[Federal Register Volume 83, Number 42 (Friday, March 2, 2018)]
[Notices]
[Pages 9015-9017]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-04279]
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DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
Notice of Issuance of Final Determination Concerning Country of
Origin of Aluminum Honeycomb Panels
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 aluminum honeycomb panels. CBP has concluded in
the final determination that for purposes of U.S. Government
procurement the assembly of the parts in the United States does not
substantially transform the aluminum panels.
DATES: The final determination was issued on February 21, 2018. A copy
of the final determination is attached. Any party-at-interest, as
defined in 19 C.F.R. Sec. 177.22(d), may seek judicial review of this
final determination within April 2, 2018.
FOR FURTHER INFORMATION CONTACT: Joy Marie Virga, Valuation and Special
Programs Branch, Regulations and Rulings, Office of Trade (202-325-
1511).
SUPPLEMENTARY INFORMATION: Notice is hereby given that on 02/21/18, CBP
issued a final determination concerning the aluminum honeycomb panels,
which may be offered to the United States Government under an
undesignated government procurement contract. The final determination,
HQ H290528, was issued at the request of Aliva Chemica E Sistemi SRL,
under procedures set forth at 19 C.F.R. Part 177, subpart B, which
implements Title III of the Trade Agreements Act of 1979, as amended
(19 U.S.C. Sec. 2511-18). In the final determination, CBP was asked to
consider whether the cutting, bending, and assembly of aluminum parts
constitutes a substantial transformation. In the final determination,
CBP concluded that these activities do not constitute a substantial
transformation and the origin of the honeycomb panels remains the
original country of manufacturing.
Section 177.29, CBP Regulations (19 C.F.R. Sec. 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 C.F.R. Sec. 177.30), provides that
any party-at-interest, as defined in 19 C.F.R. Sec. 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 21, 2018.
Alice A. Kipel,
Executive Director, Regulations and Rulings, Office of Trade.
HQ H290528
February 21, 201
OT:RR:CTF:VS: H290528 JMV
CATEGORY: Origin
Darlene Buro
All Air Custom Brokers, Inc.
145-68 228th Street, 2nd Floor
Springfield Gardens, NY11413
RE: U.S. Government Procurement; Title III, Trade Agreements Act
of 1979 (19 U.S.C. Sec. 2511); Subpart B, Part 177, CBP
Regulations; Country of Origin of Honeycomb Panels
Dear Ms. Buro,
This is in response to your request of June 5, 2017, on behalf
of Aliva Chemica E Sistemi SRL (``Aliva'') for a final determination
concerning the country of origin of a product that you refer to as
``aluminum honeycomb panels,'' pursuant to subpart B of Part 177,
U.S. Customs and Border Protection (CBP) Regulations (19 C.F.R.
Sec. 177.21, et seq.).
As a foreign producer of merchandise, Aliva 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:
The merchandise at issue are Aliva aluminum honeycomb panels,
which will be used as architectural finished coating panels for wall
and tunnel areas in train stations. The panels come in two
variations: straight and curved. Each installed panel will contain a
casing, a core, and two mounting blades.
The casing
The casing is a flat sheet of pre-painted aluminum alloy which
will be supplied in both perforated and non-perforated variations as
required for aesthetic appearance. The flat sheet is produced in
Italy in dimensions of two feet in width and variable lengths. These
aluminum alloy sheets are painted through a reverse coil process and
will include anti-graffiti characteristics as required by the
architectural specification. The sheets are then transferred to a
specialized processing factory in Italy that cuts the sheet to the
final dimensions, and bends three of the side edges to create the
casing that will house the honeycomb core. Along one side of the
casing, the edge is left flat and two bending lines are engraved on
the back of this edge for reference during the production process in
the United States. The casing will then be transported to a U.S.
production facility to receive and secure the core. Workers at the
U.S. production facility will also drill holes at prescribed
locations to attach the core.
The core
The core consists of two hard layers called skins and a layer of
aluminum honeycomb made up of 3000 series aluminum alloy with
hexagonal cells that are 80 microns thick. The skins can either be
coated with five microns of primer or pre-painted black with an
anti-graffiti finish. The skins are glued to the honeycomb panel to
create a singular panel referred to as the core.
The Italian manufacturer will supply and transport the core
sheets in bulk to a U.S. manufacturing facility. Each core sheet
will produce three to 16 cores. All cores for the curved panels will
be cut-to-size to fit the casing in Italy but cores for the straight
panels will be cut to size at the U.S. facility. Eight holes are
drilled through the back of the core for attachment of the mounting
blades. However, all the cores for curved panels will be cut and
drilled in Italy.
The mounting blades
The mounting blades are aluminum alloy sheets of unknown origin
extruded into L-shaped brackets. Two mounting blades will be
attached to the back of each core on either side. The mounting
blades are extruded, machined, bent, and cut-to-size in the United
States before being secured to the core. Two different profiles are
produced for the right and left blades, which hook the finished
panel onto Aliva's framing system.
Assembly
In the United States, the core is inserted into the case and
then the flat edge of each casing will be bent into place with
specialized aluminum bending equipment. An average of 16 holes will
be drilled into each panel, and 16 stainless steel rivets will be
fastened with a specialized riveting tool to secure the core and
casing together. Finally, each mounting blade is secured to the
finished panel with four stainless steel rivets.
According to Aliva, the processing in the United States requires
skilled labor and increases the value of the component parts. Aliva
estimates that the work required to incorporate the casing, core and
mounting blades into a singular panel in the United States will take
approximately 46 minutes of labor. The importer further states that
the processes performed in the United States to produce all of the
panels will require ``hundreds of thousands of dollars of labor.''
Aliva indicates that each panel will have a significantly increased
value over the collective value of the individual parts (casing,
core, and mounting blades) after the processing in the United States
is completed.
[[Page 9016]]
ISSUE:
Whether the component aluminum parts are substantially
transformed by the combining processes in the United States.
LAW AND ANALYSIS:
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,
pursuant to subpart B of Part 177, 19 C.F.R. 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.).
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 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
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 Trade Agreements Act. See 48 C.F.R.
Sec. 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.'' See 48 C.F.R
Sec. 25.003.
In determining whether the combining of parts constitutes a
substantial transformation, the determinative issue for CBP 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, 6 C.I.T. 204 (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. See HQ H125975, dated January 19, 2011.
CBP considers the totality of the circumstances and makes such
determinations on a case-by-case basis.
In determining whether a substantial transformation has occurred
in the processing of metals, CBP has generally held that cutting or
bending materials to defined shapes or patterns suitable for use in
making finished articles, as opposed to mere cutting to length or
width which does not render the article suitable for a particular
use, constitutes a substantial transformation. For example, in
Headquarters Ruling Letter (``HRL'') 055684, dated August 14, 1979,
CBP held that components of a water cooler gas absorption
refrigeration unit which were formed by cutting to length, cleaning
and bending imported steel tubes into the component shapes and
configurations, or by cutting to length, flattening, and drilling
holes into imported tubing, substantially transformed constituent
materials for GSP purposes, while those imported tubes which were
simply cut to length and assembled into the final articles were not.
See also HRL 555811, dated March 20, 1992 (die cutting, stamping and
shaping operations substantially transform aluminum flat stock into
new and different articles of commerce).
In HRL 555265, dated July 3, 1989, CBP held rolls of imported
aluminum strip were substantially transformed when the aluminum
strip was crowned, that is, it was passed between convexed and
concaved egg shape rollers to permanently bow the strip. Then the
strip was cut to lengths and punched with holes. CBP stated that the
cutting and crowning operations permanently altered the physical
characteristics of the strip thereby limiting its potential uses.
Prior to cutting and crowning, the strip was raw material and
possessed nothing in its character indicative of its ultimate use.
After the cutting and crowning operations, the strip could be used
in the production of a limited range of articles, such as venetian
blind slats or lattice fences. See also HRL 557159, dated January
11, 1994 (extruded aluminum cut to length and bent to shape to form
the frame of grilles and louvers was substantially transformed).
The above situations are in contrast to those where the imported
components constitute the essence of the end product. For example,
in HRL 562653, dated May 14, 2003, CBP considered whether brake kits
that were machined and assembled in the United States were
substantially transformed. Unplated, drilled and slotted brake
rotors and calipers from Italy were plated with a protective zinc
coating and some of the calipers were painted/labeled. After
painting, the calipers were machined to specification, in accordance
with the mounting profile determined by engineers. The two imported
plated rotors were each mounted to a U.S.-origin bell by means of
ten small bushing assemblies, each of which was comprised of a
bushing, spacer, spring washer and bolt. The bushing and the spring
were imported from Italy, while the remaining articles were of U.S.-
origin. CBP found that, at importation, both the rotors and the
calipers were not rough, generic forms with a multitude of uses, but
were essentially complete articles which already bore the name of
the finished product; therefore, the use of the articles was
determined at the time of importation. While the calipers underwent
some machining operations in the United States, the overall shape
and form of the finished articles was essentially the same as the
imported articles. Likewise, although all of the rotors were plated
in the United States, and some underwent additional drilling and/or
slotting in the United States, the overall dimensions and diameter
remained the same. The imported rotors also did not lose their
identity and did not become an integral part of a new article when
assembled to the U.S. bell. Additionally, the use of the calipers
and rotors was predetermined at importation. Thus, CBP found that
the imported rotors and calipers did not undergo a change in name,
character or use as a result of processing in the United States and
remained products of Italy. See also HRL 734873, dated September 7,
1994 (imported brake rotor castings were not substantially
transformed by processing, which included removing 0.06-0.12 inches
of external surface, drilling 5-10 holes, counter coring, installing
studs or bolts, and grounding for a fine finish); and National Hand
Tool Corp. v. United States, 16 C.I.T. 308 (1992) (finding no
substantial transformation occurred because components had been
cold-formed or hot-forged ``into their final shape before
importation'', and that ``the form of the components remained the
same'' after the assembly and heat-treatment processes performed in
the United States).
Here, the U.S processing of the panels is minimal and does not
alter the character of the casing and core. The pre-importation
processing is significantly more complicated than the post-
importation processing, which essentially consists of some cutting
and assembly of parts. The physical characteristics of the casing
and the core are already determined by the processing in Italy. Most
of the cutting and bending of the casing and the core occurs prior
to importation. In Italy, the aluminum sheets are produced; the core
is created by linking the skins with the aluminum honeycomb; the
aluminum for the casing is cut to size; the casing is painted; three
of the four bends in the casing are completed; the core is primed
and painted; and the curved core panels are cut. In contrast, in the
United States the last edge of the casing is bent, the straight core
panels are cut, the core and the casing are attached, and the
mounting blades are cut into shape and attached; thus, the form of
the components remains essentially the same after U.S. processing.
Since the form, materials, and structure remain the same, we find
there is no change in character of the core and casing.
The processing here is similar to the brake kits in HRL 562653.
The major parts are imported in essentially the same shape that they
will be in when assembled into the final product. Although there is
some cutting, drilling, and slotting, the casing and the core do not
lose their identity or become an integral part of a new article when
assembled in the United States. Like the brake kits, at importation
the casing and core are not rough, generic forms with a multitude of
uses--they are imported only to be assembled to be sold as wall
panels. Therefore, the casing and core are not new and different
articles of commerce from the assembled panels.
Here, because the core and the casing are not substantially
transformed in the United States, the country of origin of the
completed panels is Italy.
HOLDING:
Based on the facts of this case, aluminum honeycomb panels are
not substantially
[[Page 9017]]
transformed through the assembly of the parts in the United States.
The country of origin of the aluminum honeycomb panels is Italy.
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,
Alice A. Kipel, Executive Director
Regulations and Rulings
Office of International Trade
[FR Doc. 2018-04279 Filed 3-1-18; 8:45 am]
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