[Federal Register Volume 77, Number 84 (Tuesday, May 1, 2012)]
[Notices]
[Pages 25729-25732]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-10447]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning Certain 
Agilent Oscilloscopes

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 oscilloscopes. We were asked to consider 
five scenarios. Based upon the facts presented, CBP has concluded in 
the final determination that for each scenario the assembly and 
programming operations performed in Singapore substantially transform 
the components of the oscilloscopes. Therefore, the country of origin 
of the oscilloscopes for purposes of U.S. government procurement is 
Singapore.

DATES: The final determination was issued on April 23, 2012. 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 31, 2012.

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

SUPPLEMENTARY INFORMATION: Notice is hereby given that on April 23, 
2012, 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 certain series of Agilent oscilloscopes which may 
be offered to the U.S. Government under an undesignated government 
procurement contract. This final determination, HQ H203555, 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 assembly and programming operations in Singapore, the 
country of origin of the oscilloscopes for purposes of U.S. government 
procurement is Singapore.
    Section 177.29, Customs 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: April 23, 2012.
Sandra L. Bell,
Executive Director, Regulations and Rulings, Office of International 
Trade.[GPO Follow Lit]

Attachment

HQ H203555
April 23, 2012
MAR-2 OT:RR:CTF:VS H203555 HkP
CATEGORY: Origin
Mr. Keith Morgan
Americas Geographic Trade Manager
Agilent Technologies, Inc.
8825 Stanford Boulevard
Suite 300
Columbia, MD 21045

RE: Government Procurement; Trade Agreements Act; Country of Origin of 
certain Oscilloscopes; Substantial Transformation

    Dear Mr. Morgan: This is in response to your letter, dated January 
30, 2012, requesting a final determination on behalf of Agilent 
Technologies, Inc. (``Agilent''), 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 
Agilent's MSOX/DSOX200A and MSOX/DSOX3000A

[[Page 25730]]

series oscilloscopes. As a U.S. importer, Agilent 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:
    Agilent imports the MSOX/DSOX200A and MSOX/DSOX3000A series 
oscilloscopes, which are used to measure voltage in a variety of 
research, design, production and evaluation applications, from 
Malaysia. The two model series include 28 different configurations with 
varying bandwidth and sampling rates. The oscilloscopes consist of the 
following components:
    1. ACQ board printed circuit assembly (PCA) populated with 
transistors, diodes, capacitors, integrated circuits, and a 1GB flash 
memory to store product firmware and application software that is the 
oscilloscopes' main controller. It is described as the ``motherboard'' 
of the oscilloscopes;
    2. Keyboard PCA;
    3. Main keypad;
    4. Soft keypad;
    5. Liquid Crystal Display (LCD);
    6. LCD lens;FOL. LIT.
    7. AC line filter PCA that acts as the power manager;
    8. Power supply;
    9. Fan;
    10. Bucket assembly--a plastic component that forms part of the 
back cover of the oscilloscope;
    11. Bezel;
    12. Front and rear deck--sheet metal components that form the 
internal chassis; and
    13. Cables, bolts, screws, washers and connectors.

The components are manufactured in several countries, including China, 
Malaysia, and Taiwan.
    The application software and firmware for the oscilloscopes are 
developed in the United States. Firmware development consists of 
requirements analysis, design, code writing, quality assurance testing, 
bug fixing, maintenance and support. According to Agilent's submission, 
more than half of the years (the number of which is unstated) taken to 
develop the oscilloscopes were invested in the development of firmware, 
and an additional two years are invested in continued firmware 
development and maintenance.
    Agilent has asked us to consider five manufacturing scenarios. 
Regardless of the scenario, the following processes take place in 
Singapore where the components listed above are assembled into 
subassemblies (described below) which are then made into complete 
oscilloscopes. The rear deck subassembly, consisting of the fan, the AC 
Line Filter PCA, power supply, AC and DC cables, and wiring, is 
installed into the rear deck. The front deck subassembly, consisting of 
a display mount, the ACQ board PCA, brackets, and various types of 
cables (keyboard, display, display backlight, interboard supply), is 
installed into the front deck. The front bezel assembly, consisting of 
the bezel, keypad, keyboard, cables, and knobs, is fitted together. The 
front and rear deck subassemblies are fitted together and the 
interboard power cable on the front deck subassembly is connected to 
the AC line filter PCA on the rear deck subassembly. The power supply 
shield, power switch, and front panel connectors are installed and the 
bezel assembly is connected to the front and rear deck subassembly. The 
entire assembly is placed into a fixture that is fitted together with 
the bucket assembly. The oscilloscopes then go through three post-
assembly tests to ensure proper functionality and a cosmetic 
inspection. They are then shipped to Malaysia where they undergo a 
final pre-shipment functional test and cosmetic inspection.

Scenario 1

    The ACQ board for the front deck subassembly and the AC line filter 
PCA for the rear deck subassembly are manufactured in Malaysia and 
shipped to Singapore. U.S.-origin firmware and application software is 
downloaded onto the fully assembled oscilloscopes in Singapore.

Scenario 2

    The ACQ board is assembled in Malaysia and shipped to Singapore 
where it is programmed with application software during the front deck 
subassembly process. The AC line filter PCA is also assembled in 
Malaysia and shipped to Singapore. U.S.-origin firmware is downloaded 
onto the fully assembled oscilloscopes in Singapore.

Scenario 3

    The ACQ board and the AC line filter PCA are manufactured in 
Malaysia. The ACQ board is temporarily programmed with application 
software and tested in Malaysia. Before shipment to Singapore the 
software is deleted from the ACQ board. In Singapore, U.S.-origin 
firmware and application software is downloaded onto the fully 
assembled oscilloscopes.

Scenario 4

    As in scenario three, the ACQ board is assembled, programmed and 
tested in Malaysia and its software is deleted before it is shipped to 
Singapore. U.S.-origin firmware and application software is downloaded 
onto the fully assembled oscilloscopes in Singapore. The AC line filter 
PCA is made in Singapore.

Scenario 5

    The ACQ board is assembled in Malaysia and shipped to Singapore. 
The AC line filter PCA is manufactured in Singapore. U.S.-origin 
application software and firmware is downloaded onto the fully 
assembled oscilloscopes in Singapore.
ISSUE:
    What is the country of origin of the oscilloscopes 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 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

[[Page 25731]]

considered when determining whether a substantial transformation has 
occurred. No one factor is determinative.
    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. The court noted that programming alters the 
character of a PROM by changing the pattern of interconnections within 
the PROM. A distinct physical change is 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, 
may be discerned by electronic testing of the PROM. The essence of the 
article, its interconnections or stored memory, is 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, is no less a ``substantial 
transformation'' than the manual interconnection of transistors, 
resistors and diodes upon a circuit board creating a similar pattern.
    In Texas Instruments v. United States, 681 F.2d 778, 782 (CCPA 
1982), the court observed that the substantial transformation issue is 
a ``mixed question of technology and customs law.''FOL. LIT.
    In C.S.D. 84-86, CBP stated:

We are of the opinion that the rationale of the court in the Data 
General case may be applied in the present case to support the 
principle that the essence of an integrated circuit memory storage 
device is established by programming. * * * [W]e are of the opinion 
that the programming (or reprogramming) of an EPROM results in a new 
and different article of commerce which would be considered to be a 
product of the country where the programming or reprogramming takes 
place.

    Accordingly, the programming of a device that changes or defines 
its use generally constitutes substantial transformation. See also 
Headquarters Ruling Letter (`HQ'') 558868, dated February 23, 1995 
(programming of SecureID Card substantially transforms the card because 
it gives the card its character and use as part of a security system 
and the programming is a permanent change that cannot be undone); HQ 
735027, dated September 7, 1993 (programming blank media (EEPROM) with 
instructions that allow it to perform certain functions that prevent 
piracy of software constitute substantial transformation); and, HQ 
733085, dated July 13, 1990; but see HQ 732870, dated March 19, 1990 
(formatting a blank diskette does not constitute substantial 
transformation because it does not add value, does not involve complex 
or highly technical operations and did not create a new or different 
product); HQ 734518, dated June 28, 1993, (motherboards are not 
substantially transformed by the implanting of the central processing 
unit on the board because, whereas in Data General use was being 
assigned to the PROM, the use of the motherboard had already been 
determined when the importer imports it).
    Agilent believes that the country of origin of the oscilloscopes is 
Singapore because that is where the oscilloscopes were manufactured and 
programmed with the U.S.-origin firmware and software that cause the 
machines to function as oscilloscopes. According to the company, the 
firmware and software substantially transform the electronic assemblies 
into functioning oscilloscopes. In support of its position, Agilent 
cites HQ H090115 (Aug. 2, 2010) because it believes that the facts 
underlying that ruling are similar to the facts in the instant case. HQ 
H090115 concerned the country of origin of a product known as ``Unified 
Communications Solution'', composed of subassemblies made in China 
installed at an end user's premises in the United States over a one 
month period and run on U.S.-origin software known as ``Communication 
Manager''. Communication Manager added functionality to certain 
individual components and changed the functionality of other 
components. CBP found that there was a substantial transformation of 
the component parts in the United States, which was where the final 
assembly and installation of the hardware and the programming of the 
components with Communication Manager took place. We note that HQ 
H090115 is distinguishable from the instant case because in HQ H090115 
manufacturing operations took place in only one country and programming 
took place in another. In this case, manufacturing occurs in both 
Malaysia and Singapore and programming may take place in either 
country.
    A ruling more pertinent to the facts in this case is HQ H170315, 
dated July 28, 2011, which concerned the country of origin of satellite 
telephones and considered scenarios similar to those described in this 
ruling. In HQ H170315, CBP was asked to consider six scenarios 
involving the manufacture of PCBs in one country and the programming of 
the PCBs with second country software either in the first country or in 
a third country where the phones were assembled. In this case, PCAs are 
manufactured in Malaysia and programmed with U.S. software and firmware 
either in the Malaysia or in Singapore where the oscilloscopes are 
assembled.

Scenario 1

    In this scenario, the ACQ board (the motherboard of the 
oscilloscopes) and the AC line filter PCA (the power controller) are 
assembled in Malaysia and shipped to Singapore. After importation into 
Singapore, the boards are assembled with subassemblies of Singaporean 
origin into oscilloscopes. U.S.-origin firmware and application 
software are then downloaded onto the fully assembled oscilloscopes, 
which are then subjected to a basic test. The oscilloscopes are shipped 
to Malaysia for complete testing.
    In this scenario, a large number of parts are assembled in Malaysia 
to form the Malaysian-origin boards. Upon importation into Singapore, 
the boards are assembled with rear, front deck, and bezel subassemblies 
made in Singapore from components imported from China, Malaysia, and 
Taiwan. In addition, the completed oscilloscopes are programmed with 
U.S.-origin application software and firmware in Singapore. 
Accordingly, in this scenario, there are three countries under 
consideration where programming and/or assembly operations take place, 
the last of which is Singapore. No one country's operations dominate 
the manufacturing operations of the oscilloscopes. The boards assembled 
in Malaysia are important to the function of the oscilloscopes, as is 
the U.S. firmware and software used to program the oscilloscopes in 
Singapore. The assembly in Singapore completes the oscilloscopes. 
Therefore, we find that the last substantial transformation occurs in 
Singapore. See Belcrest Linens, supra; HQ H170315 (July 28, 2011), 
Scenario III. Consequently, we find that the country of origin of the 
oscilloscopes in this scenario is Singapore.

Scenario 2

    In this scenario, as in Scenario 1, the ACQ board and the AC line 
filter PCA are assembled in Malaysia and shipped to Singapore. However, 
in this scenario, after importation into Singapore the ACQ board is 
programmed with U.S.-

[[Page 25732]]

origin application software during the front deck subassembly process 
instead of after the oscilloscopes are completed. The boards are then 
assembled with subassemblies of Singaporean origin into oscilloscopes. 
U.S.-origin firmware is downloaded onto the fully assembled 
oscilloscopes in Singapore. The oscilloscopes undergo a basic testing 
before being shipped to Malaysia for further testing.
    As discussed under Scenario 1, the boards imported from Malaysia 
are products of Malaysia. Upon importation into Singapore, they are 
assembled with rear, front deck, and bezel subassemblies, which are 
made in Singapore, to form complete oscilloscopes, which are then 
programmed with U.S.-origin application software and firmware in 
Singapore. Accordingly, there are three countries under consideration 
where programming and/or assembly operations take place, the last of 
which is Singapore. In this scenario, no one country's operations 
dominate the manufacturing operations of the oscilloscopes. The boards 
assembled in Malaysia are important to the function of the 
oscilloscopes, as is the U.S. firmware and software used to program the 
oscilloscopes in Singapore. Further, the assembly in Singapore 
completes the oscilloscopes. Therefore, as in Scenario 1, we find that 
the last substantial transformation occurs in Singapore. See Belcrest 
Linens, supra; HQ H170315 (July 28, 2011), Scenarios IV and V. 
Consequently, we find that the country of origin of the oscilloscopes 
in this scenario is Singapore.

Scenario 3

    As in previous scenarios, the ACQ board and the AC line filter PCA 
are manufactured in Malaysia. However, in this scenario, the ACQ board 
is temporarily programmed with application software and tested in 
Malaysia. Before shipment to Singapore, the software is deleted from 
the ACQ board so that the board is not programmed when imported into 
Singapore. U.S.-origin firmware and application software is downloaded 
onto the fully assembled oscilloscopes in Singapore.
    We find this scenario to be essentially the same as Scenario 1 
because in both scenarios the ACQ board is not programmed when imported 
into Singapore, and the facts are otherwise the same as those in 
Scenario 1. Accordingly, for the reasons explained for Scenario 1, we 
find that the country of origin of the oscilloscopes in this scenario 
is Singapore.

Scenario 4

    As in Scenario 3, the ACQ board is assembled, programmed and tested 
in Malaysia and its software is deleted before it is shipped to 
Singapore. However, in this scenario, the AC line filter PCA is made in 
Singapore, not Malaysia. U.S.-origin firmware and application software 
is downloaded onto the fully assembled oscilloscopes in Singapore.
    As in previous scenarios, there are three countries under 
consideration where programming and/or assembly operations take place, 
the last of which is Singapore. In this scenario, no one country's 
operations dominate the manufacturing operations of the oscilloscopes. 
The boards assembled in Malaysia and Singapore are important to the 
function of the oscilloscopes, as is the U.S. firmware and software 
used to program the oscilloscopes in Singapore. Further, the assembly 
operations in Singapore complete the oscilloscopes. Therefore, we find 
that the last substantial transformation occurs in Singapore. See 
Belcrest Linens, supra; HQ H170315 (July 28, 2011). Consequently, we 
find that the country of origin of the oscilloscopes in this scenario 
is Singapore.

Scenario 5

    The ACQ board is assembled in Malaysia and shipped to Singapore. 
The AC line filter PCA is manufactured in Singapore. U.S.-origin 
application software and firmware is downloaded onto the fully 
assembled oscilloscopes in Singapore.
    We find this scenario to be essentially the same as Scenario 4 
because in both scenarios the ACQ board is not programmed when imported 
into Singapore, and the facts are otherwise the same as those in 
Scenario 4. Accordingly, for the reasons explained for Scenario 4, we 
find that the country of origin of the oscilloscopes in this scenario 
is Singapore.
HOLDING:
    Based on the facts in this case, we find that for all scenarios the 
country where the last substantial transformation takes place is 
Singapore. The country of origin of the Agilent MSOX/DSOX200A and MSOX/
DSOX3000A series oscilloscopes is Singapore 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. 2012-10447 Filed 4-30-12; 8:45 am]
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