[Federal Register Volume 77, Number 113 (Tuesday, June 12, 2012)]
[Notices]
[Pages 34967-34971]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-14182]


-----------------------------------------------------------------------

DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning Digital 
Projectors

AGENCY: U.S. Customs and Border Protection, Department of Homeland 
Security.

ACTION: Notice of final determination.

-----------------------------------------------------------------------

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 in the final determination that the 
assembly and programming operations performed in the Taiwan 
substantially transform the non-TAA country components of the digital 
projectors. Therefore the country of origin of the digital projectors 
is Taiwan for purposes of U.S. Government procurement.

DATES: The final determination was issued on June 4, 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 within July 12, 2012.

FOR FURTHER INFORMATION CONTACT: Robert Dinerstein, Valuation and 
Special Programs Branch, Regulations and Rulings, Office of 
International Trade (202-325-0132).

SUPPLEMENTARY INFORMATION: Notice is hereby given that on June 4, 2012, 
pursuant to subpart B of part 177, Customs and Border Protection (CBP) 
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 United States Government under an 
undesignated government procurement contracts. This final 
determination, in HQ H193929, was issued at the request of the 
manufacturer of the digital projectors under the 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. Therefore, the country of 
origin of the finished digital projectors is Taiwan for purposes of 
U.S. Government procurement.
    Section 177.29, CBP 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: June 6, 2012.
Sandra L. Bell,
Executive Director, Regulations and Rulings, Office of International 
Trade.

Attachment

HQ H193929

MAR-2 OT:RR:CTF:VS H193929 RSD

CATEGORY: Marking

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

RE: Final Determination regarding the Country of Origin of Digital 
Projectors, Substantial Transformation

    Dear Mr. Hall and Mr. Sjoberg:
    This is in response to your three letters dated November 15, 2011, 
November 22, 2011, and January 18, 2012, requesting final 
determinations on behalf of a foreign manufacturer of five digital 
projector models, pursuant to subpart B of part 177 of the U.S. Customs 
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 the U.S. law or practice for products 
offered for sale to the U.S. Government.
    This final determination concerns the country of origin of five 
different models of digital projectors. We note that the manufacturer 
of the digital projectors, a foreign manufacturer, is a party-at-
interest within the meaning the 19 C.F.R. Sec.  177.22(d)(1), and, as 
such, is

[[Page 34968]]

entitled to request this final determination.

FACTS:

    Five different models of digital projectors are at issue. One of 
the digital projectors uses light emitting diodes (LEDs) to project 
videos and images, while the other digital projectors are lamp based.

First Digital Projector Model

    In your submission of November 15, 2011, you describe the subject 
merchandise as a digital LED portable projector referred to as ``Model 
C''. The dimensions of the LED projector are 22 cm x 4.25 cm x 17 cm, 
(W x H x D), and it weighs 1.1 kg. The digital light processing 
(``DLP'') projector is designed to use LEDs as the light source for 
projecting images and videos from a computer or other video sources. 
The LED projector can produce an image size of up to 120 inches 
measured diagonally. According to your submission, the LED projector 
was designed and developed in Taiwan. The LED Projector uses four 
firmware files: (1) the system firmware, (2) the power control 
microcontroller firmware, (3) the Extended Display Identification Data 
(``EDID'') firmware, and (4) multimedia firmware. These four firmware 
files are developed and coded in Taiwan and are programmed into the 
corresponding integrated circuits (``ICs'') in Taiwan.
    The LED projector contains components from several different 
countries. Two major functional parts including the digital micro-
mirror device (DMD) and the DPP6401 data processor will originate from 
Taiwan. Other non-Taiwanese components are shipped to China where they 
are pre-assembled with the Taiwanese components to create modules or 
sub-assemblies. You list 16 modules that are assembled together to make 
the LED projectors. The modules are as follows:

    1) Bottom casing module containing parts from China, Japan, Korea 
and Taiwan;
    2) Top cover module with mechanical parts from China;
    3 4) Two fan modules with mechanical parts from China;
    5) Low voltage power supply (LVPS) containing parts from China, 
Japan, Korea, Malaysia, Philippines, and Taiwan;
    6) Semi-finished optical engine module with parts and components 
from China, Taiwan, Philippines, and Japan;
    7) Photo sensor module containing parts from China, Korea, and 
Taiwan;
    8 9 10) Three LED modules with LED chips and circuit boards from 
the USA;
    11) Heat sink for blue LED with mechanical parts from China;
    12) Heat pipe module for green LED with mechanical parts from 
China;
    13) Heat pipe module for red LED with mechanical parts from China;
    14) Projection lens module with optical lens and mechanical parts 
from China
    15) Main board module with parts and electronic components from 
China, Hong Kong, Japan, Korea, Malaysia, Philippines, Taiwan, and a 
processor from Taiwan; and
    16) LED driver board module with components and parts from China, 
Taiwan, Japan, and Malaysia.

    After the components are assembled together in China to form the 16 
different modules, they are shipped from China to Taiwan for assembly 
into the LED projectors. Other parts used in the assembly of the 
projector in Taiwan include screws, brackets which are mounted onto the 
LVPS sensor board, mylar cable ties, and an EMI gasket.
    The assembly, firmware programming, testing and packing processes 
in Taiwan consist of at least 225 steps taking no less than 4 hours and 
54 minutes to complete of which the Taiwanese assembly process consists 
of at least 71 steps taking approximately 15.6 minutes. The assembly 
process in producing the projectors in Taiwan includes the following 
steps:
    1) The fan modules are screwed to the bottom casing modules.
    2) The LVPS is screwed to the bottom casing module.
    3) The semi-finished optical engine module is assembled with other 
components into the completed optical engine module by screwing, 
inserting and sticking the pieces together.
    4) The completed optical engine module is screwed to the bottom 
casing module.
    5) The main board module is assembled onto the completed optical 
engine module. The slot of the main board module must be aligned with 
the DMD board edge connector so as to plug the main board onto the DMD 
board incorporated into the optical engine module.
    6) The wires from the different component and modules are connected 
to the main board module, by plugging the wires from different 
components and modules into the corresponding connectors, respectively, 
on the main board module.
    7) The light source with the main board module is assembled by 
inserting the edge connector of the LED driver board module to the 
corresponding slot of the main board module.
    8) The light source driver is connected with the LVPS and the wire 
from the LVPS is plugged into the corresponding connector on the light 
source driver; or the wire is plugged from the light source driver to 
the corresponding connector on the LVPS;
    9) The top cover is screwed to the bottom casing module.
    The light source driver in the Model C projectors is the LED driver 
module. The light source (LEDs) in the Model C projector is assembled 
with the semi-finished optical engine module to become the completed 
optical engine module.
    The system firmware programming, power control firmware 
programming, and EDID programming consists of at least 42 steps taking 
approximately 11.6 minutes to complete. All functions of the LED 
projectors undergo testing prior to the LED projector being exported to 
the United States. The normal testing process includes 12 kinds of 
functions tests and consists of at least 97 steps taking approximately 
137.8 minutes. After the whole projector is assembled, the next step is 
to program the firmware files into the integrated circuits (ICs) before 
function testing. The firmware programming process involves power 
control firmware programming, multimedia firmware programming, and 
system firmware programming.

Second and Third Digital Projector Models

    In your submission of November 22, 2011, you provide a description 
of two other versions of similar digital projectors. You refer to these 
versions of the projectors as Model A. The two versions of the digital 
projector are very similar to each other. The two projectors have the 
same physical dimensions of 32.4 cm x 9.7 cm x 23.4 cm (W x H x D) and 
weigh 2.9 kg. The two models are DLP projectors designed to use a high-
intensity discharge (``HID'') arc lamp as the light source to project 
images and videos from computers or other video sources. The digital 
projectors can produce an image size of up to 362 inches in diagonal. 
The main difference between the two models of digital projectors are in 
the resolution of the projected image and the throw ratio, which is 
defined as the distance (D) measured from lens to screen that a 
projector is placed from the screen, divided by the width (W) of the 
image that it will project (D/W).
    You state that the two digital projectors are designed and 
developed in Taiwan. They will also be ultimately assembled in Taiwan. 
Additionally, major functional parts, including the digital micro-
mirror device (``DMD''),

[[Page 34969]]

and the DDP2431 data processor will originate from Taiwan. The digital 
projectors will also use five firmware files: (1) the system firmware, 
(2) the power control firmware (i.e. 8051 microcontroller firmware), 
(3) the extended display identification data (``EDID'') firmware, (4) 
the network firmware, and (5) the lamp driver firmware which are 
developed and coded in Taiwan. In addition, the system firmware, power 
control firmware and EDID firmware are programmed into the 
corresponding ICs in Taiwan.
    The manufacturing of the digital projectors versions of Model A is 
very similar to the process used to manufacture the digital projector 
Model C described above. The components will be fabricated in China, 
Taiwan, USA, Korea, Japan, Indonesia, Malaysia, Thailand, Singapore, 
and the Czech Republic. In China the components are assembled into 13 
different modules or sub-assemblies. The 13 modules are: 1) the bottom 
casing module, 2) top cover keypad module, 3,4) two fan modules (i.e. 
the blower module and system fan module), 5) lamp driver (ballast), 6) 
zoom ring module, 7) lamp module, 8) lamp cover module, 9) semi-
finished optical engine module, 9) color wheel module, 10) main board 
module,11) color wheel module, 12) main board module, and 13) LVPS. The 
modules/subassemblies are shipped to Taiwan where they are assembled 
into the digital projectors.
    According to your submission, the assembly, firmware programming, 
testing, and packing operations in Taiwan will consist of at least 220 
steps and take no less than 11 hours and 48 minutes to complete. The 
Taiwanese assembly process itself consists of at least 55 steps, taking 
approximately 15.5 minutes. The assembly of the second and third 
digital projectors in Taiwan consists of the same basic processing 
steps as the first digital projector described previously.
    The light source driver in Model A projectors is the ballast (lamp 
driver). The light source (lamp) in the Model A projectors is installed 
into the system (projector) after the top cover is assembled with 
bottom casing module.
    The system firmware programming, power control firmware programming 
and EDID programming consists of at least 35 steps taking approximately 
9.3 minutes to complete. All functions of the projectors also undergo 
extensive testing prior to being exported to the United States. The 
normal testing process includes 11 kinds of function tests and consists 
of at least 97 steps which will take approximately 11 hours and 13.6 
minutes to perform.

Fourth and Fifth Digital Projector Models

    In your submission of January 18, 2012, you provide a description 
of two other versions a digital projector, designated as Model B. The 
two versions of the digital projector Model B are substantially similar 
to Model C described above. The projectors have the same dimensions of 
32.4 cm x 9.7 cm x 23.4 cm (W x H x D) and weigh 2.9 kg. The products 
are DLP projectors designed to use a HID arc lamp as the light source 
to project images and videos from computers or other video sources. One 
version of Model B can produce a diagonal image up to 303 inches, while 
the other version can produce a diagonal image up to 362 inches. Again, 
the main differences between the two digital projectors are the 
resolution of the projected image and the throw ratio which is defined 
as the distance (D) measured from lens to screen that a projector is 
placed from the screen, divided by the width (W) of the image that it 
will project (D/W).
    There are five firmware files used in digital projectors: (1) the 
system firmware, (2) the power control firmware (i.e. 8051) 
microcontroller firmware (3) the EDID firmware, (4) the network 
firmware, and (5) the lamp driver firmware, which are developed and 
coded in Taiwan. The system firmware, power control firmware and EDID 
firmware are programmed into the corresponding ICs in Taiwan.
    As in the scenario for the Model B projectors the same 13 modules 
will be assembled in China from components made in various countries 
and similarly, they will be shipped to Taiwan for final assembly into 
the digital projectors. Additionally, major functional parts, including 
the digital micro-mirror device (``DMD''), and DDP2431 data processor 
will originate in Taiwan.
    The power control firmware and system firmware will be programmed 
into the ICs. The complete digital projector will be subject to five 
function tests in what is designated as the ``pre-test''. In addition, 
the digital projectors will be subject to a series of other tests. 
After finishing the six function tests in the ``post test'', the EDID 
firmware is programmed into the digital projectors to provide the 
identification of the digital projectors. When the digital projectors 
pass the ``post tests'', they will be sent to the packing department, 
where they will be packed together with the accessory kits.
    The assembly, firmware programming, testing, and packing processes 
in Taiwan described consist of at least 211 steps taking no less than 2 
hours and 59.6 minutes to complete, of which the assembly process 
consists of at least 68 steps taking approximately 10.6 minutes to 
complete. The assembly of the fourth and fifth digital projectors in 
Taiwan consists of the same basic processing steps as the other three 
digital projector described previously.
    The light source driver in Model B projectors is the ballast (lamp 
driver). The light source (lamp) in the Models B projectors is 
installed into the system (projector) after the top cover is assembled 
with the bottom casing module.
    The system firmware programming, power control firmware programming 
and EDID programming consist of at least 35 steps taking approximately 
9.3 minutes to perform. All functions of the digital projectors undergo 
testing prior to exportation to the United States. The normal testing 
process includes 11 function tests and consists of at least 86 steps 
taking approximately 2 hours and 30.7 minutes.

ISSUE:
    What is the country of origin of the digital projectors 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.

[[Page 34970]]

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.
    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.
    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.'' In Headquarters 
Ruling (HQ) 555578 dated June 11, 1990, 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 simple combining operations 
and resulted in a new and different article of commerce with a new 
name, character and use.
    In HQ H114395, dated May 18, 2011, CBP considered the country of 
origin of a DLP projector that used LEDs as its light source for 
projecting photos and videos from mobile devices onto any surface. We 
were asked to consider two scenarios. In the first scenario, PCBA-ICs 
from Japan, Thailand, the U.S., Korea, and Malaysia; and fly eyes from 
Japan were shipped to China. Some Taiwanese origin components (DMDs, 
DPP 1505 chips, EPROM's, LEDs, and lenses) were also be shipped to 
China for assembly with Chinese-origin components (PCBs, projecting 
lenses, mirrors, and mechanical parts), the ICs, and fly eyes for 
making modules for the light engine and the PCBA main board. In China, 
two types of Taiwanese firmware for operating the projector were 
downloaded to memory chips located on the light engine and PCBA main 
board modules. The modules assembled in China were then shipped to 
Taiwan for quality inspections. In the second scenario, PCBA-ICs from 
Japan, Thailand, the U.S., Korea, and Malaysia; and fly eyes from Japan 
were shipped to Taiwan. The assembly and programming operations that 
took place in China, under the first scenario, were all performed in 
Taiwan. We determined that the light engine module and the PCBA main 
board were the essence of the projector, and it was at their production 
where the last substantial transformation occurred. Therefore, when the 
light engine module and PCBA main board module were assembled and 
programmed in China, the country of origin of the projectors was China 
for the purposes of U.S. government procurement. However, we also ruled 
that if the light engine module and PCBAs main board modules were 
assembled and programmed in Taiwan, then the country of origin of the 
projectors was Taiwan for purposes of U.S. government procurement
    HQ H146735, (July 29, 2011), concerned a determination of the 
country of origin of two models of a digital projector, which were very 
similar to the products under consideration here. In that case, Chinese 
modules were assembled together into a projector in Taiwan. However, 
the projectors were designed and developed in Taiwan. Many of the main 
parts of the projectors, including the data processors were also 
fabricated in Taiwan. CBP determined that for purposes of government 
procurement the country of origin of the digital projectors assembled 
in Taiwan using the Chinese modules was Taiwan. In making this 
determination, CBP considered that 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, LAN module programmed 
in China with Taiwanese origin firmware, and the LVPS module from China 
were assembled together in Taiwan with other Chinese components to form 
a completed projector. After assembly was performed, the projector was 
programmed in Taiwan with three types of Taiwanese developed firmware 
(power control firmware, system firmware, and EDID). We found that the 
assembly and programming operations performed in Taiwan were 
sufficiently complex and meaningful so as to create a new article with 
a distinct name, character, and use. In support of this determination, 
we further noted that some of Chinese modules were made using Taiwanese 
parts. Thus, through the operations undertaken in Taiwan, we concluded 
that the individual parts from various countries lost their separate 
identities to become a new and different article, i.e., the projector.
    In our judgment, the five versions of the different models of 
digital projectors involved in this case closely resemble the digital 
projectors that we considered in HQ H147365. In addition, in this case 
the processing steps and programming operations performed in Taiwan are 
very similar to the actions undertaken in Taiwan in HQ H147365. 
Moreover, as in HQ H147365, we recognize that the most essential 
components of the LED projectors, the DMD and data processors, will be 
made in Taiwan.

[[Page 34971]]

Furthermore, the important firmware files, namely, the system firmware, 
power control firmware, lamp driver firmware, and EDID firmware are 
developed and coded in Taiwan. The programming of the ICs, to make the 
digital projectors functional through the interaction of modules and 
via the firmware files after the digital projectors have been 
assembled, is also done in Taiwan. We also note that as in HQ H147365, 
a number of the Chinese modules contain some significant Taiwanese 
parts. Thus, as in HQ H147365, we find that the assembly processed 
previously described and the programming operations performed in Taiwan 
are sufficiently complex and meaningful so as to create new articles 
with a distinct name, character, and use.
    We note that there are some distinctions among the five different 
versions of the digital projectors under consideration. The projector 
Model A and projector Model B are the same type of digital projector 
with different resolutions and some different features. These four 
versions of the projectors are similar because they are lamp based 
projectors. Model C is a slightly different type of projector in that 
it is an LED based projector and does not require a color wheel module. 
However, we do not believe that these differences in the projectors are 
relevant in determining their country of origin. Consequently, in 
accordance with our holding in HQ H147365, we find that the country of 
origin of the specified five models of the finished digital projectors 
is Taiwan.

HOLDING:

    Based on the facts presented in this case, we find that the 
assembly and programming operations performed in Taiwan substantially 
transform the non-Taiwanese components into Taiwanese digital 
projectors. Therefore, the country of origin of the five different 
versions of digital projectors described above for purposes of 
government procurement is Taiwan.
    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 in 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. 2012-14182 Filed 6-11-12; 8:45 am]
BILLING CODE 9111-14-P