[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]


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

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.

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

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]
 BILLING CODE P