[Federal Register Volume 78, Number 183 (Friday, September 20, 2013)]
[Notices]
[Pages 57871-57873]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-22878]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning Nec 
Microwave Radios

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 NEC iPasolink 250 and 650 microwave radios. Based 
upon the facts presented, CBP has concluded in the final determination 
that Japan is the country of origin of the microwave radios for 
purposes of U.S. Government procurement.

DATES: The final determination was issued on September 13, 2013. 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 October 21, 2013.

FOR FURTHER INFORMATION CONTACT: Karen S. Greene, Valuation and Special 
Programs Branch: (202) 325-0041.

SUPPLEMENTARY INFORMATION: Notice is hereby given that on September 13, 
2013, pursuant to subpart B of Part 177, Customs and Border Protection 
Regulations (19 CFR part 177, subpart B), CBP issued a final 
determination concerning the country of origin of NEC iPasolink 
microwave radios, which may be offered to the U.S. Government under an 
undesignated government procurement contract. This final determination, 
in HQ H206977, was issued at the request of NEC Corporation of America, 
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 microwave radios were substantially 
transformed in Japan, such that Japan is the country of origin of the 
microwave radios 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: September 13, 2013.
Sandra L. Bell,
Executive Director, Regulations and Rulings, Office of International 
Trade.

Attachment

H206977
September 13, 2013
OT:RR:CTF:VS H206977 KSG
Joseph L. De La Luz
Director, Trade Compliance
NEC Corporation of America
6535 N. State Hwy. 161
Irving, Texas 75039-2402

RE: Government Procurement; Country of Origin of NEC iPASOLINK 250 and 
650 microwave radios; substantial transformation

Dear Mr. De La Luz:

    This is in response to your letter dated February 27, 2012, and 
additional submissions dated July 27, 2012, and June 13, 2013, 
requesting a final determination on behalf of NEC Corporation of 
America (``NEC''), pursuant to subpart B of part 177 of the U.S. 
Customs and Border Protection (``CBP'') Regulations (19 CFR Part 177). 
Under these regulations, which implement Title III of the Trade 
Agreements Act of 1979 (``TAA'') as amended (19 U.S.C. 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.
    The final determination concerns the country of origin of the NEC 
iPASOLINK 250 and 650 microwave radios (``microwave radios''). We note 
that as a U.S. importer, NEC is a party-at-interest within the meaning 
of 19 CFR 177.22(d)(1) and is entitled to request this final 
determination. A conference was held on this matter on August 28, 2012.

FACTS:

    The iPASOLINK 250 and 650 are hybrid digital microwave radios, used 
for wireless point-to-point communications. The hybrid nature of the 
radio enables the simultaneous transmission of both Time Division 
Multiplexed and Ethernet-based data in their native formats.
    The microwave radios are comprised of two major units, the indoor 
unit (``IDU'') and the transmitter-receiver unit chassis (``TRX 
chassis''). The TRX chassis consists of a transmitter-receiver 
(``TRX'') and a branching unit. The TRX chassis comes in two forms: an 
indoor TRX or an outdoor unit (``ODU''). The function is the same 
regardless of the mounting method. The ODU is normally attached 
directly to or mounted behind a parabolic antenna. The indoor TRX is a 
rack mountable card file-type shelf housed indoors in an 
environmentally controlled (air conditioned) shelter or other enclosure 
and it consists of a TRX, a branching circuit unit, and a chassis or 
card cage. The IDU, which is common to either type of mounting, is 
manufactured in India, and consists of a rack mounted shelf or card 
cage that can house a variety of plug-in units determined by the 
specific application of the radio. At a minimum, the IDU consists of: a 
shelf with cooling fans, a main card, a modulator/demodulator (modem), 
and a power supply. The shelf and fans provide a means of mounting

[[Page 57872]]

and connecting the cards that perform the signal processing that occurs 
inside the radio. The fans supply forced air cooling to ensure the 
operation meets the specifications over the stated temperature range of 
the IDU. The modem cards accept data from the main card and map that 
data into frames that are then applied to the modulator. The modulator 
then modulates an Intermediate Frequency (IF) based on the sequence of 
bits in the blocks presented for transmission. The main card contains 
independent Ethernet and Time Division Multiplexed switch fabrics where 
source and destination addresses of packets or circuits are analyzed 
and cross-connects are made. The main card also provides the operation, 
administrative, and maintenance functions of the radio. Once switching/
cross-connecting is complete, the main card prepares the individual 
Time Division Multiplexed and Ethernet data streams for hand-off to the 
modem card. The power supply accepts a line voltage.
    NEC iPASOLINK 250 and 650 microwave radios are comprised of 
components from Japan and India. The TRX, the branching circuit, and 
the modem are manufactured in Japan. The main card, the tributary unit, 
the power supply unit, the IDU chassis and fans are manufactured in 
India. The Indian components are assembled with the Japanese-origin 
modem to manufacture the IDU in India. The software is developed in 
India and Japan. The software developed by NEC in Japan pertains to the 
interface between the main card and the modem cards.
    All these components are shipped to the U.S. Five components are 
shipped to the U.S. from India to be assembled into the IDU: the fan 
filter unit, the fan unit, the power supply unit, the main card, and 
the chassis. Two major sub-assemblies are shipped to the U.S. from 
Japan: the modem and the indoor TRX unit or the ODU with the antenna 
attached.
    In the U.S., the components listed above that are imported from 
India (the fan filter unit, the fan unit, the power supply unit, and 
the main card) and the modem are inserted into various slots in the 
chassis. Sub-modules of the modem are assembled. Then, the indoor TRX 
is stacked on top of the chassis, the IDU is stacked and interconnected 
with U.S.-origin coaxial cables in the middle of the chassis, and the 
ODU is placed in the bottom of the chassis. The microwave radios are 
tested, and the software is customized to fit specific customer 
applications and downloaded in the U.S.

ISSUE:

    What is the country of origin of the imported microwave radios for 
government procurement purposes?

LAW AND ANALYSIS:

    Pursuant to subpart B of part 177, 19 CFR 177.21et seq., which 
implements Title III of the Trade Agreements Act of 1979, as amended 
(19 U.S.C. 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. 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 CFR 177.22(a).

    In rendering advisory rulings and final determinations for purposes 
of U.S. government procurement, CBP applies the provisions of subpart B 
of Part 177 consistent with the Federal Acquisition Regulations. See 19 
CFR 177.21. In this regard, CBP recognizes that the Federal Acquisition 
Regulations restrict the U.S. Government's purchase of products to 
U.S.-made or designated country end products for acquisitions subject 
to the TAA. See 48 CFR 25.403(c)(1). The Federal Acquisition 
Regulations define ``U.S.-made end product'' as:
    . . .an article that is mined, produced, or manufactured in the 
United States or that is substantially transformed in the United States 
into a new and different article of commerce with name, character, or 
use distinct from that of the article or articles from which it was 
transformed.

48 CFR 25.003.

    In order to determine whether a substantial transformation occurs 
when components of various origins are assembled into completed 
products, CBP considers the totality of the circumstances and makes 
such determinations on a case-by-case basis. The country of origin of 
the item's components, extent of the processing that occurs within a 
country, and whether such processing renders a product with a new name, 
character, and use are primary considerations in such cases. 
Additionally, factors such as the resources expended on product design 
and development, the extent and nature of post-assembly inspection and 
testing procedures, and the degree of skill required during the 
manufacturing process may be relevant when determining whether a 
substantial transformation has occurred. No one factor is 
determinative.
    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 (CIT 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 Customs Service Decision (``C.S.D.'') 
85-25, 19 Cust. Bull. 844 (1985), CBP held that for purposes of the 
Generalizes System of Preferences, the assembly of a large number of 
fabricated components onto a printed circuit board in a process 
involving a considerable amount of time and skill resulted in a 
substantial transformation. In that case, in excess of 50 discrete 
fabricated components were assembled.
    In Data General v. United States, 4 CIT 182 (1982), the court 
determined that for purposes of determining eligibility under item 
807.00, Tariff Schedule of the United States (predecessor to subheading 
9802.00.80, Harmonized Tariff Schedule of the United States), the 
programming of a foreign Programmable Read Only Memory Chip (``PROM'') 
in the United States substantially transformed the PROM into a U.S. 
article. In programming the imported PROM's, 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. While replicating the program pattern from a 
``master'' PROM

[[Page 57873]]

may be a quick one-step process, the development of the pattern and 
production of the ``master'' PROM required much time and expertise. The 
court noted that it was undisputed that programing 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-functional 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 created a 
similar pattern.
    It is your position that the country of origin is the U.S. because 
the final assembly, programming, customization of the software and 
testing results in a finished and operational microwave radio.
    In this case, the software is developed in Japan and India, and the 
TRX and the modem are manufactured in Japan, which are significant 
components that are imported fully assembled. You state in your 
submission that ``in terms of component material value content and 
functionality, the critical components that impart the essential 
character of the microwave radios, are of Japanese origin. . . .'' The 
TRX carries the microwave signal, which is the essence of a microwave 
radio. For all these reasons, we concur that the TRX imparts the 
essential character to the microwave radios. Further, other significant 
parts such as the TRX chassis, the branching unit and a cable are 
produced in Japan. The assembly which occurs in the U.S. does not 
involve numerous parts and is a rather simple assembly. Given the 
totality of the factors considered in this case, we find that the 
country of origin of the microwave radio for government procurement 
purposes is Japan.

HOLDING:

    Based on the facts provided, the microwave radio is considered a 
product of Japan for government procurement purposes.
    Notice of this final determination will be given in the Federal 
Register, as required by 19 CFR 177.29. Any party-at-interest other 
than the party which requested this final determination may request, 
pursuant to 19 CFR 177.31, that CBP reexamine the matter anew and issue 
a new final determination. Pursuant to 19 CFR 177.30, any party-at-
interest may, within 30 days after publication of the Federal Register 
notice referenced above, seek judicial review of this final 
determination before the Court of International Trade.
Sincerely,

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

[FR Doc. 2013-22878 Filed 9-19-13; 8:45 am]
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