[Federal Register Volume 76, Number 100 (Tuesday, May 24, 2011)]
[Notices]
[Pages 30180-30182]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-12713]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning Pocket 
Projectors

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 pocket projectors. CBP was asked to consider two 
manufacturing scenarios, under which certain operations would be 
performed in Taiwan or in China. Based upon the facts presented, CBP 
has concluded that the manufacturing and testing operations performed 
in Taiwan do not substantially transform the non-TAA country 
components. The light engine module and the PCBA main board are the 
essence of the projectors and it is at their production where the last 
substantial transformation occurs. Therefore, when the light engine 
module and PCBA main board module are assembled and programmed in 
China, the country of origin of the projectors is China for purposes of 
U.S. government procurement. However, if the light engine module and 
PCBA main board module are assembled and programmed in Taiwan, then the 
country of origin of the projectors is Taiwan for purposes of U.S. 
government procurement.

DATES: The final determination was issued on May 18, 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 June 23, 2011.

FOR FURTHER INFORMATION CONTACT: Heather K. Pinnock, Valuation and 
Special Programs Branch: (202) 325-0034.

SUPPLEMENTARY INFORMATION: Notice is hereby given that on May 18, 2011, 
pursuant to subpart B of part 177, U.S. Customs and Border Protection 
Regulations (19 CFR part 177, subpart B), CBP issued a final 
determination concerning the country of origin of pocket projectors 
which may be offered to the U.S. Government under an undesignated 
government procurement contract. This final determination, HQ H114395, 
was issued 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 manufacturing and testing 
operations performed in Taiwan do not substantially transform the non-
TAA country components of the projectors. The light engine module and 
the PCBA main board are the essence of the projector and it is at their 
production where the last substantial transformation occurs. Therefore, 
when the light engine module and PCBA main board module are assembled 
and programmed in China, the country of origin of the projectors is 
China for purposes of U.S. government procurement. However, if the 
light engine module and PCBA main board module are assembled and 
programmed in Taiwan, then the country of origin of the projectors is 
Taiwan for purposes of U.S. government procurement.
    Section 177.29, CBP Regulations (19 CFR 177.29), provides that a 
notice of final determination 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: May 18, 2011.
Sandra L. Bell,
Executive Director, Regulations and Rulings, Office of International 
Trade.

Attachment.

HQ H114395

May 18, 2011

CLA-2 OT:RR:CTF:VS H114395 HkP

CATEGORY: Marking

Munford Page Hall, Esq.
William C. Sjoberg, Esq.
Adduci, Mastriani & Schaumberg LLP, 1200 Seventeenth Street, NW, 
Washington, DC 20036

RE: Request for Final Determination on the Country of Origin of 
Pocket Projectors

Dear Mr. Hall and Mr. Sjoberg:

    This is in response to your letter dated July 6, 2010, 
requesting a final determination on behalf of a U.S. importer, 
pursuant to subpart B of part 177 of the U.S. Customs and Border 
Protection (CBP) Regulations (19 C.F.R. Part 177). Under these 
regulations, which implement Title III of the Trade Agreements Act 
of 1979 (TAA), 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.
    This final determination concerns the country of origin of a 
pocket projector. We note that the U.S. importer 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. In reaching our 
decision we have taken in account additional information submitted 
to this office on September 27, 2010.

FACTS:

    According to the information submitted, the pocket projector is 
a 1.97'' x 0.59'' x 4.06'', four ounce, digital light processing 
(DLP) projector that uses light emitting diodes (LEDs) as its light 
source to project photos and videos from mobile devices onto any 
surface. It can produce an image size of up to 60 inches.
    The projector is partly comprised of the following components.

Components of Taiwanese origin are:

    (1) A digital micromirror device (DMD) (an optical 
semiconductor; an extremely precise light switch that enables light 
to be modulated digitally via millions of microscopic mirrors 
arranged in a rectangular array. Each mirror is spaced less than 1 
micron apart);
    (2) A Digital Photonic Processor (DPP) 1505 chip that drives the 
DMD and stores image data;
    (3) An Electrically Erasable Programmable Read-Only Memory 
(EEPROM) chip (PROM 1505 chip);
    (4) Light emitting Diodes (LEDs);
    (5) Lenses that control light for each designated location;
    (6) A printed circuit board assembly integrated circuit (PCBA-
IC);

[[Page 30181]]

    (7) PCBs for the main board and DMD board; and,
    (8) The battery.
    In addition, two types of firmware are developed in Taiwan. The 
first type of firmware is made up of four categories of data, 
developed in either the U.S or Taiwan, that are programmed into the 
EEPROM: (1) The startup logo image that is projected on the screen 
when the projector is turned on (developed in Taiwan), (2) test 
patterns that are projected on the screen to determine whether the 
projector meets specifications (developed in the USA), (3) red/
green/blue (RGB) LED duty cycle settings (developed in the USA), and 
(4) the Gamma table, which affects the voltage-to-light intensity of 
the RGB LEDs (developed in the USA), compiled into one binary file. 
The second type of firmware is designed and written in Taiwan. It is 
stored in a flash memory chip mounted on the PCBA main board and is 
accessed by the video display controller, also on the main board. 
Once the projector is operational, the memory chip will send the 
information in its file to the processor, i.e., the DPP 1505 chip 
that drives the DMD chip, as well as to the thermal thermistor and 
to the audio processor.

Components of Chinese origin are:

    (1) The projecting lens;
    (2) Mirrors;
    (3) Parts related to electrical function (e.g., ICs capacitors, 
resistors, inductors and transistors).
Components of Japanese origin are:

    (1) The fly eyes, a lens array which provides light uniformity; 
and
    (2) PCBA ICs.

Components of Thai, U.S., Korean, and Malaysian origin are:

    PCBA ICs.
    In the first scenario we have been asked to consider, the PCBA-
ICs from Japan, Thailand, the U.S., Korea, and Malaysia, and fly 
eyes from Japan will be shipped to China. Some Taiwanese origin 
components (DMDs, DPP 1505 chips, EEPROMs, LEDs, and lenses) will 
also be shipped to China to be assembled with Chinese-origin 
components (PCBs, projecting lenses, mirrors, and mechanical parts), 
the ICs, and fly eyes to make modules for the light engine and the 
PCBA main board. In China, both types of Taiwanese firmware for 
operating the projector will also be downloaded to memory chips 
located on the light engine and PCBA main board modules. The modules 
assembled in China will then be shipped to Taiwan where they will 
undergo quality inspections.
    In the second scenario, the PCBA-ICs from Japan, Thailand, the 
U.S., Korea, and Malaysia, and fly eyes from Japan will be shipped 
to Taiwan. The assembly and programming operations that take place 
in China, described in the first scenario, will all be performed in 
Taiwan.
    The next process occurs only in Taiwan, regardless of whether 
the processes described above are performed in China or Taiwan. A 
top cover, high viscosity protection film, transparent LED lens, top 
graphite plate, two thermal pads, a slide switch, inside and outside 
lens covers, an anti-dust sponge, and a screw, will be assembled to 
form the ``top cover module.'' A bottom cover, battery pull tape, 
EMI mylar cover, and graphite plate will be assembled to form the 
``bottom cover module.'' The engine module and the PCBA main board 
subassemblies imported from China will then be assembled with the 
top and bottom cover modules, as well as with components such as a 
focus ring, washer, screws, audio-video connector and battery 
covers, rubber feet, and a speaker, to create a complete pocket 
projector. Assembly processes in Taiwan include gluing, screwing, 
fitting and inserting, and adhering by electrostatic means.
    The finished projector will undergo a series of tests in Taiwan: 
A pre-test, a run-in test, and a function test. The pre-test 
consists of: ensuring that the projector has the correct current 
value; using a programmable video pattern generator to check the 
projected logo, firmware version and model name while the projector 
is in Service Mode; and, if necessary, updating (reprogramming) the 
firmware installed in China. The run-in test ensures that the 
projector displays a clear image over a set period of time, and is 
conducted by manipulating the focus ring and making menu selections 
on the projector while it is in Service Mode. The function test 
involves: Checking resolution, flare, unbalance, gray scale, color 
uniformity, projection image, and white pattern; connecting the 
projector to a programmable video pattern generator to check the 
master pattern for abnormal image and color lines; audio testing 
using a DVD player; verifying battery charge/discharge by inserting 
a fully charged battery into the projector to ensure that the 
projector works; using a light meter to measure brightness, color 
uniformity, contrast ratio, and color coordinate; using menu 
selections while in Service Mode to double check model name, 
firmware version and run-in time; and, if necessary, using menu 
selections while in Service Mode to adjust the color parameter of 
the firmware on the PCBA main board to optimize the projection 
image.
    After the projector passes the function test, it will be sent to 
the packing department where it will be packaged with an accessory 
kit, a user manual, a warranty and other product literature.

ISSUE:

    What is the country of origin of the pocket projector for 
purposes of U.S. government procurement?

LAW AND ANALYSIS:

    Pursuant to Subpart B of Part 177, 19 CFR 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 
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.
    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, the 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.
    You argue that, regardless of where assembly and programming 
operations take place, Taiwan is the country of origin of the 
projector because Taiwan is the location where the following actions 
occur: design and development of the projector, including the PCBA 
used in the projector; addition of the majority of value of the 
projector, both in terms of value and labor; fabrication of many of 
the parts, including the DMD, the DPP 1505 chip, the PROM 1505 chip 
and the LEDs; development of the firmware; the disparate parts are 
enabled and made into a functional projector; testing and 
adjustments; and, packing. In support of your argument you cite 
Headquarters Ruling Letters (HQ) H100055 (May 28, 2010), HQ H034843, 
(May 5, 2009), HQ H015324 (April 23, 2008), and HQ 555578 (June 11, 
1990), among others.
    HQ H100055 concerned the country of origin of a motorized lift 
unit, designed, developed and engineered in Sweden, for an overhead 
patient lift system. The unit was assembled by teams of employees in 
a four segment process: manufacturing the electrical motor, drum and 
motor package in a 17 step process; mounting batteries and 
installing the exterior covers of the drum/motor assembly in a 5-
step process; connecting a PCBA to the motor, housed drum and 
batteries in a three-step process; and, assembling the emergency 
strap, cover and end caps in a 14-step process. The PCBA was 
assembled and programmed prior to its importation in

[[Page 30182]]

Sweden but it was designed in Sweden and its software program was 
written in Sweden. In addition the completed lift unit was tested in 
Sweden by an accredited testing institute. CBP found that the 
manufacturing and testing operations in Sweden were sufficiently 
complex and meaningful to transform the individual components into 
the lift unit, thereby making Sweden the country of origin of the 
unit.
    HQ H034843 concerned the country of origin of a USB flash drive 
partially manufactured in China and in Israel or the United States. 
Assembly took five minutes to complete and involved six 
manufacturing steps: Initial quality control, component mounting; 
device housing; software installation and customization; system 
diagnosis and testing; and packaging. The first three steps took 
place in China and the last three in Israel or the United States. 
CBP concluded that there was a substantial transformation either in 
Israel or in the United States, depending on the location where the 
final three manufacturing operations took place. You refer to the 
fact that in reaching our decision, CBP noted that the installation 
of the firmware and the application software (developed in Israel) 
made the flash drive functional and executed its security features, 
and that their installation and customization greatly increased the 
value of the flash drive.
    In HQ H015324, CBP was asked to determine the country of origin 
of stereoscopic displays assembled in the U.S. from non-U.S. parts. 
The displays consisted of two LCD monitors, from China or Taiwan, 
mounted in a custom-made stand with a special beamsplitter mirror 
mounted at a bisecting angle between the two monitors. A graphics 
card in the computer transmitted right eye and left eye video 
separately. The importer would send one of the monitors to a third-
party in the U.S. for an optical transformation process, after which 
the displays would be assembled, aligned and tested. CBP found that 
the processing and assembly operations in the U.S. resulted in a 
substantial transformation of the imported LCD monitors and the 
beamsplitter mirror into a product with a new name, character and 
use. In particular, we found that the polarization process performed 
in the U.S. changed the essential character of the LCD and imparted 
the stereoscopic functionality to the entire system. In addition, 
the assembly, testing and alignment of the display required a 
significant amount of time and precision by skilled technicians.
    In HQ 555578, overhead projectors were produced in Haiti from 
components of Belgian and U.S. origin, as well as from parts 
fabricated in Haiti. CBP concluded that the operations performed in 
Haiti constituted more than a simple combining operation and 
resulted in a new and different article of commerce with a new name, 
character and use.
    In this case, PCBs, memory chips, the DPP chip, integrated 
circuits, lenses, and LEDs from Taiwan; mirrors, the projecting 
lens, and various mechanical parts, including those relating to 
electrical function, from China; fly eyes and ICs from Japan; and, 
ICs from Thailand, the United States, Korea, and Malaysia, are 
assembled into the light engine module and the PCBA main board 
module in China or Taiwan. Through these operations, the individual 
parts lose their identities and become integral to the new and 
different articles. See Belcrest Linens. If these operations take 
place in China, the first scenario, then the country of origin would 
be China. If they take place in Taiwan, the second scenario, then 
the country of origin of the modules would be Taiwan. See HQ H015324 
and HQ 555578.
    After carefully considering the pertinent facts, we find that 
the assembly of the light engine module and the PCBA main board 
module, although not described to us, by their nature should include 
attaching active and passive as well as other components to a bare 
printed circuit board by soldering, gluing and other means, and is 
technically complex. Further, the light engine module and the PCBA 
main circuit board have all the major components necessary for the 
pocket projector to complete its function. These components are: the 
DMD, the processor chip that drives the DMD, the EEPROM chip 
programmed with firmware, and other ICs; lenses; and mirrors. See 
generally, How DLP Projectors Work, wwwgizmohighway.com/hifi/dlp_projector.htm (last accessed Nov. 9, 2010). Therefore, we find that 
the light engine module and PCBA main board manufactured in China or 
Taiwan impart the essential character of the projector.
    If the light engine module and PCBA main board module are 
assembled and programmed in China then, upon importation into 
Taiwan, the Chinese modules are joined together with a cable and 
then fitted into the top and bottom covers of the projectors made in 
Taiwan, which are then screwed and/or glued together. All together, 
the assembly, testing, and packaging operations in Taiwan consist of 
80 steps and take approximately 2 hours and 20 minutes to complete. 
Applying the principle in Belcrest Linens, we find that the fit-
together, glue and screw operations undertaken in Taiwan are not 
sufficiently complex and meaningful to transform the Chinese 
modules, which are the essence of the projector, into a new article 
with a new name, use and identity. Moreover, the Taiwanese 
subassemblies, the top and bottom covers of the projectors, are not 
necessary for the projector to function. In addition, the testing 
performed in Taiwan merely consists of turning on and running the 
projector and adjusting its preprogrammed menu selections. Based on 
these facts, we find that the last country where a substantial 
transformation occurs is China. Therefore, the country of origin of 
the projectors is China. If, however, the light engine module and 
PCBA main board module are assembled and programmed in Taiwan, then 
the country of origin would be Taiwan.
    We note that HQ H034843 is distinguishable from this case. In HQ 
H034843, the components of the flash drives were mounted and housed 
in one country and then the completed drives were shipped to another 
country for programming. Likewise, a different fact pattern also 
occurs in HQ H100055. In that case, the programming of the PCB took 
place in one country and the assembly of the lift unit, including 
the incorporation of the programmed PCB into the unit, took place in 
another. The motor and drum assembly that formed the essence of the 
lift unit was made in Sweden and the PCBA, which was programmed with 
software designed and written in Sweden, was incorporated into the 
unit in Sweden. In the present case, however, the essential 
components of the projector (the engine light module and the PCBA 
main board) are fabricated in the same country in which they are 
programmed, either China or Taiwan, and housed in Taiwan.

HOLDING:

    Based on the facts in this case, we find that the manufacturing 
and testing operations performed in Taiwan do not substantially 
transform the non-TAA country components. The light engine module 
and the PCBA main board are the essence of the projector and it is 
at their production where the last substantial transformation 
occurs. Therefore, when the light engine module and PCBA main board 
module are assembled and programmed in China, the country of origin 
of the projectors is China for purposes of U.S. government 
procurement. However, if the light engine module and PCBA main board 
module are assembled and programmed in Taiwan, then the country of 
origin of the projectors is Taiwan 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, Regulations and Rulings Office of International 
Trade.

[FR Doc. 2011-12713 Filed 5-23-11; 8:45 am]
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