[Federal Register Volume 83, Number 101 (Thursday, May 24, 2018)]
[Notices]
[Pages 24136-24138]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-11091]


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

DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning Country of 
Origin of Fleetcam Vehicle Cameras

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 a vehicle digital video camera known as the 
FleetCamTM. Based upon the facts presented, CBP has 
concluded that the processing in the United States does not 
substantially transform the imported digital video cameras for purposes 
of U.S. Government procurement.

DATES: The final determination was issued on May 18, 2018. 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 June 25, 2018.

FOR FURTHER INFORMATION CONTACT: Robert Dinerstein, Valuation and 
Special Programs Branch, Regulations and Rulings, Office of Trade (202-
325-0132).

SUPPLEMENTARY INFORMATION: Notice is hereby given that on May 18, 2018, 
pursuant to subpart B of Part 177, Customs and Border Protection (CBP) 
Regulations (19 CFR part 177, subpart B), CBP issued a final 
determination concerning the country of origin of the 
FleetCamTM digital video camera, which may be offered to the 
United States Government under an undesignated government procurement 
contract. This final determination, HQ H294933, was issued under the 
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 the country of 
origin of the finished FleetCamTM was China, where the 
digital video camera and the camera's firmware were manufactured.
    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: May 18, 2018.
Alice A. Kipel,
Executive Director, Regulations and Rulings, Office of Trade.

HQ H294933

May 18, 2018

OT:RR:CTF:VS H294933 RSD

CATEGORY: Origin

Upneet S. Teji, Esq.
Greensfelder, Hemker & Gale, P.C.
220 Madison Street, Suite 3300
Chicago, Illinois 60606

RE: Final Determination of U.S. Government Procurement; Country of 
Origin of a FleetCamTM vehicle camera

Dear Mr. Teji:
    This is in response to your eruling request of January 27, 2018, 
for a final determination on behalf of Forward Thinking Systems LLC, 
(the Company), concerning the country of origin of a FleetCam 
vehicle camera pursuant to subpart B of Part 177, U.S. Customs and 
Border Protection (``CBP'') Regulations (19 CFR Sec.  177.21 et. 
seq.). We note that the Company is a party-at-interest within the 
meaning of 19 CFR Sec.  177.22(d)(1) and is entitled to request this 
final determination.

FACTS:

    The product at issue is referred to as a FleetCam, which is a 
high-resolution digital video camera installed in a vehicle for 
streaming and recording images in real time. The FleetCam allows 
companies who purchase the product to watch the drivers that they 
employee in real-time, as well as view recorded speeding and other 
behavior moments. The FleetCam is also able to capture, record, and 
transmit images of a driver's view of the road ahead. The FleetCam 
is comprised of a physical digital video camera or several cameras 
setup together. The product also contains related cabling and a 
receiver that is compatible for use specifically with the Company's 
software and mobile applications. To use the FleetCam product, a 
user must purchase the hardware and a subscription to the software 
from the Company.
    The FleetCam's physical digital video camera is made in China 
and sourced by the Company from a Chinese firm. The firmware that is 
loaded onto the camera to allow it to be operational with the 
Company's software was also developed by the Chinese firm; however, 
you state that the firmware was developed based upon the design, 
specifications, and software architecture produced by the Company's 
staff located in the United States. The firmware developed for the 
FleetCam is designed specifically for use with the Company's fleet 
management software. The digital camera hardware (together with the 
firmware) is purchased by the Company from a Chinese producer.
    The firmware is not loaded onto the camera hardware until it is 
received by the Company in the United States. Upon receipt of the 
camera and the firmware code, the Company's engineers load and 
install the firmware on the camera hardware at the Company's offices 
in the United States. An additional hardware component of the

[[Page 24137]]

FleetCam product is the telematics gateway unit (the ``cabling''). 
The cabling units, including the receivers, are purchased from one 
or more manufacturers, and they are manufactured and procured from 
other TAA-compliant jurisdictions. The digital camera contains dual 
SD Cards that allow it to internally record the events that took 
place.
    The basic software component of the FleetCam product is produced 
in the United States. In addition, other than the firmware 
development for the camera hardware, all of the FleetCam software 
(including without limitation, software applications and mobile 
applications) are designed, developed, and integrated with the 
Company's cloud service in the United States. In order for the 
FleetCam to be functional and operational, the hardware and the 
related firmware is installed with the cabling and integrated with 
the FleetCam software platform. This compilation process occurs 
entirely in the United States.
    The Company sells the FleetCam software as a software-as-a 
service subscription, whereby the Company's customers enter into a 
separate subscription for use of the FleetCam software. After 
purchase of the FleetCam hardware, the Company's customers pay a 
separate monthly fee for using its proprietary software. The 
FleetCam hardware and software must be purchased together as part of 
the same package. Without the FleetCam software, it is stated that 
the camera and the related components are not operational. If a 
customer cancels its software subscription, the FleetCam product 
will no longer be functional.

ISSUE:

    Whether the imported components including the digital video 
camera and cabling for the FleetCam are substantially transformed 
through the downloading of the Company's proprietary software in the 
United States so as to make the FleetCam a product of 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 Data General v. United States, 4 C.I.T. 182 (1982), the court 
determined that the programming of a foreign PROM (Programmable 
Read-Only Memory chip) in the United States substantially 
transformed the PROM into a U.S. article. In the United States, the 
programming bestowed upon each integrated 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. The 
essence of the article, its interconnections or stored memory, was 
established by programming. See also, Texas Instruments v. United 
States, 681 F.2d 778, 782 (CCPA 1982) (stating the substantial 
transformation issue is a ``mixed question of technology and customs 
law''); HQ 735027, dated September 7, 1993 (programming blank media 
(EEPROM) with instructions that allow it to perform certain 
functions that prevent piracy of software constitutes a substantial 
transformation); and, 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 imported it).
    ``The term `character' is defined as `one of the essentials of 
structure, form, materials, or function that together make up and 
usually distinguish the individual.' '' National Hand Tool Corp. v. 
United States, 16 C.I.T. 308, 311 (1992) (citing Webster's Third New 
International Dictionary (1981)). In National Juice Prods. Ass'n v. 
United States, the Court of International Trade applied the 
``essence test'' and found that the fundamental character of orange 
juice concentrate was not changed by the addition of water, orange 
essences, and oils to make frozen concentrated orange juice, and 
hence, there was no substantial transformation. 10 C.I.T. 48, 628 F. 
Supp. 978 (1986).
    HQ H258960, dated May 19, 2016, reviewed the country of origin 
of hardware components of certain transceivers in two scenarios that 
are instructive to the case at issue here. The hardware components 
of the transceivers were wholly manufactured in a foreign country 
and imported into the United States. In the first scenario, the 
transceivers were ``blanks'' and completely non-functional and 
specialized proprietary software was developed and downloaded in the 
United States, making the transceivers functional and compatible 
with the OEM technology. In the second scenario, the transceivers 
were preprogrammed with a generic program that was replaced with 
specialized proprietary software. It was argued that in both 
scenarios, the imported hardware was substantially transformed by 
the development, configuration, and downloading operations of the 
U.S. origin software. In the first scenario, we found that the non-
functional transceivers were substantially transformed as a result 
of downloading performed in the United States, with proprietary 
software developed in the United States. However, in the second 
scenario, it was determined that since the transceivers had generic 
network functionality, programming them merely to customize their 
network compatibility would not actually change the identity of the 
imported transceivers. See also HQ H241177, dated December 3, 2013. 
Accordingly, it was determined that the country where the last 
substantial transformation occurred was China or another Asian 
country where the hardware components were manufactured.
    A similar finding was made in HQ H284523, dated August 23, 2017, 
where imported tablet computers were preprogrammed with a generic 
program when they were first imported. The tablets could perform all 
of the standard functions of an android tablet in their imported 
condition. After importation, the imported tablets were customized 
for a particular use as part of a system to collect and transmit a 
patient's medical data by the installation of proprietary software. 
The original tablet had the ability to perform all of previous 
functions, but it was determined that for ease of use and for other 
reasons it was best to disable these functions and to consolidate 
them in one function via the specialized software. It was stated 
that the general functionality of the tablet was removed and 
replaced so that it was easier for patients to use the device and 
access the system. It was also stated that the security of the 
patient's medical data would be better protected. In HQ H284523, we 
noted that it was clear that merely loading the specialized software 
onto the tablet computer that remained fully functional as a 
computer would be insufficient to constitute a new and different 
article of commerce, since all of the functionality of the original 
computer would be retained.
    In this case, the Company's proprietary software is being 
installed onto a digital video camera so that the camera can provide 
live-streaming of a driver and his view of the road from multiple 
vantage points. In addition, after the software is installed onto 
the FleetCam, it is able to capture, record, and store footage of 
particular incidents that may have occurred. While the particular 
proprietary software is written and downloaded in the United States, 
we note that the firmware being used to operate the FleetCam, 
although designed in the United States, was not written in the 
United States, but in China. Therefore, similar to HQ H284523, where 
the tablet could function, in this case, because the digital camera 
contains SD cards, it can fully function as a digital

[[Page 24138]]

video camera by capturing images and recording footage. The 
installation of the proprietary software onto the FleetCam only 
customizes the digital cameras to the Company's particular use and 
does not change the basic identity of the imported digital video 
cameras because they retain all their functions with the same name, 
character and use of the imported digital video cameras. Therefore, 
we find that the FleetCam is not substantially transformed by the 
downloading of the Company's proprietary software onto the imported 
digital video cameras, and the country of origin of the FleetCam 
will be China where the main hardware, including the digital cameras 
and the firmware, is manufactured.

HOLDING:

    Based on the information presented in this case, the imported 
digital video cameras are not substantially transformed by the 
processing performed in the United States. Therefore, the country of 
origin of the FleetCams is the country where the digital video 
cameras and the firmware were originally produced, which in this 
case is China.
    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

[FR Doc. 2018-11091 Filed 5-23-18; 8:45 am]
 BILLING CODE 9111-14-P