[Federal Register Volume 76, Number 155 (Thursday, August 11, 2011)]
[Notices]
[Pages 49782-49785]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-20452]


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DEPARTMENT OF HOMELAND SECURITY

 CUSTOMS AND BORDER PROTECTION


Notice of Issuance of Final Determination Concerning Certain 
Digital 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 certain digital projectors. Based upon the facts 
presented, CBP has concluded that the assembly and programming 
operations performed in Taiwan substantially transform the non-TAA 
country components of the projectors. Therefore, the country of

[[Page 49783]]

origin of the projectors is Taiwan for purposes of U.S. government 
procurement.

DATES: The final determination was issued on July 29, 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 September 12, 2011.

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

SUPPLEMENTARY INFORMATION: Notice is hereby given that on July 29, 
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 digital projectors 
which may be offered to the U.S. Government under an undesignated 
government procurement contract. This final determination, HQ H146735, 
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 assembly and programming 
operations performed in Taiwan substantially transform the non-TAA 
country components of the projectors. Therefore, 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: July 29, 2011.
Sandra L. Bell,
Executive Director, Regulations and Rulings, Office of International 
Trade.

Attachment

HQ H146735

July 29, 2011

MAR-2 OT:RR:CTF:VS H146735 HkP

Category: Marking

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

RE: Final Determination; Substantial Transformation; Country of 
Origin of Certain Digital Projectors

Dear Mr. Hall and Mr. Sjoberg:

    This is in response to your letter dated January 21, 2011, 
requesting a final determination on behalf of a foreign 
manufacturer, 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 two 
models of digital projectors. We note that as the manufacturer of 
the digital projectors, the foreign manufacturer is a party-at-
interest within the meaning of 19 CFR 177.22(d)(1) and is entitled 
to request this final determination.

Facts:

    According to the submitted information, the subject merchandise 
is two models of digital projectors, Model A and Model B 
(collectively, the digital projector). The projector is a 9cm x 30cm 
x 20cm, 2.5kg, digital light processing (DLP) projector, designed to 
use a high-intensity discharge (HID) arc lamp as the light source to 
project images from computers and other video sources. It can 
produce an image size of up to 307 inches diagonally. The main 
differences between Model A and Model B are the resolution of the 
projected image and the throw ratio (basically the viewing distance 
from the screen).
    The projector is composed of the following components:
    Components of Taiwanese origin include:
    (1) System firmware, which controls the functions of the keypad, 
remote controller, USB port, lamp brightness, volume, and on-screen 
display main menu, as well as image processing. The fully assembled 
projector is programmed in Taiwan with this firmware.
    (2) Power control firmware, used to control the on/off function 
of the projector and to retrieve the input/output (I/O) setting of 
the projector in the latest turn-off from an electronically erasable 
programmable read only memory (EEPROM). The firmware detects the 
power signal and transmits the command to the low voltage power 
supply (LVPS) to output the required voltage for the system and the 
lamp. The firmware also controls the operation of the fans and 
detects their operating status. The fully assembled projector is 
programmed in Taiwan with this firmware.
    (3) Extended Display Identification Data (EDID) firmware, a 
Video Electronics Standard Association (VESA) data format that 
contains basic information about the projector and its capabilities, 
including vendor information, maximum image size, color 
characteristics, factory pre-set timings, frequency range limits, 
and character strings for the model name and serial number. The 
information is stored in the display and uses the Display Data 
Channel (DDC) to communicate between the projector and a personal 
computer graphics adapter. The system uses this information for 
configuration purposes. The fully assembled projector is programmed 
in Taiwan with this firmware.
    (4) Network firmware, which contains the network protocol, is 
used to receive instructions to control the projector from a remote 
user using a computer. The firmware may be updated in Taiwan during 
the assembly and testing processes.
    Components of Chinese origin include:
    (1) Bottom cover module, comprised of parts from Korea, China, 
and Taiwan.
    (2) Elevator module, used to adjust the height of the projector, 
comprised of parts from China and Japan.
    (3) Right cover module, comprised of parts from China.
    (4) Input/Output (I/O) cover module, comprised of parts from 
China.
    (5) Top cover module, comprised of parts from Japan, Taiwan, 
China, the U.S., and Korea.
    (6) Cosmetic module, comprised of parts from China.
    (7) Fan modules, comprised of the system (axial) fan module and 
the lamp blower module attached to the lamp housing, comprised of 
parts from China.
    (8) Lamp driver (ballast) module, comprised of parts from China.
    (9) Lamp driver firmware, used to control lamp ignition and to 
obtain the ballast waveform that controls the output current with 
respect to the angle of the color wheel. White light, generated by a 
high intensity discharge arc lamp, passes through the filter to 
generate different colors. The firmware is programmed into an IC on 
the lamp driver module (Chinese component no. 8) in China.
    (10) Color wheel module, which includes the color wheel, photo 
sensor board with photo sensor, and bracket. It acts as a time-
varying wavelength filter to allow certain wavelengths of light to 
pass through at the appropriate times so that the filtered light may 
be modulated by the light valve, DMD (digital micromirror device, 
i.e., an optical semiconductor), to produce the projected image with 
full color. Module parts are from Japan, China, and Taiwan.
    (11) Zoom ring module, comprised of parts from China.
    (12) Lamp module, comprised of parts from China.
    (13) Lamp cover module, comprised of parts from China.
    (14) Semi-finished optical engine module, which includes a 
Taiwanese-origin DMD, a DMD board, an optical lens, a projection 
lens, and rod integrator. Module parts are from Taiwan and China.
    (15) Main board module, which stores the system firmware 
(Taiwanese component no. 1) on a Taiwanese-origin DDP2431 processor, 
comprised of parts from China, the Czech Republic, Taiwan, Japan, 
Korea, and the U.S.
    (16) Low voltage power supply (LVPS) module, comprised of parts 
from Taiwan, Japan, Korea, China, and the U.S.
    (17) Local area network (LAN) module board, comprised of parts 
from the U.S. and

[[Page 49784]]

unnamed countries. It is programmed with Taiwanese-origin network 
firmware (Taiwanese component no. 4) in China.
    (18) Miscellaneous items: screws, EMI gaskets, tape (Mylar and 
3M), 16-pin wiring, brackets, main board spacers, insulating rubber, 
Mylar film, and elevator feet.
    Modules 1-8 and 10-17 are assembled in China and shipped to 
Taiwan. The miscellaneous Chinese components described at no. 18 
above are also shipped to Taiwan to be assembled with the 16 Chinese 
modules.
    In Taiwan, the imported modules and components are inspected and 
then assembled into a complete digital projector using the Chinese 
screws, EMI gaskets, tape (Mylar and 3M), 16-pin wiring, brackets, 
main board spacers, insulating rubber, Mylar film, and an elevator 
foot. The projector is then programmed with the power control 
firmware and system firmware developed in Taiwan, and then subjected 
to various tests. During the testing stage, the projector is also 
loaded with Taiwanese-origin EDID firmware, which programs the 
identification of the projector into the EEPROM on the main board.

ISSUE:

    What is the country of origin of the projector for purposes 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 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 Data General v. United States, 4 Ct. Int'l Trade 182 (1982), 
the court determined that for purposes of determining eligibility 
under item 807.00, Tariff Schedules of the United States 
(predecessor to subheading 9802.00.80, Harmonized Tariff Schedule of 
the United States), the programming of a foreign PROM (Programmable 
Read-Only Memory chip) in the United States substantially 
transformed the PROM into a U.S. article. In programming the 
imported PROMs, the U.S. engineers systematically caused various 
distinct electronic interconnections to be formed within each 
integrated circuit. The programming bestowed upon each circuit its 
electronic function, that is, its ``memory'' which could be 
retrieved. A distinct physical change was effected in the PROM by 
the opening or closing of the fuses, depending on the method of 
programming. This physical alteration, not visible to the naked eye, 
could be discerned by electronic testing of the PROM. The court 
noted that the programs were designed by a U.S. project engineer 
with many years of experience in ``designing and building 
hardware.'' While replicating the program pattern from a ``master'' 
PROM may be a quick one-step process, the development of the pattern 
and the production of the ``master'' PROM required much time and 
expertise. The court noted that it was undisputed that programming 
altered the character of a PROM. 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, was no less a ``substantial 
transformation'' than the manual interconnection of transistors, 
resistors and diodes upon a circuit board creating a similar 
pattern.
    You argue that Taiwan is the country of origin of the projector 
because it is the country in which the following actions occur: 
design and development of the projector, including the main board; 
addition of the majority of the value (materials and labor); 
fabrication of many parts, including the data processors (the DMD 
and DDP2431) that are claimed to be the major functional parts of 
the projector; development of four of the five firmware files used 
to operate the projector; programming of the main board with system 
firmware and programming of the control panel with power control 
firmware; assembly of the Chinese modules with disparate parts to 
make a functional projector; and, testing and adjustment of the 
projector. You point out that 60 percent of the total cost of 
materials (including accessories and packing material) comes from 
the United States and TAA designated countries, and that the 
processing in Taiwan will require 180 steps, including assembly, 
programming, testing, and packing.
    Further, you claim that the Chinese modules are substantially 
transformed in Taiwan when they are assembled into a projector. As a 
result of the color wheel module being assembled with the semi-
finished optical engine module in Taiwan, the HID arc lamp can be 
used as a light source and the DMD can be used as a light valve to 
produce color images. When the lamp ballast is connected to the 
LVPS, the ballast gains a power source, and when connected to the 
main board, the lamp can be controlled. Connecting the Chinese main 
board module to the semi-finished optical engine module, the DMD 
board, fan modules, and color wheel module allows all the boards 
attached to the main module to be controlled. The LVPS powers the 
main board so that the modules attached to it can operate. Finally, 
assembling the top cover module with the main board module allows 
the projector to be controlled through the keypad.
    You state that factors such as the resources expended on design 
and development, extent and nature of post-assembly inspection and 
testing procedure, and worker skill required during the 
manufacturing process have been considered in determining whether a 
substantial transformation occurred. In support of your position you 
cite Headquarters Ruling Letters (HQ) H100055 (May 8, 2010), H034843 
(May 5, 2009), and H015324 (April 23, 2008), 559534 (June 4, 1996), 
among others.
    HQ H100055 concerned a motorized lift unit, designed, developed 
and engineered in Sweden, for an overhead patient lift system. The 
PCBA was assembled and programmed prior to its importation in Sweden 
but it was designed in Sweden and its software program was written 
in Sweden. The unit was then assembled in Sweden, which included the 
manufacture of the electrical motor. 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 a USB flash drive partially manufactured 
in China and 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. HQ H015324 involved 
stereoscopic displays assembled in the U.S. from non-U.S. parts. 
U.S. assembly resulted in a substantial transformation of imported 
LCD monitors and a beamsplitter mirror.
    In this case, the bottom cover module, elevator module, right 
cover module, I/O cover module, cosmetic module, two fan modules, 
lamp driver module programmed in China with Chinese firmware, zoom 
ring module, lamp module, lamp cover module, semi-finished optical 
engine module, color wheel module, main board module, top cover 
module, LAN module programmed in China with Taiwanese-origin 
firmware, and the LVPS module, from China are assembled together in 
Taiwan with other Chinese components to form a complete projector. 
After assembly, the projector is programmed in Taiwan with three 
types of firmware developed in Taiwan. The first, power control 
firmware, is used to control on/off functions and to retrieve the 
input/output setting from the last time the projector was turned 
off. The second, system firmware, controls the functions of the 
keypad, remote control, USB port, lamp brightness, volume, on-screen 
display menu, and image processing. The third, EDID firmware, 
contains basic information about the

[[Page 49785]]

projector, such as maximum image size, color characteristics, 
factory pre-set timings, and frequency range limits. We find that 
the assembly and programming operations performed in Taiwan are 
sufficiently complex and meaningful so as to create a new article 
with a new character, name and use. See, for e.g., HQ H034843 and 
H100055. Moreover, we note that some of the Chinese modules were 
made using Taiwanese parts. Through the operations undertaken in 
Taiwan, the individual parts lose their identities and become 
integral to the new and different article, i.e., the projector. See 
Belcrest Linens. Accordingly, we find that the country of origin of 
the projector is Taiwan.

HOLDING:

    Based on the facts in this case, we find that the assembly and 
programming operations performed in Taiwan substantially transform 
the non-TAA country components of the projector. Therefore, the 
country of origin of the Model A and Model B 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. 2011-20452 Filed 8-10-11; 8:45 am]
BILLING CODE 9111-14-P