[Federal Register Volume 79, Number 131 (Wednesday, July 9, 2014)]
[Notices]
[Pages 38943-38945]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-15978]
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DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
Notice of Issuance of Final Determination Concerning Catheter
Trays
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 Foley catheter trays to be offered to the
U.S. Government under an undesignated government procurement contract.
The final determination found that based upon the facts presented, the
country of origin of the subject trays is China and U.S.A.
DATES: The final determination was issued on June 30, 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 within 30 days of July 9, 2014.
FOR FURTHER INFORMATION CONTACT: Fernando Pe[ntilde]a, Esq., Valuation
and Special Programs Branch, Office of International Trade; telephone
(202) 325-1511.
SUPPLEMENTARY INFORMATION: Notice is hereby given that on June 30,
2014, 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 Foley catheter trays to be offered to the
U.S. Government under an undesignated government procurement contract.
The final determination, Headquarters Ruling Letter H230416, was issued
at the request of Medline Industries, Inc., 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 processing in Mexico of several medical
instruments and accessories to create the subject ``Foley catheter
trays'' does not constitute a substantial transformation into a product
of Mexico for purposes of U.S. government procurement.
Section 177.29, Customs 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, Customs 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 30, 2014.
Sandra L. Bell,
Executive Director, Regulations and Rulings, Office of International
Trade.
Attachment
HQ H230416
June 30, 2014
OT:RR:CTF:VS H230416 FP
CATEGORY: Marking
Mr. Michael T. Shor
Arnold & Porter, LLP
555 12th Street, NW
Washington, DC 20004
RE: U.S. Government Procurement; Final Determination; Country of
origin of catheter system trays; substantial transformation; 19 CFR
Part 177
Dear Mr. Shor:
This is in response to your letter on behalf of Medline
Industries, Inc. (hereinafter ``Medline''), in which you seek a
final determination pursuant to subpart B of Part 177, Customs
Regulations, 19 CFR 177.21 et seq. Under these regulations, which
implement Title III of the Trade Agreements Act of 1979, as amended,
(19 U.S.C. Sec. 2411 et seq.), U.S. Customs and Border Protection
(``CBP'') issues country of origin advisory rulings and final
determinations on whether an article is or would be a product of a
designated foreign country or instrumentality for the purpose 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 six
models of Foley catheter trays, which Medline is considering
[[Page 38944]]
selling to the U.S. Government in an unspecified procurement tender.
We note that Medline 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 your submission and information provided, Medline
developed its Foley catheter trays (hereinafter ``trays'') to aid in
the prevention of catheter-associated urinary tract infections.
Medline designed sterilized, single-use trays containing a catheter
and all of the equipment necessary to insert the catheter, organized
and sequenced in a way to minimize the possibility of infection. You
state that each tray is intended to be used only as an entirety, for
single use, after which use the individual components, other than
the inserted catheter that remains in the patient, are discarded.
You state that Medline manufactures six different models of the
tray, which differ principally in the materials used for the
catheter. The main model sold is the silicone-elastomer coated latex
Foley catheter tray. Medline also produces two latex-free models,
including a 100% silicone model, and a silicone catheter with silver
ions bound in the catheter's coating. Each of these three types
comes in two sizes, 16Fr and 18Fr, using the industry standard
French units (FR), where 1 Fr is equivalent to 0.33 mm of diameter.
You state that the six tray models are otherwise similar.
With your correspondence, you provided a representative sample
of the latex Foley model, together with a detailed description and a
list of medical instruments and accessories (materials and
components) placed into the tray. These include patient drapes, hand
sanitizer, sterile gloves, a syringe prefilled with sterile water to
inflate the catheter balloon, lubricating jelly, iodine swabsticks,
a syringe to draw a urine sample, securement devices, and a specimen
jar. In the sample, these instruments are arranged in a plastic
tray, which contains indentations to hold items or group of items.
The medical instruments and accessories are sourced from China
and the U.S., and imported into Mexico, where they are placed into
trays, packaged, and boxed at Medline's facility in Nuevo Laredo,
Mexico. Specifically for the latex Foley catheter tray, the specimen
container, catheter Foley silver, gloves, and drainage bag are
manufactured in China. The remaining materials are of U.S. origin.
The catheter is sourced in varying countries depending on the
model. The silicone and latex catheters (as in the submitted sample
of the latex Foley catheter tray) are manufactured in China.
Silvertouch catheters are manufactured in India or Canada. For all
models, the catheter and drainage bag are packaged together in
Mexico, together with all of the medical instruments and materials
needed to insert and secure the catheter, including materials to
create a sterile field. The accessories of the other models and
their origin were not provided.
You claim that all of the instruments and materials in the tray
are intended to be used in conjunction with the insertion of the
catheter, in a specific sequence, and only for one use, and thus
function together as a single medical device. After their initial
use, all of the included instruments and materials, as well as the
instructions and plastic tray, are discarded and have no alternative
use.
According to Medline the tray components are delivered to a
clean room and put together by a designated line of approximately 15
specially trained technicians. The catheter is attached to the drain
bag in a way that creates a closed urological system that minimizes
contamination when the catheter is used on the patient. By
connecting the catheter to the drain bag in Medline's sterile
environment, instead of having a nurse connect the two in a hospital
room environment, the risk of bacterial contamination and patient
infection is minimized.
You claim that attaching the drain bag is a fundamental
characteristic of a Foley catheter system, and that the design of
the tray transforms the components into an assembly which promotes
proper insertion of the Foley catheter, thereby minimizing patient
risk. After packaging, Medline performs a quality inspection prior
to wrapping, sealing and packaging operations in Mexico, before
sending the finished trays for medical sterilization in the United
States.
Issue:
Whether Medline's Foley catheter system management trays are
considered to be products of Mexico for purposes of U.S. Government
procurement.
Law and Analysis:
Under subpart B of part 177, 19 CFR 177.21 et seq., which
implements Title III of the Trade Agreements Act of 1979, as amended
(``TAA''; 19 U.S.C. 2511 et seq.), CBP issues country of origin
advisory rulings and final determinations on 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 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 Procurement
Regulations. See 19 CFR 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 CFR 25.403(c)(1).
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. Unites States, 573 F. Supp. 1149 (CIT 1983), aff'd, 741
F.2d 1368 (Fed. Cir. 1984). CBP considers the totality of the
circumstances and makes such decisions on a case-by-case basis. The
country of origin of the article's components, extent of the
processing that occurs within a given country, and whether such
processing renders a product with a new name, character, or use are
primary considerations in such cases. Additionally, facts such as
resources expended on product design and development, extent and
nature of post-assembly inspection procedures, and worker skill
required during the actual manufacturing process will be considered
when analyzing whether a substantial transformation has occurred;
however, no one such factor is determinative.
In Headquarters Ruling Letter (HRL) 555268 dated March 6, 1991,
Customs considered the eligibility for preferential tariff treatment
under the Generalized System of Preferences to ``Code 6000 Infection
Control Systems.'' Similar to the articles under consideration, the
Code 6000 catherization tray contained the following items packaged
together: Latex catheter, ``Mono-Flo'' drainage bag, lubricating
jelly, latex gloves, fenestrated drape, underpad prefold, urine
specimen vial, forceps, applicator rayon balls, prefilled 10 cubic
centimeter syringe, a tamper band, and a package of povidone iodine
solution. The tray contained sections and indentations for
individual items. The paper cover of the tray, which was designed to
be peeled off, listed the contents and the directions for use.
Customs determined that the catheter of Malaysian origin imparted
the essential character to the set and, therefore, the Code 6000
combination package was classified in subheading 9018.39.00, HTSUS.
As in this case, with respect to the Code 6000 combination package,
certain items in the set were imported into Mexico from the U.S. or
other sources and merely packaged together with items of Mexican
origin. Customs held that merely packaging the items originating
outside of Mexico with items of Mexican origin clearly did not
result in a substantial transformation of the non-Mexican items into
``products of'' that country. Therefore, because the entire imported
entity (the set) was not the ``product of'' Mexico, as required by
the GSP statute, neither the set nor any part thereof would be
entitled to duty-free treatment under the GSP. As to the U.S. items
in the set, it was determined that they were eligible for duty-free
treatment under subheading 9801.00.10, HTSUS.
Accordingly, it is our conclusion that the operations carried
out by Medline in Mexico on the imported components do not result in
a substantial transformation of the items into a product of Mexico.
Therefore, the origin of each item in the set will be where it was
originally manufactured. Considering the sample of the latex Foley
catheter tray, the specimen container, catheter foley silver,
[[Page 38945]]
gloves, and drain bags will remain of Chinese origin. Therefore, the
finished latex Foley catheter trays will be considered a product of
China and U.S.A. for purposes of U.S. Government procurement. The
other five tray models will follow a similar result, but as
indicated only the origin of the particular catheter was provided
(India or Canada for the Silvertouch model) and the origin of the
accessories was not submitted.
Holding:
On the basis of the information provided, we find that the
operations in Mexico do not constitute a substantial transformation
of the components in Medline's latex Foley catheter system
management trays. Therefore, the country of origin of Medline's
Foley catheter system management trays is China and the U.S. where
the items were originally manufactured for purposes of U.S.
Government procurement. The other five tray models will follow a
similar result, and their country of origin will be where the items
of those models were originally manufactured (India, Canada, or the
U.S. as the case may be), but specific origin details were not
provided for our consideration.
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. 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. 2014-15978 Filed 7-8-14; 8:45 am]
BILLING CODE 9111-14-P