Camus DynaFlame, DynaForce, and DynaMax 
heating boilers fabricated and assembled in Canada from sheet metal 
and components primarily of United States (U.S.), Canadian, and (in 
the case of the DynaMax) French origin. All three boilers go through 
both a sub-assembly stage and an assembly stage in Canada, as well 
as testing, quality control, and packaging. A bill of materials was 
submitted with your request.

[[Page 65024]]

DynaFlame Boilers

    The DynaFlame boiler is composed of 65 separate components. Of 
these, 22 are fabricated in Canada from sheet metal imported from 
the U.S. Most of the finished components, including the burner, 
headers, and controls, are also of U.S. origin. The fabrication 
process includes, among other things, shearing the flat stock to the 
required size; utilizing punch presses, tools, and dies; bending and 
welding the steel; and painting the steel components.
    Four sub-assembly processes then occur in Canada; these include 
the assembly of the heat exchanger, the gas train, electronics and 
controls, and the combustion fan. Assembly of the heat exchanger 
requires, among other things, cutting copper finned tube to specific 
lengths, adjusting the tube to the required specifications, 
inserting the tubes into the headers, inserting and attaching a 
number of other components, and hydro testing the heat exchanger. 
The copper tubes used to make the heat exchanger are of U.S. origin. 
The gas train assembly requires fitting the components together by 
threading the components with nipples and fittings, and then 
painting all the pipe black. Assembly of the electronics and 
controls requires installing and wiring the components together, and 
programming certain aspects of the control box. The combustion fan 
is assembled by separating the fan housing, installing the 
components, and then reassembling the housing.
    The four sub-assemblies, along with the fabricated sheet metal 
parts and various other components, are then assembled into a 
finished DynaFlame boiler. Final assembly consists of, among other 
things, installing, wiring, and fastening the sub-assemblies to each 
other and the remaining components.

DynaForce Boilers

    The DynaForce boiler contains almost 60 separate components. Of 
these, 18 are fabricated in Canada from sheet metal imported from 
the U.S. The sheet metal fabrication process for the DynaForce is 
the same as that for the DynaFlame. The heat exchanger is purchased 
already assembled from a Canadian supplier, and is assembled in 
Canada from U.S. origin stainless steel plates and tubes. The 
burner, controls, and fan kit are some of the U.S. origin 
components.
    Like with the DynaFlame, the DynaForce goes through both a sub-
assembly stage and an assembly stage. The sub-assembly stage has 
three processes: the gas train, electronics and controls, and the 
combustion fan. The assemblies of the gas train, electronics and 
controls, and the combustion fan for the DynaForce are very similar 
to those for the DynaFlame.
    The three sub-assemblies, the heat exchanger, the fabricated 
components of sheet metal, and the remaining parts are then 
assembled to create the finished DynaForce boiler.

DynaMax Boilers

    The DynaMax boiler contains over 50 separate components. Of 
those, 21 are fabricated in Canada from U.S. originating sheet 
metal. The fabrication process for the sheet metal is the same for 
the DynaMax as it is for the DynaFlame and DynaForce. The heat 
exchanger (along with the burner) is imported into Canada from 
France. The controls, sensors, fan, and pump are some of the 
components of U.S. origin.
    As with the other two boilers, the DynaMax has both a sub-
assembly stage and an assembly stage. The sub-assembly stage is 
composed of three sub-assembly processes: the heat exchanger, 
electronics and controls, and the plate exchanger. Although the heat 
exchanger is imported from France, it undergoes additional assembly 
in Canada. The heat exchanger sub-assembly consists of, among other 
things, inspection, attaching the pump, installing the burner and 
ignition, and testing the heat exchanger. Assembly of the plate 
exchanger requires selecting the required plate exchanger, attaching 
the fittings and labeling the fittings.
    These three sub-assemblies are then assembled together with the 
fabricated components of sheet metal, the combustion fan, the gas 
train, and various other parts to become the finished DynaMax 
boiler.

ISSUE:

    What is the country of origin of the subject boilers for the 
purpose 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 as to 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 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 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, 573 F. Supp. 1149 (Ct. Int'l Trade 1983), 
aff'd, 741 F.2d 1368 (Fed. Cir. 1984). 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, C.S.D. 89-110, C.S.D. 89-118, C.S.D. 90-51, and 
C.S.D. 90-97. Whether an operation is complex and meaningful depends 
on the nature of the operation, including the number of components 
assembled, number of different operations, time, skill level 
required, attention to detail, quality control, the value added to 
the article, and the overall employment generated by the 
manufacturing process.
    The courts and CBP have also considered the essential character 
of the imported article in making these determinations. See 
Uniroyal, Inc. v. United States, 542 F. Supp. 1026, 3 CIT 220, 224-
225 (1982) (where it was determined that imported uppers were the 
essence of a completed shoe) and National Juice Products 
Association, et al v. United States, 628 F. Supp. 978, 10 CIT 48, 61 
(1986) (where the court addressed each of the factors (name, 
character, and use) in finding that no substantial transformation 
occurred in the production of retail juice products from 
manufacturing concentrate).
    In order to determine whether a substantial transformation 
occurs when components of various origins are assembled into 
completed products, CBP considers the totality of the circumstances 
and makes such determinations on a case-by-case basis. The country 
of origin of the item's components, extent of the processing that 
occurs within a country, and whether such processing renders a 
product with a new name, character, and use are primary 
considerations in such cases. Additionally, factors such as the 
resources expended on product design and development, extent and 
nature of post-assembly inspection and testing procedures, and 
worker skill required during the actual manufacturing process will 
be considered when determining whether a substantial transformation 
has occurred. No one factor is determinative.
    In Headquarters Ruling Letter (``HRL'') 555532 (September 18, 
1990), Customs held that electric and gas water heaters imported 
from Mexico were a product of Mexico. The Mexican manufacturer 
fabricated the shell with rolled steel from the U.S. and then 
assembled the fabricated shell with other components of the water 
heater, many of which were of U.S. origin. This is very similar to 
the process used by Camus in this case. Camus uses U.S. originating 
sheet metal to fabricate many parts, such as the boiler shell, and 
then assembles U.S., Canadian, and (in the case of the DynaMax) 
French originating components to create the completed boilers.
    In HRL 561450 (April 14, 2000), a home espresso machine 
assembled in Italy from over 60 components from both Spain and Italy 
was considered to be a product of Italian origin. The assembly of 
the components was found to be a substantial transformation 
resulting in a new commercial product with a new name, character and 
use. Similarly, the assembly of the U.S., Canadian, and French 
components for the boilers involves at least 50 components. The 
assembly results in an article with a new name, character and use 
from that of the individual components--a boiler.
    All three boilers undergo a substantial amount of work in 
Canada, from the fabrication of the sheet metal into components, the 
assembly of parts into subassemblies, and the final assembly--
combining the subassemblies and the

[[Page 65025]]

remaining components into the finished boilers. The number of 
components, the least of which being 50, is a meaningful assembly of 
individual components into the finished boilers. Although some of 
the more expensive parts are not of Canadian origin, no one part 
could function or run the boiler without the others.
    Therefore, based on the totality of the circumstances in this 
case, we find that the Canadian processing results in a substantial 
transformation of the components and that the DynaFlame, DynaForce, 
and DynaMax boilers should be considered products of Canada for the 
purpose of U.S. Government procurement.

HOLDING:

    Based on the facts of this case, the country of origin of the 
Camus DynaFlame, DynaForce, and DynaMax heating boilers is Canada 
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 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,
    Sandra L. Bell
    Executive Director
    Office of Regulations and Rulings
    Office of International Trade
[FR Doc. 2010-26649 Filed 10-20-10; 8:45 am]
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