[Federal Register Volume 76, Number 74 (Monday, April 18, 2011)]
[Notices]
[Pages 21775-21778]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-9327]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning Certain 
Office Workstations

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 office workstations. Based upon the facts 
presented, CBP has concluded in the final determination that the U.S. 
is the country of origin of the office workstations for purposes of 
U.S. government procurement.

DATES: The final determination was issued on April 11, 2011. 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 May 18, 2011.

FOR FURTHER INFORMATION CONTACT: Elif Eroglu, Valuation and Special 
Programs Branch: (202) 325-0277.

SUPPLEMENTARY INFORMATION: Notice is hereby given that on April 11, 
2011, 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 Vivo and Ethospace office workstations which 
may be offered to the U.S. Government under an undesignated government 
procurement contract.
    This final determination, Headquarters Ruling Letter (``HQ'') 
H134536, was issued at the request of Herman Miller, 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. 
2511-18). In the final determination, CBP has concluded that, based 
upon the facts presented, the assembly of the Vivo and Ethospace office 
workstations in the U.S., from parts made in China, Mexico, and the 
U.S., constitutes a substantial transformation, such that the U.S. 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: April 11, 2011.
Sandra L. Bell,
Executive Director, Regulations and Rulings, Office of International 
Trade.

Attachment

HQ H134536

April 11, 2011

OT:RR:CTF:VS H134536 EE

CATEGORY: Marking

Lisa A. Crosby, Sidley Austin, LLP, 1501 K Street, NW., Washington, 
D.C. 20005

RE: U.S. Government Procurement; Title III, Trade Agreements Act of 
1979 (19 U.S.C. Sec.  2511); Subpart B, Part 177, CBP Regulations; 
Office Workstations

    Dear Ms. Crosby: This is in response to your correspondence of 
November 15, 2010, supplemented by your letter of March 10, 2011, 
requesting a final determination on behalf of Herman Miller, Inc. 
(``Herman Miller''), pursuant to subpart B of part 177, U.S. Customs 
and Border Protection (``CBP'') Regulations (19 C.F.R. Sec.  177.21 
et seq.). Under the pertinent regulations, which implement 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.
    This final determination concerns the country of origin of the 
Vivo and Ethospace office workstations. We note that Herman Miller 
is a party-at-interest within the meaning of 19 C.F.R. Sec.  
177.22(d)(1) and is entitled to request this final determination.

FACTS:

    Herman Miller is a U.S. supplier of furniture products and 
accessories for home, office, healthcare and learning environments. 
The merchandise at issue is Herman Miller's Vivo and Ethospace 
office workstations. You state that Herman Miller engineered and 
designed the office workstations wholly within the U.S. The assembly 
and installation of the office workstations, from U.S. and imported 
components, occurs in the U.S.
    You state that the Vivo and Ethospace office workstations both 
feature ``frame-and-tile'' construction, which consists of a sturdy 
steel frame on which a variety of components can be hung, including 
shelving, storage units, drawer units, work surfaces, lighting, 
decorative tiles/panels, etc. The open frame also has a large 
capacity to house wiring and cable, permitting a workstation to 
accommodate computers, printers and other office equipment.
    You state that the Vivo and Ethospace office workstations can be 
assembled in a

[[Page 21776]]

variety of configurations, depending on the needs and constraints of 
a given office space. Herman Miller offers 90-, 120-, and 135-degree 
connectors for its workstations which permit its customers to shape 
their office environment--enclosed, open, facing in, facing out, 
shared, private, etc. The height of a workstation can also vary from 
30 to 118 inches, permitting different levels of privacy.
    You state that Herman Miller's sales representatives, which are 
often independent distributors, work directly with each customer to 
design a workstation architecture best suited to the specific office 
space. Once a design decision has been made, Herman Miller receives 
from its sales representative a detailed order identifying each 
component that will be used in the custom workstation. Herman Miller 
operates on a make-to-order manufacturing schedule; therefore, when 
an order is received from a sales representative, Herman Miller 
orders from its supply chain the parts and components necessary to 
begin the manufacturing process. Herman Miller manufactures certain 
components as necessary and palletizes all of the components for 
shipment to a customer site in the U.S. At the customer site, the 
components are assembled together according to the custom design. 
Herman Miller does not permit its customers to purchase workstations 
for self-installation. Rather, trained furniture installers employed 
by Herman Miller's distributors/representatives install the 
workstations.
    You state that depending on the specific configuration selected 
by a customer, a Vivo and Ethospace office workstation can be made 
up of hundreds of components, including metal frames, laminated work 
surfaces, painted or fabric tiles, cabinet doors, electrical 
accessories and other hardware. With respect to the two 
representative configurations identified for purposes of this ruling 
request, you state that the Vivo office workstation has 
approximately 40 components (excluding fasteners and brackets) and 
the Ethospace office workstation has approximately 14 components 
(excluding fasteners and brackets). All of the materials are of 
U.S., Chinese, or Mexican origin.
    You submitted the costed bills of materials for the 
representative Vivo office workstation and the Ethospace office 
workstation. The Vivo workstation's components from China include: 
connectors, connection hardware, and surface cantilevers. The 
components from Mexico include: a power harness extender, power 
harnesses, and receptacles. Components originating in the U.S. 
include: frames, connector covers, top cap connectors, finished 
ends, tiles, work surfaces, open supports, sliding door storage 
units, utility task lights, v-pull freestanding pedestals, and v-
pull freestanding lateral files. The Ethospace workstation's 
components from China are draw rods. The components from the U.S. 
include: tiles, frames, connectors, finished ends, work surfaces, a 
flipper door unit, a shelf, task lights, and a w-pull support 
pedestal. The installation times for the representative Vivo and 
Ethospace workstations are approximately seven and a half hours and 
seven hours, respectively. Of the total cost of production for the 
Vivo workstation, 83 percent is attributable to U.S. origin costs, 
including materials, labor, and overhead. Of the total cost of 
production for the Ethospace workstation, 98 percent is attributable 
to U.S. origin costs.
    You state that Herman Miller self-manufactures many of the 
components used in its workstations at its Michigan facility. For 
example, with respect to the work surfaces used in its workstations, 
Herman Miller staff cut-to-size domestically-sourced raw particle 
board and then bond to each board a high pressure laminate top, a 
backer and edge bands. With respect to the frames, Herman Miller 
staff roll form rolled steel (coils) from a domestic source into 
rails and stiles, which are then welded together using a special 
fixture to form the frames for its workstations. Staff then apply an 
autophoretic coating to the frames (requiring five stages) and 
attach glides to the bottoms of the frames. Herman Miller staff also 
manufacture the tiles used in workstations, using U.S.-origin raw 
materials.
    You state that the installation procedures for the Vivo and 
Ethospace office workstations are substantially similar. The first 
step in installing a workstation is to mark the perimeter for the 
workstation based on its layout. This is done by laying strips of 
tape on the ground in the form of the layout for the walls. Next, 
electrical and non-electrical wall bases are laid along the tape 
lines. The electrical bases are then wired, which entails running 
wires along the bases and connecting the wires to a power source and 
the electrical outlets in the bases.
    Once the bases are in place, the frames for the wall panels, 
windows and other features of the workstation are installed. The 
frames are fitted on top of the bases and secured with brackets and 
hand-driven screws. As the frames are inserted, the electrical 
wiring is run through the interior of the frame as needed to 
accommodate the location of the power source.
    The wall panels, windows and other special tiles are then 
installed in the bases and frames. The bottom of a wall panel is 
inserted into the slot of a base and the slots of the surrounding 
frame. This step is repeated until all of the wall panels are joined 
to their corresponding bases and frames. In some cases, a half-sized 
wall panel is used so that a window or special tile may be installed 
above it. A window/tile is attached to a half-size wall panel and 
the corresponding frame using brackets, hand-driven screws and other 
fasteners. This step is repeated until all wall panels and windows/
tiles are securely connected.
    Next, the frame connectors of the workstation are assembled. The 
connectors are slid into the frames. They are then secured with 
hand-driven screws and other fasteners. This step is repeated until 
all of the frames are connected.
    The tops of the wall panels are then finished. This involves 
fastening caps and top plates to the top of each wall panel to 
eliminate rough edges. These items are then secured with hand-driven 
screws and other fasteners.
    With the structure of the office workstation thus in place, the 
work surface is installed next. Brackets are mounted on the relevant 
panels and secured with hand-driven screws and other fasteners. The 
work surface is then placed on the brackets, adjusted to ensure that 
it is level, and secured with hand-driven screws and other 
fasteners. Open supports are added to either side of the work 
surface to enhance stability. They are secured to the work surface 
with hand-driven screws and other fasteners.
    Shelves, flipper units, and sliding door storage units are then 
added to the office workstation in a similar manner. Brackets are 
first fitted and secured into place with hand-driven screws and 
other fasteners. Then, the shelves, flipper units and storage units 
are placed onto the brackets, leveled, and secured with hand-driven 
screws and other fasteners.
    The bookcase is installed next by sliding it beside the relevant 
wall panels and ensuring that it is level. The leg glides are 
adjusted as necessary. A drawer handle also is added to the bookcase 
and installed using hand-driven screws.
    You provided a copy of the product datasheets for the Vivo and 
Ethospace office workstations as well as photos of the 
representative configurations for a Vivo office workstation and an 
Ethospace office workstation. Additionally, you provided a copy of 
the design materials, the list of patents applicable to the Vivo and 
Ethospace office workstations, a video which depicts the 
installation procedures for the Vivo and Ethospace office 
workstations, the overview of Herman Miller's installation 
certification program, the installation procedures, and a breakdown 
of the time typically required to install the representative Vivo 
and Ethospace workstations.

ISSUES:

    1) What is the country of origin of the Vivo and Ethospace 
office workstations for the purpose of U.S. government procurement?
    2) Whether Herman Miller is the ultimate purchaser of the 
imported components and whether only their outermost container needs 
to be marked.

LAW AND ANALYSIS:

Government Procurement

    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 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

[[Page 21777]]

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 Acquisition 
Regulations. See 19 C.F.R. Sec.  177.21. In this regard, CBP 
recognizes that the Federal Acquisition 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 
C.F.R. Sec.  25.403(c)(1). The Federal Acquisition 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 C.F.R. Sec.  25.003.
    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 the 
degree of skill required during the actual manufacturing process may 
be relevant when determining whether a substantial transformation 
has occurred. No one factor is determinative.
    In Carlson Furniture Industries v. United States, 65 Cust. Ct. 
474 (1970), the U.S. Customs Court ruled that U.S. operations on 
imported chair parts constituted a substantial transformation, 
resulting in the creation of a new article of commerce. After 
importation, the importer assembled, fitted, and glued the wooden 
parts together, inserted steel pins into the key joints, cut the 
legs to length and leveled them, and in some instances, upholstered 
the chairs and fitted the legs with glides and casters. The court 
determined that the importer had to perform additional work on the 
imported chair parts and add materials to create a functional 
article of commerce. The court found that the operations were 
substantial in nature, and more than the mere assembly of the parts 
together.
    In Headquarters Ruling Letter (``HQ'') 561258, dated April 15, 
1999, CBP determined that the assembly of numerous imported 
workstation components with the U.S.-origin work surface, the 
essential and largest component of the workstation, into finished 
workstations constituted a substantial transformation. CBP found 
that the imported components lost their identity as leg brackets, 
drawer units, panels, etc. when they were assembled together to form 
a workstation.
    In the instant case, the Vivo office workstation has 
approximately 40 components and the Ethospace office workstation has 
approximately 14 components which are proposed to be assembled in 
the U.S. Regarding both types of workstations, we note that the 
major components such as the work surfaces, the frames, and the 
tiles are of U.S. origin. Regarding the Vivo workstation, the U.S.-
sourced frames, connector covers, top cap connectors, finished ends, 
tiles, work surfaces, open supports, sliding door storage units, 
utility task lights, v-pull freestanding pedestals, and v-pull 
freestanding lateral files will be assembled with the imported 
components which will take approximately seven and a half hours. 
Regarding the Ethospace workstation, the U.S.-sourced tiles, frames, 
connectors, finished ends, work surfaces, flipper door unit, shelf, 
task lights, and w-pull support pedestal will be assembled with the 
imported components which will take approximately seven hours. Under 
the described assembly process, we find that the foreign components 
lose their individual identities and become an integral part of a 
new article, the Vivo or the Ethospace office workstation, 
possessing a new name, character and use. Based upon the information 
before us, we find that the imported components that are used to 
manufacture the Vivo and the Ethospace office workstations, when 
combined with the U.S. origin components, are substantially 
transformed as a result of the assembly operations performed in the 
U.S., and that the country of origin of the Vivo and the Ethospace 
office workstations for government procurement purposes is the U.S.

Marking

    Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 
Sec.  1304), provides that unless excepted, every article of foreign 
origin imported into the United States shall be marked in a 
conspicuous place as legibly, indelibly, and permanently as the 
nature of the article (or its container) will permit, in such a 
manner as to indicate to the ultimate purchaser in the United 
States, the English name of the country of origin of the article. 
Congressional intent in enacting 19 U.S.C. Sec.  1304 was ``that the 
ultimate purchaser should be able to know by an inspection of the 
marking on the imported goods the country of which the goods is the 
product. The evident purpose is to mark the goods so that at the 
time of purchase the ultimate purchaser may, by knowing where the 
goods were produced, be able to buy or refuse to buy them, if such 
marking should influence his will.'' States v. Friedlander & Co., 27 
C.C.P.A. 297 at 302; C.A.D. 104 (1940). Part 134, U.S. Customs and 
Border Protection (CBP) Regulations (19 C.F.R. Sec.  134) implement 
the country of origin marking requirements and exceptions of 19 
U.S.C. Sec.  1304. Section 134.1(b), CBP Regulations (19 C.F.R. 
Sec.  134.1(b)), defines ``country of origin'' as:

    [T]he country of manufacture, production, or growth of any 
article of foreign origin entering the United States. Further work 
or material added to an article in another country must effect a 
substantial transformation in order to render such other country the 
``country of origin'' within the meaning of [the marking 
regulations] * * *

    As previously noted, in HQ 561258, dated April 15, 1999, CBP 
considered the country of origin marking requirements for certain 
workstation office furniture. In that case, the importer 
manufactured office workstation furniture in the U.S. using various 
components that were manufactured by its subsidiary in Italy. The 
Italian components were combined with the work surfaces made in the 
U.S., shipped to the customer's site, and assembled by the 
importer's installers into finished workstations. Additionally, some 
of the Italian components were shipped to the importer and kept in 
stock to replace damaged or lost material. These replacement parts 
were kept in their original individual packing until they were 
required to be shipped to a customer. CBP determined that the 
assembly of the imported components with the U.S.-origin work 
surface into the finished workstations resulted in a substantial 
transformation and that provided the importer installed and 
assembled the components together, the importer would be the 
ultimate purchaser and it would be acceptable to only mark the outer 
shipping crate in which the foreign components were imported.
    Similarly in this case, we find that Herman Miller is the 
ultimate purchaser since Herman Miller (or its distributor/
representative) substantially transforms the imported components as 
a result of installation at the customer's site. Accordingly, it is 
acceptable only to mark the outside shipping crate in which the 
goods are imported and transported to Herman Miller. With regard to 
the replacement parts, provided they are also installed by Herman 
Miller (or its distributor/representative), only the outer original 
individual packing needs to be marked. However, if the customer 
itself is supplied with the replacement parts and performs the 
installation, they must receive these replacement parts in properly 
marked packing.

HOLDING:

    The imported components that are used to manufacture the Vivo 
and Ethospace office workstations are substantially transformed as a 
result of the assembly operations performed in the U.S. Therefore, 
we find that the country of origin of the Vivo and Ethospace office 
workstations for government procurement purposes is the U.S. 
Provided Herman Miller installs and assembles the components 
together, Herman Miller is the ultimate purchaser and it will be 
acceptable to only mark the outer shipping crate in which the 
foreign components are imported.
    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 after publication of the Federal Register notice 
referenced above, seek judicial review of this final determination 
before the Court of International Trade.


[[Page 21778]]


 Sincerely,

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

[FR Doc. 2011-9327 Filed 4-15-11; 8:45 am]
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