[Federal Register Volume 79, Number 29 (Wednesday, February 12, 2014)]
[Notices]
[Pages 8471-8473]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-03029]


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DEPARTMENT OF HOMELAND SECURITY

Customs and Border Protection


Notice of Issuance of Final Determination Concerning Certain 
Cordless Headsets

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 cordless headsets with included dongles. 
Based upon the facts presented, CBP has concluded that the non-TAA 
country where the headsets and dongles are assembled is the country 
where the last substantial transformation occurs. Therefore, for 
purposes of U.S. Government procurement, the country of origin of the 
headsets with included dongles is the non-TAA country where they were 
assembled.

DATES: The final determination was issued on February 3, 2014. 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 March 14, 2014.

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

SUPPLEMENTARY INFORMATION: Notice is hereby given that on February 3, 
2014, 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 cordless headsets 
with included dongles that may be offered to the U.S. Government under 
an undesignated government procurement contract. This final 
determination, HQ H248027, 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 concludes that, based upon the facts presented, the 
last substantial transformation takes place in the non-TAA country 
where the headsets and dongles are assembled. Therefore, for purposes 
of U.S. Government procurement, the country of origin of the headsets 
with included dongles is the non-TAA country where they were assembled.
    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: February 5, 2014.
Sandra L. Bell,
Executive Director, Regulations and Rulings, Office of International 
Trade.

Attachment

HQ H248027

February 3, 2014

VAL OT:RR:CTF:VS H248027 HkP

CATEGORY: Origin

Mr. Steve Bonar
Sr. Global Customs Compliance Manager
Plantronics, Inc.
345 Encinal Street
Santa Cruz, CA 95060

RE: Trade Agreements Act; Substantial Transformation; Country of 
Origin of Cordless Headsets

Dear Mr. Bonar:

    This is in response to your letter dated August 21, 2013, 
requesting a final determination on behalf of Plantronics, Inc. 
(``Plantronics'') 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 
Plantronics Voyager LegendTM UC cordless headsets. We 
note that as both the foreign manufacturer and the U.S. importer, 
Plantronics 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. Your request for confidential treatment regarding 
manufacturing locations contained in your request is granted and the 
information contained in square brackets will not be disclosed to 
the public.

FACTS:

    Plantronics imports fully functional Plantronics Voyager 
LegendTM UC cordless headsets from [TAA country]. 
According to the information submitted, the cordless headsets are 
lightweight devices worn over the ear that allow the user to control 
and communicate with mobile phones and computers. The headsets 
utilize Bluetooth technology, which allows for the exchange of

[[Page 8472]]

data over short distances from fixed and mobile devices using radio 
frequency reception and transmission technologies. The headsets are 
packaged and sold with a Bluetooth Universal Serial Bus (``USB'') 
dongle/adapter (a hardware key for electronic copy and content 
protection that unlocks software functionality or decodes content) 
that, when plugged into a computer, allows the headset to control 
Voice over Internet Protocol (``VoIP'') communication by acting as a 
pass-through for data.
    The headsets and dongles are manufactured in the countries 
listed below as follows:

[TAA country]

    Individual chips containing all the components of an electronic 
system, known as a ``System on a Chip'' (``SoC''), are manufactured 
and loaded with Bluetooth protocol stack firmware and 16 megabits of 
programmable memory. A Bluetooth protocol stack is a series of 
instructions that allow Bluetooth devices to communicate with each 
other.

[Non-TAA country]

    A printed circuit board containing transistors, diodes, 
capacitors, the Bluetooth-loaded SoC with flash memory, and an 
antenna is manufactured and assembled with plastic housing, buttons, 
speakers, microphones, sensors and batteries using solder and glue 
into a complete headset. The components are from [non-TAA country 
and TAA countries].
    An antenna and an integrated circuit from [TAA country] also 
loaded with Bluetooth protocol stack firmware are assembled with the 
plastic housing to create a dongle.

[TAA country]

    The fully assembled headsets and dongles are shipped to [TAA 
country]. In their imported condition, the headsets are capable of 
sending and receiving data but cannot utilize the data to perform 
tasks such as the regeneration of sound (voices).
    Firmware is downloaded onto the SoC in the headset. Embedded in 
the firmware are ``software hooks'', the sole purpose of which is to 
link the headsets with non-headset devices that have corresponding 
software (discussed below).
    After the firmware is downloaded, the interior circuitry and the 
exterior of the headset are coated with a water resistant nano 
coating, the radio frequency reception and transmission of the 
headset are tested, and the headsets are packaged for retail sale.
    Firmware is a class of code that controls the user interface 
(such as buttons and voice prompts that allow a user to change 
languages, answer or end a call), as well as the entire data flow 
into and out of the headset. In addition, firmware manages the 
integration of the headset with a paired device, such as a computer 
with a VoIP softphone, by calling the software loaded onto the 
paired device using digital hooks embedded in the firmware code. For 
example, some Voyager Bluetooth headsets have Vocalyst software 
hooks embedded in their firmware and will only interact with a 
corresponding Vocalyst application on a computer, while other 
Bluetooth headsets that do not have Vocalyst software hooks would 
not be able to connect. Firmware features digital signal processing 
(DSP), which regenerates data into audio and transforms audio into 
data. In addition, firmware is responsible for: Smart Call Transfer 
which, during an active call, transfers audio to the appropriate 
device (phone or headset); disabling the call control button to 
eliminate pocket dialing; automatically pausing streaming audio; 
automatically disconnecting a call; battery meter display on 
smartphones; voice recognition/commands; and, Caller ID. You state 
that without the firmware downloaded in [TAA country], the headset 
could not function as designed, and would only be able to be turned 
on and send and receive a signal but could not interface with other 
devices.
    Since 2008, all Bluetooth and other Voyager firmware has been 
designed and coded in [TAA country] by Plantronics. Firmware design 
involves the definition of application architecture, sequencing, and 
the programming language, while coding involves writing code 
according to specification and placing it in the predefined 
sequence.
    Software allows the headset to integrate with multiple VoIP 
applications, and supports activities such as firmware updates, 
headset diagnostics, and the sending of emails and the reading of 
text messages. The software is designed in the United States, 
outsourced to multiple non-TAA countries to be coded according to 
U.S. specifications, and sequenced in the U.S. However, the software 
is not installed onto the headset or dongle but onto the paired non-
headset device, such as a computer or mobile phone, which is not at 
issue in this ruling. Accordingly, the software will not be further 
discussed.
    This ruling is issued on the assumption that the information 
provided to this office is correct.

ISSUE:

    What is the country of origin of Plantronics Voyager Legend UC 
headsets 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 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 Procurement 
Regulations. See 19 C.F.R. Sec.  177.21. In this regard, CBP 
recognizes that the Federal Procurement 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 
C.F.R. Sec.  25.403(c)(1). The Federal Procurement Regulations 
define ``U.S.-made end product'' as:

[A]n 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 a name, character, 
or use distinct from that of the article or articles from which it 
was transformed.

    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 PROMs had no capacity 
to store and retrieve information until they were programmed in the 
U.S. by U.S. engineers who interconnected the discrete components in 
a defined logical pattern. 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 C.S.D. 84-86, CBP stated:


[[Page 8473]]


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).
    You argue that the country of origin is [TAA country] because 
you believe that it is the country where the final substantial 
transformation takes place. You state that without the firmware with 
embedded software hooks loaded onto the fully assembled headsets in 
[TAA country], the headsets can only receive signals but cannot 
answer or end calls, operate by voice recognition, be turned on and 
off based on their positioning, direct signals to paired devices, or 
otherwise interact with a VoIP softphone or other Bluetooth devices. 
Accordingly, you believe that the firmware makes the headsets into 
new and different articles. In support of your position you cite 
Data General supra and HQ H170315, dated July 28, 2011.
    HQ H170315 concerned the country of origin of satellite 
telephones. 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 the relevant 
scenarios (I and II), CBP found that when the PCBs were manufactured 
and programmed with second country software in one country and then 
incorporated into the phones in a third country, that the country of 
origin was the country in which the PCBs, which were the essence of 
the phones, were manufactured and programmed because the assembly 
operations in the third country were not sufficiently complex or 
meaningful to transform the PCBs into new and different articles. 
The third country operations consisted of assembling the imported, 
programmed PCBs with covers, a housing, antennas and cables by means 
of inserting, stacking, screwing and fitting together with clips.
    In this case, the headset is fully assembled in [non-TAA 
country] from [non-TAA country and TAA country] components. The 
dongle is also made in [non-TAA country]. The headset and the 
dongle, both loaded with [TAA country]--origin Bluetooth firmware, 
are shipped to [TAA country]. Although in its imported condition the 
headset can send and receive signals, it cannot interface with other 
devices. The dongle is fully functional when imported and is able to 
transmit and receive data signals. In [TAA country], [TAA country]--
origin firmware with embedded [TAA country]--origin software hooks 
is downloaded onto the headset, enabling it to communicate with 
corresponding software in a paired device such as a computer via the 
dongle. The firmware loaded in [TAA country] also enables the 
headset to process digital signals by filtering, measuring and 
compressing analog radio signals, transfer audio between a paired 
phone and headset during an active call, and to operate using voice 
recognition/commands, among other functions.
    In HQ 241177, dated December 3, 2013, switches were assembled to 
completion in Malaysia and then shipped to Singapore, where software 
developed in the United States at a significant cost and over many 
years was downloaded onto them. The U.S.-origin software enabled the 
imported switches to interact with other network switches through 
network switching and routing, and allowed for the management of 
functions such as network performance monitoring and security and 
access control; without this software, the imported devices could 
not function as Ethernet switches. CBP found that the software 
downloading performed in Singapore did not amount to programming 
because programming consisted of writing, testing and implementing 
code necessary to make a computer function in a certain way.
    Likewise, in this case the software downloading performed in 
[TAA country] does not amount to programming because the [TAA 
country] operations do not involve writing, testing or implementing 
the code necessary to make the headsets function in a certain way. 
See Data General supra. See also ``computer program'', 
Encyclop[aelig]dia Britannica (2013), (9/19/2013) http://www.britannica.com/EBchecked/topic/130654/computer-program, which 
explains, in part, that ``a program is prepared by first formulating 
a task and then expressing it in an appropriate computer language, 
presumably one suited to the application.''
    While the programming occurs in [TAA country], the downloading 
occurs in [TAA country]. Given these facts, we find that the country 
where the last substantial transformation of the headsets occurs is 
[non-TAA country], that is, where the major assembly processes are 
performed. The country of origin for purposes of U.S. Government 
procurement is [non-TAA country]. Likewise, we find that the country 
of origin of the dongles is [non-TAA country], where they were 
assembled.

HOLDING:

    Based on the facts provided, the last substantial transformation 
occurs in [non-TAA country]. As such, the headsets and dongles will 
be considered products of [non-TAA country] 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. 2014-03029 Filed 2-11-14; 8:45 am]
BILLING CODE P